Cemex EBITDA margin under pressure

Cemex EBITDA margin under pressure
Published: 21 July 2014

Tagged Under: Cemex Results Mexico US 

Cemex' first-half turnover improved by 5.7 per cent to US$7736.5m and the EBITDA edged ahead by 1.5 per cent to US$1269.7m, while the trading profit improved by 4.5 per cent to US$721.5m.

Net interest payments rose by 15.1 per cent to US$841.4m and, after other charges, there was a pre-tax profit of US$49.2m compared with a US$118.9m loss. At the net attributable level, the loss fell by 49.1 per cent to US$220.3m.

Equity shareholders' funds at the end of June declined by 2.6 per cent to US$10,480.4m and the net debt was 0.7 per cent higher at US$16,308m. The gearing level increased from 150.5 per cent a year ago to 155.6 per cent. Of the debt, 87 per cent is denominated in US dollar, 11 per cent in euro and two per cent in Mexican peso. Total capital expenditure for the year is forecast by the company to amount to some US$670m, of which maintenance capital expenditure should account for around US$505m.

Higher shipments
Group cement deliveries in the six months were 5.8 per cent higher at 33.42Mt and ready-mixed concrete deliveries improved by 2.9 per cent to 27.05Mm³ while aggregates shipments rose by 6.5 per cent to 81.19Mt. For full the year, Cemex is forecasting cement volumes to increase in high single digits, as should ready-mixed concrete. Aggregates shipments should rise in mid single digits. The cost of energy, on a per tonne of cement produced basis, is forecast to be little changed from last year's level.

Mexico
The Mexican turnover eased by 4.6 per cent to US$1,551.4m and the EBITDA declined by 3.2 per cent to US$497.1m. Domestic cement deliveries were marginally lower in the period with all of the decline coming in the second quarter. The average cement price was stable in local currency, but declined by 3 per cent in dollar terms. Cement prices were raised by seven per cent during the period. Private residential and commercial building showed positive trends in cement consumption. Aggregates volumes were strong and improved by 13 per cent while the average price was two per cent higher in local currency. Ready-mixed concrete deliveries rose by four per cent and prices were one per cent ahead in local currency but declined by two per cent in dollar terms. 

US
In the United States, turnover advanced by a further nine per cent to US$1,748.6m and the EBITDA jumped by 48/8 per cent to US$146.9m. Cement shipments increased by eight per cent in the period and the average price improved by four per cent. The aggregates tonnage was three per cent lower but the average price rose by 12 per cent. In ready-mixed concrete, deliveries were off by one per cent but the price improved by eigh per cent. The improvement in residential building activity was the primary reason for the mainly better numbers, but office building was also notably positive. Cemex is forecasting its US cement volumes to increase by a high single figure this year, as should ready-mixed concrete volumes, with aggregates shipments growing in mid single figures.

Northern Europe
The Northern European turnover staged an 11.0 per cent recovery to US$2,045.8m while the EBITDA advanced by 45.1 per cent to US$133.3m. European cement deliveries were less affected by the weather than in the past couple of years and volumes improved by an average seven per cent with prices being marginally ahead on average.

British cement shipments improved by two per cent and prices by one per cent, while in aggregates the tonnage rose by 15 per cent with prices improving by two per cent. In ready-mixed concrete, deliveries were four per cent higher and prices rose by three per cent.

French volumes rose by eight per cent in aggregates but were just one per cent ahead in ready-mixed concrete, while prices were ahead by 2-3 per cent. In Germany, cement volumes improved by six per cent, helped by a strong housing market, and prices improved by two per cent, while volumes rose by six per cent in aggregates and by four per cent in ready-mixed concrete, while prices eased by one per cent in aggregates but improved by four per cent in concrete.

Polish cement volumes recovered by two per cent but prices were one per cent lower. Polish aggregates shipments recovered by a quarter and prices staged a three per cent recovery, while in ready-mixed concrete volumes improved by two per cent while prices fell by 11 per cent.

Mediterranean
Turnover in the Mediterranean area recovered by 15.1 per cent to US$860.7m and the EBITDA showed a 7.9 per cent improvement to US$181.1m. Cement volumes improved by an average one per cent, while local currency prices averaged an eight per cent improvement. In aggregates, volumes were another three per cent lower, but prices did improve by an average 21 per cent, while in ready-mixed concrete, volumes were 6 per cent ahead and prices improved by three per cent.

In Spain, the cement volumes that had been dropping sharply, were stable but the price came off by eighg per cent. Spanish aggregates volumes fell by a further 23 per cent, while in ready-mixed concrete prices recovered by five per cent and volumes by two per cent. Egyptian cement volumes declined by three per cent but prices improved by 17 per cent, or 10 per cent in dollar terms, while aggregates prices fell by 18 per cent but ready-mixed concrete prices improved by 12 per cent recovery, both on volumes that were little changed.

South America, Central America and the Caribbean
Turnover in South America, Central America and the Caribbean improved by 3.8 per cent to US$1,099.4m but the EBITDA declined by 8.6 per cent to US$364.6m. The separately-quoted Cemex Latin American Holdings accounted for 78.6 per cent of turnover and 77.6 per cent of EBITDA and reported on the day before the parent.

Domestic cement volumes were eight per cent ahead and the price in local currency was stable, but fell by five per cent in US dollars. The aggregates volume rose by 21 per cent while price movements mirrored those in cement. Ready-mixed concrete deliveries improved by 11 per cent and prices were little changed.

Colombia, the biggest contributor, saw volumes rise by 20 per cent in cement, by 32 per cent in aggregates and by 17 per cent in concrete.

Asia
Cemex' Asian turnover improved by 0.3 per cent to US$305.7m but the EBITDA declined by 5.3 per cent to US$59.1m. Domestic cement deliveries increased by five per cent, while the average price rose by two per cent in local currencies, but declined by four per cent in US dollar terms. Aggregates deliveries improved by 14 per cent and the average selling price rose by nine per cent, while ready-mixed concrete deliveries were 21 per cent lower though the average price improved by 14 per cent. Domestic deliveries of grey cement in the Philippines increased by seven per cent and the average price rose by two per cent in local currency, but fell by five per cent in US dollars.