Cemex announced yesterday that consolidated net sales reached US$3.8bn during the second quarter of 2015, representing a decline of eight per cent YoY, or an increase of five per cent on a like-for-like basis for ongoing operations and adjusting for currency fluctuations. The increase was due to higher prices, in local currency terms, in most operations, as well as improved volumes in most products in Mexico, US and northern Europe and Asia regions.
Operating EBITDA increased by one per cent YoY during the quarter to US$744m, or by 13 per cent on a like-for-like basis, attributed mainly to higher contributions from the US, Mexico and Asia regions.
Fernando A Gonzalez, Cemex CEO, commented: “We are pleased with our results. Our controlling interest net income during the quarter was the highest in six years. In addition, our operating EBITDA grew by 13 per cent on a like-to-like basis. This is the third quarter with double-digit, like-to-like growth in EBITDA.”
On the financing side, Cemex announced that as of yesterday, it has commitments from 19 financial institutions to fully repay approximately US$1.94bn outstanding under its Facilities Agreement, maturing in February 2017. The new debt is expected to have a final amortisation in 2020 and benefit from a lower interest rate, which is expected to initially represent savings in Cemex’s financial expense of close to US$20m annually, Mr Gonzalez noted.
Total debt plus perpetual notes decreased by US$774m during the second quarter of 2015.
2Q performance by region
Net sales in Mexico fell by nine per cent to US$745m compared with US$816m in the year-ago period. Operating EBITDA rose by four per cent versus US$256m in 2Q14. Domestic grey cement volumes increased by four per cent during the quarter versus the same period last year, while ready-mix volumes increased by two per cent during the same period. Cemex said it continues to see growth across all the main sectors, especially in the industrial and commercial, and formal residential sectors. Cement prices as of June were five per cent higher than in March and increased by nine per cent from December 2014 levels.
Operations in the US reported net sales of US$1008m, up five per cent YoY while operating EBITDA increased by 31 per cent to US$156m. For the second-consecutive quarter, poor weather and reduced demand for oil well cement affected cement volumes in the region.
Construction growth in the second quarter was supported by the residential and the industrial and commercial sectors. The residential sector remains positive driven by fundamentals such as substantial pent-up demand, low levels of inventory and good job creation.
Domestic grey cement volume declined by one per cent, while ready-mix and aggregates volumes increased by 10 and three per cent, respectively, during the second quarter of 2015 versus the same period of last year. Prices increased by seven per cent for cement and by six per cent for ready-mix.
In northern Europe, net sales fell by 21 per cent YoY to US$904m and operating EBITDA was eight per cent lower than the same period of last year to US$111m. Domestic grey cement volumes in the northern Europe region increased by six per cent during the second quarter of 2015. On a pro-forma basis, adjusting for the transactions with Holcim closed at the beginning of 1Q15, domestic grey cement volumes increased by 17 per cent during the second quarter of 2015.
In Germany pro-forma cement and ready-mix volumes, adjusting for the transactions with Holcim, increased by 13 and one per cent, respectively, while aggregates volumes declined by eight per cent during the quarter. Pro-forma cement prices in local-currency terms remained stable sequentially. The residential sector was the main driver of demand during 2Q15.
In Poland domestic grey cement volumes growth of 43 per cent resulted from a historically-low base in 2Q14 and stronger volumes to Cemex’s ready-mix operations. Prices in local-currency terms increased one per cent sequentially and two per cent versus December 2014.
In the United Kingdom, domestic grey cement and aggregates volumes increased, on a YoY basis, by eight and two per cent, respectively, while ready-mix declined one per cent during the second quarter of 2015
Second-quarter net sales in the Mediterranean region were US$409m, nine per cent down YoY. Operating EBITDA was 25 per cent lower at US$75m. Egyptian cement volumes dropped 23 per cent in the 2Q15, attributed to lower activity due to Ramadan (which came 12 days earlier this year) and a high comparative base. During the quarter Cemex noted higher activity in the formal residential and infrastructure sectors. Spanish grey cement volumes increased by 37 per cent while on a pro-forma basis there was a seven per cent decline.
South, Central America and the Caribbean
Cemex’s operations in South, Central America and the Caribbean reported net sales of US$517m during the second quarter of 2015, a decrease of eight per cent YoY. Operating EBITDA fell 10 per cent to US$160m. Domestic cement sales declined by 11 per cent, or 17 per cent on a pro-forma basis..
Domestic grey cement volumes in the region remained flat during the second quarter of 2015. In Colombia domestic grey cement volumes declined by seven per cent, while ready-mix volumes increased by three per cent and aggregates volumes remained stable, compared to the second quarter of 2014. Cement volumes improved by 11 per cent sequentially, reflecting a partial recovery of market share lost in the first quarter as a result of Cemex’s price increase.
On the other hand, operations in Asia registered an 11 per cent increase in net sales to US$17m and operating EBITDA rose 34 per cent YoY. Domestic grey volumes in Asia group region rose by 19 per cent in the 2Q15. In the Philippines Cemex’s cement shipments increased by 25 per cent YoY during the quarter, benefitting from increased residential and industry-and-commercial activity, as well as from the introduction of a new cement mill at the end of the second quarter of last year.