GCC sees higher volumes and bettter pricing

GCC sees higher volumes and bettter pricing
Published: 19 August 2015


Grupo Cementos de Chihuahua (GCC) reported a 19 per cent rise YoY in second-quarter net sales to MXP3051m (US$186m) on the back of higher volumes and a better pricing environment both in its Mexican and US markets.

In the US, sales rose by 19.6 per cent in the quarter, totalling MXP2190.3m. This reflected the two per cent rise in cement sales driven by deliveries in Minnesota, Texas, Iowa and South Dakota. Ready-mix volumes remained at the previous year’s level as adverse weather conditions in the southern region of the country led to a decline in volumes that were offset by growth in the northern region. Additionally, the group reported a better pricing environment and the effect of the 17.8 per cent depreciation of the Mexican peso against the US dollar positively impacted sales in local currency terms.

The increase in sales in US dollar terms was 1.4 per cent, notably in the northern regions of the country where GCC operates, in the following segments: public sector, with the construction of roads and water infrastructure, and non-residential, in particular the construction of facilities and infrastructure for the commercial, manufacturing, health, entertainment and office segments.

Mexico
In Mexico, second quarter sales rose by 17.7 per cent YoY to reach MXP860.7m. Cement and ready-mix sales volumes increased by 13 and 12 per cent, respectively, while block and aggregate volumes were up by 43 per cent and 42 per cent each. The results reflected increased activity in the residential segment (particularly construction of middle income housing), commercial (construction of business and hotel infrastructure) and industrial buildings. Similarly, public sector activity continued to drive demand, led by pacing and urban infrastructure projects. The increase in sales were also reflected by a better pricing environment for all products.

Operating income in the second quarter of 2015 rose 39.8 per cent YoY to MXP441m, reflecting GCC’s
operating leverage. Similarly, cumulative operating income in the first half of the year grew 66.2 per cent YoY and totalled MXP554.7m.

Second quarter EBITDA was ahead by 29.2 per cent YoY to MXP676.9m. The margin expanded 1.8 percentage points to 22.2 per cent of sales, an increase driven by GCC’s operating leverage. Cumulative
first-half EBITDA in 2015 rose 34.7 per cent over the  same period of 2014, and totaled MXP1016.7m, with a 19.8 per cent margin, 2.3 percentage points greater than 1H14.

First-half sales update
Consolidated net sales in the first half of 2015 increased by 19.4 per cent YoY to MXP5145.3m. In the US, growth of 2.4 per cent in dollar terms relicts the one per cent increase in cement volumes arising from more favourable weather run the northern region of the country and a better pricing environment. in Mexico, the 20.4 per cent sales increase was driven by double-digit rises in volumes across all projects.