Cemex


Cemex saw first quarter turnover decline by 10.2% to US$3,042.6m, which represented an underlying reduction of around 16%. The EBITDA was off by 22.8% to US$515.0m and the trading profit fell by 50.3% to US$148.4m and, after net interest charges that were 55.2% higher at US$308.3m and other financial items, the pre-tax loss emerged just 0.2% higher at US$231.7m. Equity shareholders' funds recovered by 16.4% to US$19,381.1m to give a gearing level of 93.1% compared with 134.5% a year earlier, thanks to the raising of fresh capital.

Cement shipments in the period declined by 6.1% to 14.45m tonnes, while aggregates production was down by 13.2% to 32.50m tonnes and ready-mixed concrete deliveries fell by 16.3% to 10.76m m³ as a result of weaker economic activity and an unusually severe winter in both Europe and North America. The usage of alternative fuels has been increasing, notably in Poland, Spain and Egypt.

Mexican turnover declined by 4.3% to US$741.5m and the EBITDA was off by 10.4% to US$258.0m. Domestic cement deliveries fell by around 12% but average cement prices were off by 1% in local currency, but improved by some 13% in US dollar terms. Mexican aggregates deliveries declined by 14% but prices improved by 10% in local currency and by 26% in dollar terms, while ready-mixed concrete deliveries fell by 22% and the average price was almost stable in local currency. For the full year, cement and aggregates volumes are expected to fall by about 4% and ready-mixed concrete volumes by twice as much.

The US turnover fell by a further 24.0% to US$551.8m, while the EBITDA moved into negative territory with a US$23.4m loss. Cemex' US cement volumes and prices both declined by 8%, aggregates volumes by about 15% and prices by 5%, while in ready-mixed concrete, volumes were off by 14% and prices by 15%. An April cement price increase did not stick fully and a further price increase has been announced from July. In April, US cement volumes are showing high single digit increases.

In Spain, turnover fell by 24.5% to US$150.5m and the EBITDA was down by 19.2% to €30.6m. Domestic cement deliveries fell by 12% and the average cement price fell by 9%, as the regions where Cemex is strong suffered worse than the national average. Aggregates volumes fell by 18% and ready-mixed concrete volumes by 28%.

In Great Britain the turnover actually edged ahead by 0.2% to US$267.2m, but the EBITDA swung from positive US$6.6m into a US$4.8m loss as cement deliveries fell by 6% and the average price by 5%.  British ready-mixed concrete shipments were down by 12%, while prices retracted by an average 8% in the period. The aggregates prices suffered a 7% reduction, but volumes were off by just 4%.

In the rest of Europe, turnover declined by 12.6% to US$529.2m and the EBITDA loss widened from US$2.3m to US$26.7m, while at the trading level the loss increased by 48.4% to US$70.0m. Sales of emission permits (essentially in Europe) were around 2m credits higher in the first quarter of this year than they were last year, resulting in proceeds in the order of US$90m compared with US$60m. No further sales of emission permits are anticipated for this year. Cement shipments fell by some 18% and prices were off by about 2%, with German domestic volumes dropping by 23%. In France, where Cemex does not sell cement, aggregates deliveries declined by 13% and ready-mixed concrete shipments by 14%. Taking the whole of the 'rest of Europe' aggregates volumes fell by 22% and prices by 8%, while in ready-mixed concrete the reductions were 17% and 1% respectively.

In South America, Central America and the Caribbean, turnover improved by 4.4% to US$348.2m but the EBITDA still declined by 6.2% to US$120.9m. Cement volumes improved by some 4%, boosted by an 18% rise in domestic deliveries in Colombia, but prices declined by 7% in local currency terms but improved by 3% in US dollar terms. For aggregates, average volumes and prices decreased by 12% and 15% respectively, with ready-mixed concrete volumes declining by 11% and prices by 12%. Cemex is expanding into Peru, by taking a minority interest in a new venture and providing the technological expertise.

Turnover in Africa and the Middle East was off by 0.6% to US$263.6m and the EBITDA declined by 5.4% to US$83.3m. Domestic cement deliveries in the region were off by 1% though prices rose by 3% in local currency. In Egypt, which is Cemex' largest market in the region, volumes improved by 6%. The aggregates volume rose by 15% across the region, while ready-mixed concrete volumes declined by 9%, with the Gulf area being notably weak.

Asian turnover advanced by 9.8% to US$124.5m and the EBITDA improved by 17.7% to US$33.3m. In the Philippines, Cemex improved domestic deliveries by 17% in a strong market and in Asia as a whole, cement shipments rose by some 20%. In aggregates, both volumes and local prices improves by about 8%, while in ready-mixed concrete volumes declined by about 2% and prices eased by 3%.

Outlook
For full year 2010, group cement volumes are anticipated to be around 3% higher and ready-mixed concrete volumes up by about 1% but aggregates shipments could be slightly lower.

In the USA, the company expects high single-figure growth, with April volumes positive to date. After a failed price rise in April, Cemex is planning a US$11/st cement price hike in July.

However, in Mexico, the company has downgraded expectations and expects volumes to fall around 4% in both cement and in aggregates and by 8% in ready-mixed concrete. Better prospects in other emerging markets should make up for the reduced expectations from Mexico.