Cemex seen surviving any Venezuela cement takeover

Cemex seen surviving any Venezuela cement takeover
16 April 2007

Any nationalisation of cement companies in Venezuela is unlikely to hurt the global operations of producer Cemex, but the Mexican company is still trying hard to avoid a possible government takeover.  
Venezuelan President Hugo Chavez, an anti-U.S. leftist, said on Thursday he would investigate whether to nationalize cement factories as part of a socialist drive to take over companies in areas such as oil, power and media. 
The sheer size of Cemex, the world’s No. 3 cement producer with plants ranging from Thailand to Britain, means its profits would not be heavily damaged if it were to lose its three Venezuelan plants, Mexican analysts said on Friday.  
"We believe a possible nationalization of Cemex’s cement plants in Venezuela will not have a considerable financial impact for the company," BBVA Bancomer said in a report.  
Cemex, which looks set to succeed in its $15 billion bid to take over Australian rival Rinker and expand in the United States, generates 4 percent of its pre-tax income and 2 percent of its total sales in Venezuela.  
Still, investors were shaken by Chavez’ cement comments and shares in Cemex closed down 0.93 percent to 38.21 pesos in Mexico City on Friday.  
In New York, the company’s stock lost 0.6 percent of its value to close at $34.79 a share.  
The Chavez announcement "knocked the share price a bit, but everyone knows that Cemex’s operations in Venezuela aren’t very important" said Gonzalo Fernandez, an analyst at Santander.  
Cemex, which is based in the northern Mexican city of Monterrey, is nevertheless working to prevent being a target of Chavez’ nationalization drive.  
To deflect any criticism that Cemex might be taking unfair advantage of operating in Venezuela, it has switched its sales focus to the domestic market, increasing local cement sales by 30 percent last year and cutting its exports by almost half.  
Cemex in March boosted its social program in the Caribbean nation, helping low-income families build their own homes.  
The company also helps subsidize cement prices for poor families via local Venezuelan authorities, reaching 45,000 people last year.  
Published under Cement News