Cemex 1Q results to get boost from RMC buy

Cemex 1Q results to get boost from RMC buy
21 April 2005

Cemex is expected to report significant sales growth in the first quarter as it consolidates a month of results from its latest acquisition - RMC Group of the U.K. 

The $5.8bn cash-and-debt acquisition is expected to boost sales and profits, but lower margins.  Analysts see the month of RMC results as a first clue to the effect the expansion will have on Cemex. 

"It’s difficult to judge a whole year on the basis of one month’s numbers," said Gonzalo Fernandez, an analyst at Santander Serfin, adding that he hopes there will be some full-year guidance from the company. 

Cemex excluded RMC from its mid-quarter guidance, issued only two weeks after completing the purchase on March 1. 

Cemex said that without RMC it expected EBITDA, to be flat around $560m, affected by the Easter holiday falling in March this year instead of April. Sales were expected to grow 5% to $1.9bn, with operating profit rising 2% to $400m. 

Anibal Habeica, an analyst at the Scotiabank-Inverlat brokerage, said the results may be "a bit better than what they already gave." 

Santander’s Gonzalez said that given the Easter effect, anything above zero organic growth will be a good result. 

Cemex said it expected cement volumes in Mexico to be 7% lower than a year ago, or 2% excluding the Easter effect, amid weakness in domestic cement consumption during the quarter. The company said sales volumes were probably flat in the U.S., but likely grew in Spain. 

One noticeable effect of the RMC buyout will be the level of Cemex’s net debt, which will roughly double from $5.6bn at the end of 2004. Cemex has said it aims to get the ratio of net debt to trailing 12-month EBITDA back to 2.7 times by the end of this year. 


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