US to drive gains in Cemex EBITDA – report

The US construction sector is expected to be the main driver behind an annual 12.6 per cent rise in Cemex’s EBITDA over the next five years, a report by Banco Monex has stated.

Cemex is expected to achieve an annual growth rate in sales and EBITDA of 6.7 per cent and 12.6 per cent respectively over the next five years, driven by a recuperation of the US construction sector, the report said.

In the first half of this year, Cemex’s United States, turnover advanced by a further 8.4 per cent to US$1,604.3m and the EBITDA climbed from US$2.6m to US$99m. Cement shipments increased by three per cent in the period and the average price was four per cent higher. The aggregates tonnage rose by 12 per cent but the average price was just one per cent ahead. In ready-mixed concrete, deliveries increased by 11 per cent and the price improved by around six per cent. The higher volumes were achieved in spite of unfavourable climatic conditions and not only did the housing market improve but also the industrial and commercial markets. Cemex is forecasting its US cement volumes to increase by a mid- to high-single figure this year and that ready-mixed concrete volumes will somewhat grow faster than this.

The PCA has also expressed its confidence that cement demand growth will accelerate from 2014 onwards. Despite cutting projections for 2013 growth by half from eight to four per cent, PCA chief economist Ed Sullivan expects a 9.7 per cent advance for both 2014 and 2015. Sullivan predicts an increase in local spending on public construction beginning in fiscal 2016. This is key to cement consumption recovery as road construction accounts for the largest area of public cement consumption. An 11 percent consumption gain is forecasted for 2016.

Domestic declines
During 2013, Banco Monex expects sales and EBITDA to fall in Mexico by 1.2 and 1.5 per cent, respectively YoY. The decrease is attributed to an expected drop in cement and concrete volumes.

Cemex is expected to fare better in Central America, South America and the Caribbean, with Monex predicting increases in sales and EBITDA of 7.6 per cent and 9.9 per cent respectively.