Cemex Loss Narrows as Accelerating U.S. Rebound Boosts Sales

Cemex SAB (CEMEXCPO), the largest cement maker in the Americas, said its second-quarter loss narrowed as the U.S. housing recovery and a Latin American rebound outside Mexico bolstered sales.

The net loss was $152 million, compared with a $187 million loss a year earlier, the Monterrey, Mexico-based company said in a statement today. Sales rose 3.8 percent to $4.01 billion, in line with the $3.99 billion average of eight analyst estimates compiled by Bloomberg, with U.S. revenue jumping 9.2 percent as home starts accelerated from their year-ago level.

Cemex is benefiting from a U.S. housing rebound that pushed the company’s earnings before interest, taxes, depreciation and amortization in the country to $80 million in the second quarter, almost triple the level of a year earlier. Sales advanced 6 percent in Central America, South America and the Caribbean after a first-quarter decline.

“Material margin expansion in the U.S. and strong results in the South America, Central America and Caribbean region” buoyed Cemex last quarter, said Esteban Polidura, a Deutsche Bank AG analyst in Mexico City who recommends buying the company’s American depositary receipts. “We expect these two regions to continue supporting operating leverage, which should translate into positive free cash flow generation.”

Mexico Volumes

The company’s operating earnings before interest, taxes, depreciation and amortization, a profit measure known as Ebitda, rose 4 percent to $730 million, Cemex said. That trailed the $744.7 million average of eight analyst estimates compiled by Bloomberg.

Total cement sales volume was little changed at 17.3 million metric tons and ready-mix concrete volume added 1.7 percent to 14.5 million cubic meters. Aggregates such as sand, gravel and crushed stone advanced 3.6 percent to 42.7 million metric tons.

Cemex’s U.S. revenue was $868 million as the annual rate of housing starts in June rose 10 percent from a year earlier. The U.S. unit posted an Ebitda profit for the fifth quarter in a row as cement volume climbed 3 percent and prices advanced 4 percent. Ready-mix concrete volumes climbed 14 percent with a 5 percent price gain, Cemex said.

Northern Europe was the company’s largest market by revenue in the second quarter with sales of $1.09 billion, down 1.1 percent from the same period a year ago. The region’s operating Ebitda slid 11 percent to $108 million.

Cost Cuts

Sales in Mexico rose 1.7 percent to $847 million as cement volumes fell 7 percent and prices gained 5 percent. Ready-mix concrete volume in Cemex’s home country fell 3 percent while prices climbed 8 percent.

Cemex said cost cuts in Mexico and Northern Europe would lead to about $100 million in savings in the second half of the year.

The savings give “upside to our model,” Vanessa Quiroga, an analyst with Credit Suisse Group AG in Mexico City, said.

“First reaction should be positive on the back of better than expected U.S. margins and savings announcement,” Quiroga wrote in a note to clients today.

Cemex advanced 1.1 percent to 14.53 pesos at 8:39 a.m. in Mexico City trading and through yesterday have added 18 percent this year.

To contact the reporter on this story: Brendan Case in Mexico City at bcase4@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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