Cemex Loss Narrows as Housing Recovery Fuels U.S. Sales
Cemex SAB (CEMEXCPO), the largest cement maker in the Americas, said its third-quarter loss narrowed as a housing recovery propelled sales growth in the U.S. market.
The net loss attributable to controlling shareholders shrank to $203 million from $730 million a year earlier, Cemex said today. The company posted a revenue gain of 12 percent in the U.S., where housing starts rebounded 57 percent in August from an April 2009 low.
Cemex has reported 12 straight quarterly net losses, according to data compiled by Bloomberg, battered by a slump in the U.S. construction market after its $14.2 billion acquisition of Rinker Group Ltd. That company drew more than 80 percent of sales from the U.S., where there were 1.04 million housing starts in 2007, the year the deal was completed.
Operating earnings before interest, taxes, depreciation and amortization, a measure of cash flow known as Ebitda, increased 9 percent to $730 million, in line with the company’s Oct. 4 forecast.
“This is the highest Ebitda generation since the third quarter of 2009 and the fifth consecutive quarter with a year- over-year Ebitda increase,” Cemex Chief Financial Officer Fernando Gonzalez said in a statement.
Cemex fell 0.4 percent to 11.32 pesos at the close in Mexico City. The stock had gained 59 percent this year through Oct. 12.
Cemex reported $27 million in U.S. operating Ebitda, its second straight quarter with a profit by that yardstick. U.S. sales reached $826 million, the Monterrey, Mexico-based company said.
“The U.S. had positive results in Ebitda terms again, and that’s a favorable point in the report,” said Carlos Hermosillo, an analyst at Grupo Financiero Banorte SAB, who has a buy rating on the shares. “The main message is that the company’s on the right track.”
In South America, Central America and the Caribbean, sales rose 15 percent with operating Ebitda climbing 25 percent to $177 million.
Cemex’s total revenue dropped 2 percent to $3.9 billion, according to a statement on the company’s website. That was in line with a forecast earlier this month.
“In general, it was a positive report that the market had probably already recognized in the share price,” Jorge Placido, an analyst at Vector Casa de Bolsa in Mexico City, wrote in a report today. He rates the shares hold.
Third-quarter results included $168 million in expenses mainly from a provision related to an outsourcing agreement with International Business Machines Corp. (IBM) announced in July. That deal is expected to generate savings for Cemex of almost $1 billion over 10 years, Cemex said at the time.
Sales in Northern Europe fell 15 percent in the third quarter compared with the same period a year earlier, to $1.1 billion. Sales in the Mediterranean region, which includes Spain and Egypt among other countries, dropped 19 percent, including a 41 percent decline in Spanish cement volume and a 45 percent decline in ready-mix concrete.
The company’s total debt plus perpetual notes stood at $17.7 billion as of Sept. 30, down almost 4 percent from a year earlier and little changed from the June 30 level. Free cash flow after maintenance capital expenditures doubled over the last year to $204 million in the third quarter.
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