Cemex Loss Narrows With U.S. Boost as Housing AcceleratesBrendan Case
Cemex SAB, 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.
That spurred UBS AG’s Marimar Torreblanca to raise her recommendation today to buy from neutral, pushing the share of analysts with that rating on the Mexico City-traded stock to 73 percent, the highest in at least two years, data compiled by Bloomberg show. The net loss was $152 million, compared with a $187 million loss a year earlier.
Cemex is benefiting from a U.S. housing rebound that pushed the Monterrey, Mexico-based 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.
The company showed “improvement in trends across the board,” said UBS’s Torreblanca. “Things for Cemex are looking better than we expected,” she wrote in an investor note.
The shares climbed 1.5 percent to 14.58 pesos in Mexico City, the highest closing price since May 31.
The company’s total sales rose 3.8 percent to $4.01 billion, in line with the $3.99 billion average of eight analyst estimates compiled by Bloomberg. Operating earnings before interest, taxes, depreciation and amortization, a profit measure known as Ebitda, rose 4 percent to $730 million, according to a statement.
That trailed the $744.7 million average of eight analyst estimates compiled by Bloomberg.
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.
A higher number of working days in the quarter compared with the same period last year added 1 percentage point to volume growth for the three core products, Cemex said.
Total debt plus perpetual notes was $16.9 billion at the end of June, little changed from three months earlier.
In the second quarter, U.S. revenue rose 9.2 percent to $868 million as the annual rate of housing starts in June increased 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 volume was up 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.
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 cut its 2013 U.S. cement volume outlook, saying it expects percentage growth in the “mid-to-high single digits” instead of the “high single digits” projected in April.
Mexico cement volumes may be little changed or show a percentage loss in the low single digits, the company said, compared with an April projection of 2 percent growth. Cemex kept its total cement volume forecast at 1 percent growth as estimates for the U.K., Egypt and the Philippines improved.
Cost cuts in Mexico and Northern Europe will lead to about $100 million in savings in the second half of the year, Cemex said. The savings give “upside to our model,” said Vanessa Quiroga, a Credit Suisse Group AG analyst in Mexico City.