Cemex Rises as U.S. Recovery Bolsters Latin America GainsBrendan Case
Cemex SAB, the largest cement maker in the Americas, reported a narrower fourth-quarter loss as advances in the U.S. and Latin American countries, excluding Mexico, bolstered sales.
The net loss in the final three months of 2013 fell to $255 million from $494 million a year earlier, the Monterrey, Mexico-based company said today. Operating earnings before interest, taxes, depreciation and amortization, a profit measure known as Ebitda, rose 4.2 percent to $642 million, trailing the $655.1 million average analyst estimate.
Cemex is benefiting from a housing comeback in the U.S., where builders began work last year on the most homes since 2007. An 8.3 percent sales increase in the U.S., where it gets 20 percent of revenue, helped boost Ebitda in the country to almost six times the level a year earlier.
“The U.S. was the big winner for them relative to our expectations.” said Todd Vencil, an analyst with Sterne, Agee & Leach Inc., who has a neutral recommendation on Cemex’s American depositary receipts.
Cemex rose 2 percent to 17.10 pesos at the close of trading in Mexico City. Shares have gained 11 percent this year, the second-biggest gain on the benchmark IPC index, which has tumbled 5.7 percent in the same period.
In the U.S., Cemex’s Ebitda jumped to $77 million in the fourth quarter from $13 million a year earlier, the company said in a statement. U.S. cement volume may post a high-single-digit percentage gain this year with a similar gain in ready-mix concrete, according to forecasts released by Cemex.
January price increases in Florida and Colorado are showing “favorable traction” and the company will raise prices in other states in April, Cemex Chief Financial Officer Fernando Gonzalez said.
While Mexico sales in the fourth quarter fell 5.6 percent to $785 million from the year-ago period, demand improved compared with the third quarter, Gonzalez said. Mexico generated more Ebitda for Cemex than any other market last year.
“Declines in this country represent an important impact for the company’s overall results,” Fernando Bolanos, an analyst with Monex Casa de Bolsa who has a buy recommendation on the shares, said in a telephone interview from Mexico City. “In Mexico, we don’t expect volumes to improve until the third quarter of this year.”
Mexico is already showing signs of a rebound, Gonzalez said, after last year’s 8 percent decline in Cemex’s cement sales by volume in its home market. Government spending on building projects accelerated late last year and Cemex’s cement volume in Mexico will probably expand in 2014, boosted by public works, industrial construction and do-it-yourself homebuilders.
“Our cement volumes for 2014 should grow in the mid-single-digits driven by a higher emphasis on infrastructure spending” in Mexico, he said.
Cemex’s revenue in South America, Central America and the Caribbean climbed 11 percent. Operating Ebitda in the region rose 15 percent to $183 million.