Cemex Boosts Cement Sales Worldwide as Building RecoversBrendan Case
Cemex SAB, the largest cement maker in the Americas, boosted sales by more than analysts estimated as building recoveries in the U.S. and Europe pushed up volumes by the most in eight years.
First-quarter sales by the Monterrey, Mexico-based company advanced 8.2 percent to $3.59 billion, beating the $3.54 billion average of seven analyst estimates compiled by Bloomberg. Cemex’s cement sales measured by tons climbed 8.7 percent, the biggest quarterly increase since the first quarter of 2006, bolstered by gains in all of its regional markets.
Revenue in northern Europe increased 21 percent, buoyed by “improved macroeconomic conditions and favorable weather,” Cemex said in a statement. Rising U.S. sales pushed operating earnings before interest, taxes, depreciation and amortization in the nation to $28 million, a 48 percent gain from the same period a year earlier.
“There’s a lot to look at and to like in this report,” said Todd Vencil, a Sterne, Agee & Leach Inc. analyst in a telephone interview. He has a buy rating on the stock.
Cemex shares rose 2.1 percent to 16.73 pesos at the close in Mexico City. They have gained 13 percent this year, compared with a 4.7 percent decline in the Mexican IPC index.
“Given the strong underlying drivers in Cemex’s key regions, we believe the stock’s reaction will be positive,” Credit Suisse analyst Vanessa Quiroga, who has a buy recommendation on the shares, said in a note to clients today. “All regions were in line or higher than our forecast except the U.S. due to maintenance works.”
Cemex’s net loss, its 18th in a row, widened to $293 million in the first quarter from $281 million a year earlier. Operating earnings before interest, taxes, depreciation and amortization increased 2.7 percent to $535 million, missing the $564.4 million average of seven analyst estimates compiled by Bloomberg.
Adjusting for higher maintenance costs, an inventory drawdown and the higher number of business days in the quarter, operating Ebitda would have expanded 15 percent, Cemex said.
“I think that’s legitimate, I’ll take that analysis,” Sterne Agee’s Vencil said.
Cemex’s woes in Mexico, where sales fell 5.5 percent in the first quarter, are showing signs of moderating, Vencil said. Cement volume in Mexico advanced 1 percent in after being little changed in the fourth quarter and falling 8 percent last year.
A stronger turnaround in Mexico, Cemex’s biggest market by Ebitda, may not materialize until later this year, according to Fernando Bolanos, an analyst with Monex Casa de Bolsa who has a hold recommendation on the shares.
“This was a modest report,” he said in a telephone interview. “There was still a sales decline in Mexico, which goes hand in hand with the downturn in the construction industry. We think it’ll be the same story in the second quarter and probably won’t change until the second half of the year.”