Cemex Names CFO Gonzalez to Succeed Late CEO ZambranoBrendan Case
Cemex SAB stayed close to home and took just three days to name its first new chief executive officer since 1985. Investors signaled their approval.
The shares rose for the first time in three trading sessions today after Cemex promoted Chief Financial Officer Fernando Gonzalez to CEO and named Rogelio Zambrano as chairman. Longtime leader Lorenzo Zambrano died May 12.
The swift transition fulfilled predictions of analysts and investors, who said the deceased Zambrano built a professional management team at the largest cement maker in the Americas even as he kept three relatives on the board. Gonzalez, 59, takes over a 108-year-old company poised to turn its first quarterly profit since 2009, according to the average of five analyst estimates compiled by Bloomberg, as a global building recovery boosts demand.
“The quick resolution of the succession issue underscores our view that the experienced management team will ensure a smooth transition,” Adrian Huerta, an analyst with JPMorgan Chase & Co. who has an overweight recommendation on the cement maker’s American depositary receipts, said in a report today.
Investors are likely to view Gonzalez’s appointment favorably “given his deep familiarity with the company, his role in guiding Cemex through the global financial crisis and since the appointment of a non-family member represents an important development in Cemex’s corporate governance,” Huerta said.
Cemex advanced 1 percent to 16.26 pesos at the close in Mexico City as the benchmark IPC index of 35 Mexican stocks climbed 0.8 percent. The shares have gained 10 percent so far this year as the IPC has dropped 1.9 percent.
Rogelio Zambrano has been a director since 1987 and is a cousin of Lorenzo Zambrano, who was 70 when he died. Gonzalez will start his new job immediately, the Monterrey, Mexico-based company said yesterday in a statement.
The former CFO is a good choice to lead Cemex as its turnaround accelerates after 18 straight quarterly losses, said Carlos Peyrelongue, an analyst at Bank of America Corp. Debt from the cement maker’s 2007 acquisition of Rinker Group Ltd. pushed it to the brink of default as the U.S. housing collapse torpedoed Cemex’s revenue in its biggest country by sales.
‘It’s an operational and deleveraging story now,’’ Peyrelongue, who recommends buying Cemex’s American depositary receipts, said in a telephone interview. “Fernando has 25 years’ experience, he’s a guy who focuses on the business, who focuses on turning around the assets, improving them, making them more efficient.”
Gonzalez said before being named CEO that major shifts were unlikely. A 25-year veteran of Cemex, he has led the cement maker’s operations in Asia, Africa, South America, the Caribbean and the Middle East, according to the company’s website.
“Cemex’s strategy should be maintained,” Gonzalez told reporters May 14 following a funeral Mass for Zambrano. “The strategy is to participate in the global market of the building materials industry.”
Ian Armstrong, a nephew of Lorenzo Zambrano, will also join the board effective immediately, Cemex said. Armstrong’s appointment is subject to ratification at next year’s annual meeting. He is vice president of promotion and analysis at Evercore Casa de Bolsa.
In 2007, Lorenzo Zambrano capped a two-decade, $29 billion buying spree with the Rinker Group acquisition, boosting Cemex’s exposure to the U.S. just as the housing industry was imploding. A grandson of the company’s founder, the late CEO never married and had no children.