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 Business News | December 2007 
Mexico's Cemex Sees Strong Sales, Eye on U.S. Market
 Gabriela Lopez & Cyntia Barrera Diaz
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Mexico City - Mexico's Cemex, the world's No. 3 cement maker, said on Sunday it sees fourth-quarter revenue up 30 percent but warned that weakness in the U.S. residential market remains a concern.
Cemex (CMXCPO.MX) (CX.N) expects revenue of about $5.8 billion for the October-December period and earnings before interest, taxes, depreciation and amortization, or EBITDA, of close to $1.1 billion, about 18 percent higher from the year-ago period.
Full-year revenue will be above $21.6 billion, up 18 percent from 2006, while EBITDA will be around $4.6 billion, up 11 percent from last year's results, Cemex said.
"Our EBITDA guidance for 2007 reflects the continued weakness in the U.S. residential sector and the upfront costs associated with the post-merger-integration process and our global expense-reduction initiatives," Cemex Chief Financial Officer Rodrigo Trevino said in a statement.
A dramatic drop in demand for new homes and a crisis in the subprime lending market have slowed residential construction in the United States, holding back Cemex's cement sales.
Cemex acquired Australia's Rinker in July to boost presence in its main market, the United States.
Cemex sees 2008 revenue of about $24.5 billion and EBITDA of around $5.6 billion.
"Close to half of the expected EBITDA growth for 2008 is expected to come from the contribution from synergies achieved in relation to the Rinker acquisition as well as our expense-reduction initiatives," Trevino added.
"The remainder will be organic growth, which we expect to be achieved in spite of zero growth in the United States and Spain."
Cemex announced last week that it was working on a plan to cut jobs, and said layoffs could come in below 10 percent.
Cemex has operations in more than 50 countries and some 68,900 employees.
The company shares, which closed at 28.48 pesos on Friday, are down more than 20 percent this year, compared with the broader market's gain of 13 percent. Cemex's New York-traded stock ended the week at $26.35. (Editing by Steve Orlofsky)
Cemex Expects 4Q Profit, Sales to Rise
Associated Press
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Mexico City - Cemex, among the largest building materials companies in the world, said Sunday it expects its fourth-quarter profit to rise 18 percent from the same period a year ago, and it projects growth of about 13 percent in 2008 despite flat sales in the U.S. market.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, should rise to $1.1 billion, and net profit also is expected to rise 18 percent to $650 million, the Monterrey-based company said in a guidance report.
Cemex said it expects sales to total about $5.8 billion for the quarter, an increase of about 30 percent compared with the same period a year ago.
Much of that sales increase was due to Cemex's June takeover of Australia's Rinker Group Ltd. for $15.3 billion this summer, a move that raised the company's net debt.
Full-year results for 2007 should show total sales growing by 18 percent to $21.6 billion and operating income rising 5 percent to close to $3.1 billion.
Sales in 2008 are expected to rise to about $24.5 billion and EBITDA to about $5.6 billion, representing a 13 percent increase from 2007 proforma results.
Cemex Chief Financial Officer Rodrigo Trevino said the earnings guidance for 2007 "reflects the continued weakness in the U.S. residential sector and the upfront costs associated with the post-merger-integration process." The company said it expects "zero growth" from its U.S. operations.
But he stressed that "favorable supply-demand dynamics in most of our markets will more than offset the effects from the ongoing correction in the residential sector in the United States."
Trevino said the company "will continue to apply most of our free cash flow to reduce debt."
Earlier this month, Cemex announced a plan to cut overall costs by 10 percent, including by reducing its work force.
Cemex did not say how many of the company's 70,000 employees will be cut worldwide, but a spokesman said "much less" than 10 percent of the work force would be eliminated. |
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