Mexican cement maker Cemex’s Q1 profit climbs despite dip in volumes

By Thomson Reuters Apr 25, 2024 | 6:23 AM

By Kylie Madry and Natalia Siniawski

MEXICO CITY (Reuters) – Mexican cement-maker Cemex reported a 13% increase in first-quarter net profit on Thursday, bolstered by lower taxes and less exposure to financial derivatives, although its operating earnings declined.

The firm, one of the world’s largest cement producers, posted a net profit of $254.4 million, beating analysts’ estimate of $218.2 million as per LSEG data.

Revenue inched up 3% year-over-year to $4.14 billion, just shy of analysts’ estimate of $4.19 billion, despite volumes falling in all of its product segments.

On a like-to-like basis, revenue was stable from the year-ago quarter, Cemex said.

Cemex Asia is divesting its Philippine operations, including full equity in Cemex Asian South East Corporation and subsidiaries APO Cement and Solid Cement, to DACON, DMCI Holdings, and Seminara Mining & Power for $660 million, minus debt, and a 10.14% stake in CHP.

The transaction also includes a 40% indirect equity interest in APO Land & Quarry and Island Quarry and Aggregates, with a purchase price payable to Cemex equating to 40% of a total enterprise value of $140 million.

The firm said year-over-year it spent 63% less on financial instruments such as derivatives and 66% less in taxes in the quarter, though it was dinged by higher financial expenses and an around 8% appreciation in the Mexican peso from last year.

Sales in Cemex’s top market Mexico rose 20% from last year, with all of its product segments registering growth, causing the firm to slightly increase its full-year outlook for cement and ready-mix volumes in the country.

The company now expects low-to-mid single digit percentage volume growth in the country, compared to low single-digits earlier.

In the U.S., just behind Mexico in terms of sales, revenue and volumes dipped slightly, largely due to poor weather.

Meanwhile, in Cemex’s European and Middle Eastern unit, demand conditions were “a mixed bag” with volumes hit by fewer working days, bad weather and a strong performance in the year-ago quarter.

Core earnings, or earnings before interest, taxes, depreciation and amortization (EBITDA) in the Middle East slid 35% “due to ongoing tensions” in the region, Cemex said.

The firm operates in Israel, Egypt and the United Arab Emirates.

Overall, the company’s EBITDA rose 5% YOY to $772.4 million, falling short of the estimated $780 million according to LSEG data, due to the EMEA unit’s drag on strong growth in Mexico and the rest of Latin America. Cemex also announced its 2024 capital expenditure guidance would remain unchanged at approximately $1.6 billion, with $1 billion allocated for maintenance and $0.6 billion for strategic total.

(Reporting by Kylie Madry and Natalia Siniawski; Editing by Varun H K and David Evans)