CEMEX reports strong volume growth in key markets and improved debt service coverage in second quarter
July 25, 1997
CEMEX S.A. de C.V. (OTC:CMXBY) today reported that second quarter net sales increased 12% in real terms to Ps. 7.513 billion (or 22% in dollar terms to US$945 million) compared with the same period of 1996.
The increase in net sales came primarily from strong volume growth in Mexico, Venezuela and Spain. In Mexico, cement sales volume increased 34% while ready-mix sales volume increased 44% compared to the second quarter of 1996. In Spain, cement and ready-mix sales volume rose 21% and 26% respectively over the same quarter a year earlier. In Venezuela, the quarter-to-quarter sales volume increases in cement and ready-mix were 19% and 46% respectively. For the quarter, revenues from Mexico were 42% of the total, Spain 21%, Venezuela 11%, Colombia 10%, the United States 11% and Panama and the Caribbean 5%.
Net income was Ps. 1.228 billion (US $154 million) in the second quarter of 1997. Net income per ADR (ratio 2:1) was Ps. 1.98 (US $0.25) based on an average of 1,241,338,137 shares outstanding during the quarter.
Operating income increased 9% in real terms (19% in dollar terms) to Ps. 1.796 billion (US$226 million). Operating margin in the quarter decrease to 23.9% from 24.6% in 1996, as an improvement in SG&A expense as a percentage of sales only partially offset a decline in gross margin due to weaker prices in Mexico and Spain.
Cash flow (EBITD) and cash earnings (EBITD less net financial expenses) grew in the second quarter of 1997. Cash flow increased 8% in real terms (18% in dollar terms) to Ps. 2.409 billion (US$303 million). With financial expenses decreasing 22% in real terms (16% in dollar terms) to Ps. 992 millions (US$125 million), cash earnings rose 38% in real terms, compared with the same period of 1996 (58% in dollar terms) to Ps. 1.547 billion (US$195 million).
These results led to continued improvement in debt service coverage in the second quarter. Coverage rose to 2.43 times in the quarter, and was 1.83 times for the trailing twelve months. The debt-to-total capitalization ratio at the end of the quarter was 51.7% versus 51.9% at the end of the first quarter of 1997.
Cash flow (EBITD) decreased 6% to Ps. 1.957 billion but was flat in dollar terms at US$247 million for the quarter.
Cash earnings for the quarter were US$ 130 million or 16% better than first quarter 1996, as financial expenses for the quarter were US$126 million, down from US$148 million last year. Cash earnings also grew by 8% in real terms.
These results, combined with the reduced financial expenses, led to an improvement in the interest coverage which was 1.97 times for the quarter and 1.68 times for the last twelve months.
Rodrigo Treviño, CEMEX´s CFO, said, "Our second quarter results, continuing with the positive trend began during the first quarter, demonstrate our ability to achieve high growth and stability. Along with strong marketing and distribution, our geographic diversification in countries with growing demand and predictable cash flow margins results in solid consolidated performance. With increasing cash flow from operations and reduced financial expenses, we are confident in our ability to continue improving CEMEX´s debt service coverage and strengthening our capital structure."
Founded in 1906, CEMEX is the largest cement producer in the Americas and one of the three largest cement producers in the world, with close to 50 million metric tons of annual production capacity. CEMEX has market-leading operations in Mexico, Spain, Venezuela, Panama and the Dominican Republic and a significant presence in Colombia, the Caribbean and the southwest United States.