Debt service coverage and capital structure improve in the first quarter
April 25, 1997
CEMEX, S.A. de C.V. (OTC: CMXBY) today reported that first quarter net sales increased 3% in real terms to Ps. 6.232 billion, compared with the same period a year ago.
The increase in net sales is primarily attributable to the consolidation of Cementos Diamante and Samper. In dollar terms, net sales increased 10% to US$787 million. For the quarter, revenues from Mexico represented 39% of the total, Spain 22%, Colombia 12%, the United States 12%, Venezuela 10%, Panama and the Caribbean 5%.
Gross margin was lower at 38.5% vs. 39.4% in the first quarter of 1996 as higher energy costs caused the Group´s average cash cost of production to increase 17% in dollar terms, outpacing growth in the Group´s average price increases in dollar terms.
Operating margin in the quarter decreased to 23.0% from 25.2% in 1996 (but was higher than the 21.8% of the fourth quarter of 1996), primarily as a result of higher energy costs and an increase in selling and administrative expense as a percent of sales in some of the subsidiaries. This resulted in quarterly operating income of Ps. 1.435 billion (US$181 million), a 6% decrease in real terms and flat in dollar terms compared to the same period in 1996.
In Mexico, domestic cement sales volume increased 4% in the first quarter compared with the same period of 1996, while ready-mix sales volume increased 15%.
Net income decreased to Ps. 1.341 billion (US$169 million) during the first quarter of 1997 as a result of a drop in non-cash gains arising from lower inflation year over year. Net income for the first quarter of 1996 was Ps. 2.701 billion (US$319 million) mostly from the effect of monetary gains due to high inflation. Net income per ADR (ratio 2:1) was Ps. 2.16 (US$0.27) based on an average of 1,245,676,903 shares outstanding during the quarter.
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.
Leverage (total debt / total capitalization) ended the quarter at 51.9% down from 53.0% at December 31, 1997.
Rodrigo Treviño, CEMEX´s CFO said, "our first quarter results demostrate the stability obtained as a result of our geographic diversification as well as a result of our strong marketing and distribution strategies."
"We are increasingly less dependant on any one given market and the outlook for growth in our current markets gives us the confidence that we will continue improving the debt service coverage and strengthening the capital structure of the Company."
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.