Strong cash flow, higher cash earnings and solid interest coverage in fourth quarter of 1997
February 12, 1998
CEMEX S.A. de C.V. (OTC:CMXBY) announced today consolidated net sales increased 8% in real terms to Ps. 7.953 billion during the fourth quarter of 1997 versus 1996. Approximately 5 percentage points of this increase is attributable to the consolidation of Colombian subsidiary Samper beginning in 1997. In dollar terms, net sales increased 13% in both the fourth quarter and the full year to US$985 million and US$3,788 million, respectively.
Operating income increased 19% in real terms to Ps. 1.904 billion for the quarter and increased 24% in dollar terms to US$236 million. For 1997 operating income was Ps. 7.224 billion representing a 7% increase over 1996.
CEMEX´s operating margin was 23.9% during the fourth quarter versus 21.8% for the prior year period. The operating margin for the year declined slightly to 23.6% as compared to 23.8% in 1996.
Cash flow (EBITD) increased 15% in real terms during the fourth quarter to Ps. 2.475 billion. In dollar terms, cash flow grew 19% to US$307 million versus US$257 during the same period last year. Cash flow from January through December 1997 grew 6% to Ps. 9.631 billion or 19% in dollar terms to US$1.193 billion.
Mexico represented 51% of the cash flow for the fourth quarter, Spain 17%, Venezuela 14%, Colombia 10%, the United States 4%, and Central America and the Caribbean 4%.
Cash earnings (EBITD less net financial expenses) in the fourth quarter grew 111% in real terms versus the prior year, to Ps. 1.553 billion (Ps. 1.27 per share), or 119% in dollar terms to US$192 million (US$0.16 per share). For the year, cash earnings increased 47% to 5.815 billion (Ps. 4.70 per share), or 52% in dollar terms to US$721 million (US$0.58 per share).
Net income during the fourth quarter of 1997 was Ps. 1.470 billion (including monetary position gains of Ps. 1.017 billion), or US$182 million. For the full year 1997, net income was Ps. 6.140 billion (including monetary gains of Ps. 4.657 billion), or US$761 million.
Net income per ADR (ratio 2:1) in the fourth quarter was Ps. 2.40 (US$0.30). For the full year 1997, net income per ADR (ratio 2:1) was Ps. 9.94 (US$1.24). Excluding shares held in trust for equity swaps, the average number of shares outstanding during the quarter and the full year 1997 declined to 1,222.8 million and 1,236.0 million, respectively, reflecting purchases under CEMEX´s previously announced share repurchase program.
Interest coverage in the fourth quarter was 2.42 times, and 2.34 times for the trailing twelve months. When measured using cash flow before lease payments and cost restatements for inflation, interest coverage was 2.49 times in the fourth quarter and 2.41 times for the trailing twelve months. Financial expenses decreased 30% to US$127 million in the fourth quarter of 1997.
Net debt (on- plus off-balance sheet debt minus cash) was US$4.738 billion, over US$250 million lower than the fourth quarter of 1996, marking the third consecutive quarter that CEMEX reduced its net debt.
The debt to total capitalization ratio at the end of the quarter was 49.6% versus 53.0% at the end of the fourth quarter 1996. In addition, financial leverage as measured by comparing total debt to operating cash flow for the previous twelve months was reduced from 4.39 times at the end of fourth quarter of 1996 to 3.87 in the same period of 1997, representing a reduction of 12% during 1997.
Rodrigo Treviño, Chief Financial Officer, stated "The results achieved during 1997 demonstrate the success of our geographic diversification strategy. We have exceeded our financial targets and delivered on our commitment to strengthen the capital structure of the Company. The growth in cash earnings, resulting from a strong performance in our core businesses combined with lower financial expenses, allowed us to continue with our business strategy while leaving excess cash to pay down debt and buy back stock."
Founded in 1906, CEMEX is the largest cement producer in the Americas and one of the three most important producers of cement in the world, with a production capacity of approximately 51 million metric tons per year. CEMEX is the market leader in its operations in Mexico, Spain, Venezuela, Panama, and the Dominican Republic; and has a significant presence in the markets of Colombia, the Caribbean, and the southwest region of the United States of America.