This Content Is Only For Paid Member
Mexican cement manufacturer, Cemex, released its third-quarter financial report, indicating a significant 75% decline in profit compared to the previous year, primarily attributed to a nearly five-fold increase in taxes and the adverse impact of substantial asset sales made last year.
According to the company’s filing, Cemex’s net profit for the quarter plummeted to $126 million, down from $494 million reported in the same period last year. The significant portion of this profit reduction was directly linked to the sale of assets in Costa Rica, El Salvador, and a partial stake sale in the tech firm Neoris, all carried out in the previous year.
Cemex specified that if these asset sales were excluded from the calculations, the third-quarter profit would have decreased by 26%.
The company also attributed the rise in taxes to higher revenue and the foreign exchange effect on its U.S. dollar-denominated debt. Cemex highlighted that the Mexican peso had appreciated by approximately 14% against the U.S. dollar between September 2022 and September 2023. As Cemex holds 75% of its debt in dollars, this currency fluctuation had a notable impact.
Moreover, Cemex announced an 8% decrease in its overall debt during the third quarter. The company anticipates finalizing the refinancing of a $1 billion loan and a $2 billion revolving credit facility on October 30.
In terms of operations, Cemex observed double-digit growth in volumes in Mexico due to increased demand from the formal sector. However, in the United States, the volumes of cement and ready-mix products contracted, primarily due to weakness in the state of California.
Revenues for the cement manufacturer witnessed a 16% rise in the third quarter, reaching $4.57 billion, driven by price increases compared to the previous year. While prices remained relatively stable in local currency terms compared to the second quarter, Cemex reported that operating earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter surged by 40% to $910 million. This increase was attributed to higher prices and a reduction in input cost inflation.
Cemex noted that, for the first time since implementing price hikes in 2021, the EBITDA margin for the quarter exceeded their goal of recovering 2021 margins.
