Cemex focuses spotlight on Colombia

Earlier this week Cemex announced that its Cemex España subsidiary, Cemex Latam Holdings, presented an application to the Superintendencia Financiera de Colombia to list its shares on the Colombian stock exchange and to offer a minority of Cemex Latam’s shares in a public offering to investors in Colombia and in a concurrent private placement, to eligible investors outside of Colombia. The offer includes all of Cemex's assets in Central and South America but excludes Mexico. The move comes as the Monterrey-based cement producer is continuing efforts to reduce debt and extend its debt maturities.

With a cement production capacity of 4.8Mta installed in six plants, Cemex is Colombia’s second-largest producer after Argos Inversiones, which owns 13.3Mta of capacity, and ahead of Holcim Colombia, which operates a 2.1Mta works at Nobsa.

Cemex is reported to have a significant market share in the cement and ready-mix concrete market in Colombia’s "Urban Triangle", comprising the capital Bogotá and the key cities of Medellín and Cali. These three cities account for around 40 per cent of national consumption. Cemex’s Ibague plant, at 2.6Mta Cemex Colombia’s flagship works, is strategically located in the area.?

In 1H2012, the Mexican cement maker raised its Colombian sales volumes by nine per cent YoY as the key residential sector continued to drive construction activity on the back of stable interest rates, controlled inflation and low unemployment. The industrial/commercial sector also continued its upward trend as the construction of offices, warehouses, shopping centres and hotels progressed. However, as recently-appointed local governments reviewed their development plans, the infrastructure sector slowed. In 2011, Cemex increased its Colombian sales by five per cent, supported by an active residential sector and healthy levels of construction in the industrial/commercial and infrastructure segments.

Meanwhile, market leader Cementos Argos noted a six per cent increase in local cement sales from 2.37Mt in 1H2011 to 2.51Mt in 1H2012. Revenues rose by 28 per cent to COP1124bn (US$619m) while the company’s EBITDA advanced by 39 per cent to COP363bn.

In the 12 months to June, deliveries reached 10.538Mt, a YoY increase of 11.5 per cent while output rose 8.3 per cent. Consumption growth was particularly strong in Cundinamarca (35.9 per cent), Casanara (32 per cent) and Cesar (31.4 per cent). Cement companies have found a ready market in infrastructure projects such as the Ruta del Sol and the Ecopetrol refinery in Cartagena. In 2011, national cement consumption reached 10.1Mt, an increase of nearly 14 per cent when compared to the previous year.