Cemex’s lower trading profit offset by lower tax rate/interest charge

Cemex' turnover improved by 2.4 per cent in 2017 to US$13,672.2m. EBITDA declined by 9.1 per cent to US$1725.2m and the trading profit fell by 15.8 per cent to US$1523.1m. The net interest charge, however, declined by 10.9 per cent to US$1022.3m, but still giving a pretax profit 22.9 per cent lower at US$723.4m. The tax charge was some 83 per cent lower and deconsolidated activities had also been profitable, giving a net attributable profit 7.5 per cent ahead at US$806.2m.

Net debt, including perpetual notes, declined by 14.9 per cent during the year to US$10,650m, with 68 per cent of the debt being at fixed rates and 62 per cent in US dollars and 30 per cent in euros. Shareholders' funds were ahead for the first time for many years and improved by 12.8 per cent to US$9136.9m, giving a gearing level of 116.6 per cent compared with 154.5 per cent a year earlier. Capital expenditure in 2018 is estimated by the company to be around US$800m, of which US$550m would be for maintenance 

Group cement shipments improved by 0.3 per cent to 68.52Mt while aggregates deliveries were ahead by 0.4 per cent to 147.35Mt.Ready-mixed concrete deliveries were ahead by 0.7 per cent to 51.74Mm³. The number of employees at the year end was very marginally lower at 40,307.

The Mexican turnover recovered by 8.1 per cent to US$3095.4m and EBITDA improved by 10 per cent to US$1145.3m, with the Mexican EBITDA margin advancing from 36.4 per cent to 37 per cent. Mexico generated 36.5 per cent of group EBITDA, compared with 35.2 per cent but has been above 46 per cent in recent years. Domestic cement deliveries decline by around four per cent as Cemex was endeavouring to improve the price further. The commercial and industrial as well as other private developments and housebuilding industries were all advances. Aggregates volumes declined by some three per cent while prices were around 11 per cent ahead. Ready-mixed concrete deliveries also eased by three per cent, but prices improved by about 10 per cent. All prices in local currency.

US turnover declined by 2.2 per cent to US$3484.4m. EBITDA eased by 0.6 per cent to US$604.3m, but the trading profit did advance by 4.7 per cent to US$276.5m. The recovery in US cement demand weakened during the year and grey cement volumes were some three per cent lower, but in the case of Cemex the volume reduction was more like six per cent. Cemex did, however, see a price improvement of about three per cent. Volumes were negatively affected by adverse weather conditions in Texas and Florida. Longer term the hurricanes should have a positive impact, as it should encourage people to build with concrete rather that with wood. Deliveries of aggregates declined by three per cent but prices advanced by five per cent, while in ready-mixed concrete, volumes eased by two per cent while prices were ahead by just one per cent.

In South America, Central America and Caribbean, turnover improved by 9.0 per cent to US$1882.8m but EBITDA was  down by 13.1 per cent to US$470.9m. Cement volumes did improve by 13 per cent, but prices came off by three per cent, both in US$ and in local currency. Aggregates volumes improved by just one per cent while prices were three per cent lower in local currency. In ready-mixed concrete volumes declined by four per cent while prices were stable. Colombia is the most important country and here the cement volume declined by six per cent and the local price fell by 19 per cent. In aggregates volumes fell by 17 per cent, but prices did improve by four per cent. In ready-mixed concrete local prices slightly weaker volumes dropped by 13 per cent. In Panama Cemex saw cement deliveries improve by three per cent at stable prices with aggregates volumes ahead by 13 per cent, albeit at four per cent lower prices, while ready-mixed concrete volumes improved by nine per cent. Costa Rica improved volumes but saw weaker pricing.

In Europe turnover improved by 4.8 per cent to US$3515.7m, but EBITDA declined by 7.7 per cent to US$362.7m. At the trading level there was 16.8 per cent reduction to US$165.5m. Overall cement volumes were around eight per cent higher while the average price was little changed overall. Aggregates volumes improved by three per cent and the average price was little changed.  In ready-mixed concrete, volumes improved by four per cent while prices about one per cent ahead on average. In Great Britain cement deliveries were six per cent lower and the average price was one per cent higher on a weaker currency while in aggregates volumes declined by four per cent and prices improved by two per cent and in ready-mixed concrete volumes eased by two per cent and prices were marginally weaker. In Germany cement deliveries increased by 15 per cent and the average price improved by three per cent. German aggregates volumes eased by one per cent while prices improved by two per cent. In ready-mixed concrete volumes were down by three per cent while the average price improved by two per cent. In Poland cement volumes showed a five per cent recovery and prices improved by three per cent lower. Polish aggregates volumes rose by 12 per cent and prices by just two per cent, while in ready-mixed concrete volumes were five per cent higher.  In France, where Cemex does not sell cement, aggregates deliveries improved by 10 per cent, but prices were little changed. In ready-mixed concrete volumes improved by seven per cent and prices by one per cent.

The Middle East, African and Asian turnover declined by 8.9 per cent to US$1361.4m and EBITDA dropped by 40.6 per cent to US$222.8m. Cement volumes declined by two per cent and prices were three per cent lower in local currency terms but fell by 25 per cent when measured in US dollar. In aggregates volumes improved by four per cent while prices were one per cent higher. The ready-mixed concrete volume improved by seven per cent, but the average price was little changed. The Philippines is the biggest market and Cemex cement volumes there were little changed over the year and prices weakened by some 10 per cent. In Egypt there was a six per cent reduction in volume and prices, in US dollar terms fell by 42 per cent with weaker volumes and prices also affecting aggregates and ready-mixed concrete operations in that country.