Alexa

Mexico's Cemex lowers 2009 outlook

Mexico's Cemex lowers 2009 outlook

Mexican cement giant Cemex reduced its 2009 operating cash flow outlook Wednesday but said it will have enough money to cover its debt through mid-2011.
Cemex SAB de CV estimates earnings before interest, taxes, depreciation and amortization to be $2.9 billion this year, down from its earlier forecast of $3.1 billion, executive vice president Hector Medina said during a conference call with analysts.
Net income plunged almost 40 percent in the third quarter on a 27 percent drop in sales. The Monterrey, Mexico-based company reported Tuesday that profits fell to $121 million in July-September, compared to $200 million in the same period of 2008. Sales declined to $4.2 billion from $5.8 billion.
In response to the report, Cemex CPO stock fell 7.25 percent to 13.82 pesos a share Wednesday morning when markets opened, but was creeping back up by afternoon.
Medina said the company's losses are directly tied to the global recession, which has slowed new construction _ and, by extension, demand for cement _ in the 50 countries where Cemex operates. He said a series of government recovery programs have failed to boost construction sales so far, but there are signs that the recession has hit bottom in some regions.
"We have not yet seen the positive impact of stimulus packages around the world," Medina said, but "leading indicators are showing signs of stabilization" including a flattening in sales.
During the third quarter, Cemex took its own steps to weather the rough economy, including selling its Australia operations to Switzerland's Holcim for $1.7 billion, which went toward reducing debt.
The company also issued additional stock and completed a major refinancing, extending the maturities of about $15 billion of debt until 2014 with about 75 banks and private investors.
While the company's losses were global, sales in the U.S., where Cemex is the leading cement maker, have been particularly hard hit as demand for building materials declined. Cemex's operations for cement, ready-mix and aggregates decreased 31 percent, 34 percent and 33 percent respectively in the third quarter, versus the same period last year. Medina said he expects U.S. cement volumes to fall 30 percent for the year.
Earlier this year, Cemex projected that after paying all expenses including investments in 2009, it would have $1.6 billion free cash flow. But on Wednesday, after a disappointing third quarter, Cemex revised that to $1.2 billion.
A 104-year-old company, Cemex employs more than 50,000 workers worldwide.


Updated : 2020-12-06 02:53 GMT+08:00