Business Strategy

Leveraging our global presence and extensive operations worldwide, we plan to continue focusing on our core business of cement, ready-mix concrete, and aggregates. Our geographically diverse portfolio of assets positions us for the expected recovery of key construction markets, providing us with the opportunity for significant organic growth over the medium and long term. By managing our cement, ready-mix concrete, and aggregates assets as one vertically integrated business rather than as distinct businesses, we not only capture a greater portion of the cement value chain, but also get closer to our end consumers.

We want CEMEX to be the supplier of choice for our customers— whether global construction companies or individuals building their family’s first home. We look to provide them with the most efficient and effective building solutions for their construction project, large or small. To this end, we tailor our products and services to suit our customers’ specific needs in all major construction segments, including the residential, commercial, industrial, and infrastructure sectors.

We also see abundant opportunities to deepen our customer relationships by focusing on more vertically integrated building solutions rather than separate products. By developing our integrated offerings, we can provide customers with more reliable, higher-quality service and more consistent product quality.

We continue to focus on strengthening our capital structure and regaining our financial flexibility by reducing our debt, improving our cash flow generation, and extending our maturities through different strategic initiatives. As a result of our efforts, we have reduced total debt plus perpetual securities by ap¬proximately US$5.6 billion since June 2009.

In 2012, we refinanced close to US$6.7 billion of debt under the Financing Agreement, dated as of August 14, 2009, as amended, into a new Facilities Agreement with a final maturity in 2017 and US$500 million of new senior secured notes due 2018. The new Facilities Agreement provides us with more flexible operating and financial covenants. In addition, we issued US$940 million in new senior secured notes maturing in 2019 in exchange for approximately US$452 million in perpetual debentures and US$619 million in 2014 Eurobonds. We also issued US$1.5 billion of new senior secured notes due 2022.

We have continued our asset sale process in order to reduce our debt and streamline our operations. During 2012, we completed the initial share offering of a 26.65% minority position in CEMEX Latam Holdings, S.A., resulting in net proceeds of approximately US$960 million. In addition, we raised US$227 million in asset sales during 2012.

Moreover, we have continued to optimize our maintenance and strategic capital expenditures to maximize our free cash flow generation. In 2012, we limited our maintenance and strategic capital expenditures to approximately US$609 million.

We have now reduced the amount of debt maturing through March 2015 to approximately US$750 million and addressed all of our required amortizations under the new Facilities Agreement until February 2017. We have also increased the average life of our debt to 5.0 years, from 3.8 years at the beginning of 2012, with no significant change in yearly interest expense. We have further maintained more than adequate liquidity to support our operations and continued to comply with our financial obligations.

We constantly look for ways to reduce our costs and maximize our operating efficiency. In a rapidly changing, challenging global business environment, we continually adapt our global operations network to meet current market dynamics. We are reshaping our portfolio to ensure that we are in the right businesses in the right markets with the right returns. We are also seizing every opportunity to drive down costs at both the operating and corporate levels. As a result of our transformation process, in 2012, we achieved an incremental recurring improvement in our steady-state EBITDA of US$200 million on top of the US$150 million we achieved last year, reaching a run rate of US$400 million by the end of the year.

Our senior management enjoys a strong track record of operating diverse businesses throughout our industry’s value chain in emerging and developed markets globally. With this in mind, we will continue to focus on recruiting, retaining, and developing motivated and knowledgeable professional managers.

We encourage our managers to regularly review our processes and practices and to identify innovative management and business approaches to improve our operations. By rotating our managers from one country to another and from one area of our operations to another, we increase their diversity of experience and knowledge of our business.

At CEMEX, sustainability is incorporated in our strategy and our day-to-day operations. Our goal is to provide building solutions that meet the needs of a resource-constrained world, to minimize the ecological footprint of our operations, and to foster closer relationships with all of our relevant stakeholders.

Among our priorities, we look to take the lead in sustainable construction through the development of products, services, and building solutions for a low-carbon economy. We also actively participate in low-income housing programs and high-scale infrastructure projects. Moreover, as part of our efforts to reduce our ecological footprint, we increase our use of alternative fuels and raw materials, improve our energy efficiency, and contract renewable power where feasible. Additionally, we optimize air quality, waste management, and recycling; diminish disturbances from noise and dust; and implement biodiversity action plans at our quarries.

Furthermore, we engage our key stakeholders. In particular, we place a high priority on the health and safety of our employees, our contractors, and our communities. We are committed to help developing our local communities, and we collaborate with governments, NGOs, and opinion leaders to anticipate and address emerging social demands.