About Us - Press Release - CEMEX provides guidance for the second quarter of 2007
June 18, 2007
CEMEX, S.A.B. de C.V. (NYSE: CX) announced today that it expects EBITDA for the quarter ending June 30, 2007 to be about US$1,120 million, a decrease of about 2% versus the same period last year, while operating income is expected to be close to US$810 million, 6% lower than the same period a year ago. CEMEX expects sales in excess of US$4.9 billion, an increase of around 6% versus the same period a year ago. For the first six months of the year, CEMEX expects EBITDA of about US$2,010 million, while revenue is expected at close to US$9.4 billion, a growth of 2% and 9% respectively.
Rodrigo Treviño, CEMEX's Chief Financial Officer, said: "The results for the quarter reflect the ongoing correction in the residential sector in the United States, which is partially mitigated by a strong operating performance in most of our other markets. We continue with our cautious optimism for 2007 and, on balance, we are encouraged by the favorable supply-demand dynamics present in most of our markets. We expect to deliver EBITDA of about US$4.3 billion in 2007 and free cash flow after maintenance capital expenditures of about US$2.7 billion. We are very pleased with having a more than 50% interest in Rinker tendered in response to our offer during the quarter, and look forward to the integration of Rinker's operations. Rinker will enhance our position as one of the world's largest building materials companies, reduce our cash-flow volatility, and lower our cost of capital. We reaffirm our confidence and optimism in the future of CEMEX and continue to execute our strategy of creating value for our shareholders."
Cement and ready-mix volumes for CEMEX's operations in Mexico are expected to increase about 3% and 10%, respectively, during the second quarter versus the same period last year. For the first six months of the year volumes are expected to increase about 4% and 11%, respectively, versus the same period of last year. Cement volumes continue to be driven by infrastructure demand and a strong formal residential sector. Given this performance in volumes for the first half of the year, we continue to expect domestic cement volume in Mexico to grow in excess of 4% for the full year 2007.
During the second quarter, CEMEX expects domestic cement and ready-mix sales volumes in the United States to decrease about 11% and 22%, respectively, versus the same period last year. For the first six months of 2007, cement volumes are expected to decrease about 14% while ready-mix volumes are expected to decrease about 23% versus the same period in 2006. The main drivers of demand in the United States continue to be the industrial-and-commercial and public sectors. The correction in the residential sector continues, and we now expect a weaker demand from this segment during the year. Accordingly, we now expect cement sales volumes for 2007 to decrease close to 4% versus the comparable period in 2006.
In our operations in Spain, cement volumes for the second quarter are expected to decrease about 5% versus the same quarter last year. Ready-mix volumes are expected to decrease about 7% during the second quarter versus the comparable period of 2006. For the first six months of 2007, cement volumes are expected to decrease about 2% while ready-mix volumes are expected to decrease about 4% versus the same period in 2006. Adverse weather conditions in many regions of the country affected cement consumption during the quarter. Infrastructure spending continues to be an important driver of cement consumption in the country; however, the termination of major projects earlier this year, in anticipation of local and municipal elections held in May, affected cement consumption during the quarter. Given the performance in cement volumes for the first half of the year, we now expect cement volume growth in Spain to be about 1% for the full year 2007, roughly in line with market conditions.
Cement volumes for CEMEX's operations in the United Kingdom are expected to increase about 20% during the second quarter versus the comparable period of last year. Ready-mix volumes are expected to decrease about 4% during the second quarter versus the same period of 2006. For the first six months of the year, cement volumes are expected to increase about 12% and ready-mix volumes are expected to decrease about 4% versus the same period in 2006. The industrial, commercial, and public housing sectors continue to drive cement volumes in the United Kingdom. As we have been operating at full capacity levels in our Rugby plant, comparisons are favorable to second quarter 2006, when we were implementing some enhancements that translated to lower production levels. We now expect cement volumes for the year to increase around 7%.
Guidance numbers are calculated on the basis of market close exchange rates as of June 15, 2007. Given the volatility of foreign exchange rates and the increased exposure of our operations to factors beyond our control, our actual results could be materially different from our indicative guidance.
CEMEX is a growing global building solutions company that provides high quality products and reliable service to customers and communities in more than 50 countries throughout the world. CEMEX has a rich history of improving the well-being of those it serves through its efforts to pursue innovative industry solutions and efficiency advancements and to promote a sustainable future. For more information, visit www.cemex.com.
This press release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of CEMEX to be materially different from those expressed or implied in this release, including, among others, changes in general economic, political, governmental and business conditions globally and in the countries in which CEMEX does business, changes in interest rates, changes in inflation rates, changes in exchange rates, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, weather conditions, changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. CEMEX assumes no obligation to update or correct the information contained in this press release.
EBITDA is defined as operating income plus depreciation and amortization. Free Cash Flow is defined as EBITDA minus net interest expense, maintenance and expansion capital expenditures, change in working capital, taxes paid, and other cash items (net other expenses less proceeds from the disposal of obsolete and/or substantially depleted operating fixed assets that are no longer in operation). Net debt is defined as total debt minus the fair value of cross-currency swaps associated with debt minus cash and cash equivalents. The net debt to EBITDA ratio is calculated by dividing net debt at the end of the quarter by EBITDA for the last twelve months. All of the above items are derived from generally accepted accounting principles in Mexico. EBITDA and Free Cash Flow (as defined above) are presented herein because CEMEX believes that they are widely accepted as financial indicators of CEMEX's ability to internally fund capital expenditures and service or incur debt. EBITDA and Free Cash Flow should not be considered as indicators of CEMEX's financial performance, as alternatives to cash flow, as measures of liquidity or as being comparable to other similarly titled measures of other companies.