About Us - Press Release - CEMEX reports fourth-quarter and full-year 2006 results
January 29, 2007
- Fourth-Quarter 2006 Net Sales Increased 13%; EBITDA Rose 4%
CEMEX, S.A.B. de C.V. (NYSE: CX), announced today that consolidated net sales increased 13% in the fourth quarter of 2006 to US$4.5 billion and were up 19% for the full year reaching US$18.2 billion versus the comparable periods in 2005. EBITDA grew 4% in the fourth quarter of 2006 to US$934 million and 16% to US$4.1 billion for the full year.
CEMEX's Consolidated Fourth-Quarter and Full-Year Financial and Operational Highlights
- Sales increased in the majority of CEMEX's markets due to higher cement, ready-mix, and aggregates volumes and better supply-demand dynamics. The main drivers of demand in most markets continued to be public infrastructure and housing.
- Free cash flow after maintenance capital expenditures for the quarter was US$570 million, up 53% from US$373 million in the same quarter of 2005. For the full-year 2006, free cash flow after maintenance capital expenditures was up 22% to US$2.7 billion versus US$2.2 billion in 2005.
- Operating income in the fourth quarter increased 21%, to US$611 million, from the comparable period in 2005 and increased 18% to US$2.9 billion for the full-year 2006 versus US$2.5 billion in 2005.
- EBITDA (operating income plus depreciation and amortization) increased to US$934 million, 4% more than the US$901 million achieved in the fourth quarter of 2005. For the full year 2006, EBITDA grew 16% to US$4.1 billion versus US$3.6 billion in 2005.
Hector Medina, Executive Vice President of Planning and Finance, said: "2006 was an outstanding year for CEMEX. We celebrated our 100-year anniversary and achieved record financial results driven by our international presence and global diversification strategy. Despite the current slowdown in the U.S. residential sector, we experienced strong double-digit sales growth during the quarter both overall and in the majority of our key markets. As we look ahead to 2007, and with the integration of RMC fully completed, we are well positioned to grow and continue to capitalize on the macroeconomic trends driving the industry."
Consolidated Corporate Results
In the fourth quarter of 2006, majority net income increased 55% to US$377 million from US$244 million in the fourth quarter of 2005. For the full-year 2006, majority net income increased 13%, reaching US$2.4 billion. The increase in majority net income for the quarter is due primarily to lower depreciation and amortization expense and higher foreign-exchange and financial-instrument gains.
Net debt at the end of the fourth quarter was US$5.8 billion, representing reductions of US$1.33 billion during the quarter and US$2.85 billion for the full year 2006. The net-debt-to-EBITDA ratio decreased to 1.4 times from 1.8 times at the end of third quarter 2006. Interest coverage reached 8.4 times during the quarter, up from 6.8 times a year ago.
Major Markets Fourth-Quarter Highlights
CEMEX's operations in Mexico reported net sales of US$911 million in the fourth quarter of 2006, up 11% from the same period in 2005. EBITDA increased 9% to US$347 million, from US$319 million in 2005. Cement, ready-mix, and aggregates volumes increased 6%, 19%, and 75%, respectively, during the quarter.
Net sales in our operations in the United States decreased 11% in the fourth quarter of 2006 to US$923 million from US$1.0 billion in the comparable period of 2005. EBITDA decreased 7% to US$250 million versus the same period in the previous year. On a like-to-like basis for the ongoing operations during the fourth quarter of 2006, cement and ready-mix volumes decreased 11% and 25%, respectively, while aggregates volumes decreased 21% during the fourth quarter compared with the same period in 2005.
In Spain, net sales for the quarter were US$449 million, up 21% from the fourth quarter of 2005, while EBITDA increased 8% to US$116 million. Domestic cement volume increased 9% during the fourth quarter of 2006 versus the same quarter in 2005. Ready-mix volumes, adjusted for the integration of the Readymix Asland assets after the termination of the joint venture with Lafarge in December 2005, increased 7% during the quarter versus the same period of the previous year.
Our operations in the United Kingdom experienced a 12% increase in net sales, to $467 million, when compared with the same quarter of 2005. EBITDA increased 2% to US$28 million in the fourth quarter from US$27 million in the fourth quarter of 2005.
Other European Markets
During the fourth quarter of 2006, net sales in the Rest of Europe region increased 34% to US$1.0 billion versus the comparable period in the previous year. EBITDA decreased 5% to US$84 million versus US$88 million in the fourth quarter of 2005.
South/Central America and the Caribbean
CEMEX's operations in South/Central America and the Caribbean reported net sales of US$440 million during the fourth quarter of 2006, representing an increase of 35% from the same period of 2005. EBITDA increased 51% for the quarter to US$140 million versus US$93 million in 2005.
Africa and the Middle East
Fourth-quarter net sales in Africa and the Middle East were US$176 million, up 21% from the same quarter of 2005. EBITDA decreased 10% to US$34 million for the quarter versus the comparable period in 2005.
Operations in Asia reported a 6% increase in net sales, to US$83 million, versus the fourth quarter of 2005, and EBITDA was US$17 million, up 22% from the same period in the previous year.
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, 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 presented under 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.