===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
_______________________
Date of Report: July 22, 2005
CEMEX, S.A. de C.V.
-------------------
(Exact name of Registrant as specified in its charter)
CEMEX Corp.
-----------
(Translation of Registrant's name into English)
United Mexican States
---------------------
(Jurisdiction of incorporation or organization)
Av. Ricardo Margain Zozaya #325, Colonia Valle del Campestre
Garza Garcia, Nuevo Leon, Mexico 66265
--------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
N/A
- ---
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Contents
1. Press release, dated July 21, 2005, announcing CEMEX's results for
the first quarter of 2005 (attached hereto as exhibit 1).
2. CEMEX's 2005 first quarter earnings report (attached hereto as
exhibit 2).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
CEMEX, S.A. de C.V. has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CEMEX, S.A. de C.V.
-------------------------------
(Registrant)
Date: July 21, 2005 By: /s/ Rafael Garza
----------------------- ---------------------------
Name: Rafael Garza
Title: Chief Comptroller
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
1. Press release, dated July 21, 2005, announcing
CEMEX's results for the first quarter of 2005.
2. CEMEX's 2005 first quarter earnings report.
Exhibit 1
Media Relations Investor Relations Analyst Relations
Jorge Perez Abraham Rodriguez Ricardo Sales
(52 81) 8888-4334 (52 81) 8888-4262 (212) 317-6008
[CEMEX GRAPHIC OMITTED]
CEMEX'S SECOND QUARTER 2005 SALES
INCREASE 125%; EBITDA GROWS 56%
MONTERREY, MEXICO, July 21, 2005 - CEMEX, S.A. de C.V. (NYSE: CX) announced
today that consolidated net revenues in the second quarter of 2005 grew 125% to
$4.4 billion compared to the same quarter of 2004. This increase is primarily a
result of the effect of the incorporation of RMC into CEMEX's consolidated
results, reflected for the first time in CEMEX's quarterly earnings results.
CEMEX Second Quarter Financial and Operational Highlights
- ---------------------------------------------------------
o Sales improved in the majority of CEMEX's markets due to higher cement
and ready-mix volumes in the Company's core markets and a stronger
Mexican peso.
o CEMEX's consolidated cement volume increased 30% to 22 million metric
tons while consolidated ready-mix volume grew 243% to 21 million cubic
meters. The Company's consolidated aggregates volume increased to 50
million metric tons, 329% higher over the second quarter of 2004.
o Operating income for the period rose 60% over the same period of 2004 to
US$751 million.
o Free cash flow grew 56% versus the same quarter a year ago, reaching
US$693 million.
o EBITDA (operating income plus depreciation and amortization) was US$989
million, up 56% over the second quarter of 2004. This increase is due to
effect of EBITDA contribution from RMC and higher domestic cement and
ready-mix volumes, which offset higher energy and transportation costs.
o EBITDA margin decreased to 22.6% from 32.6% in second quarter 2004.
Margins were positively affected by strong demand in CEMEX's core
markets, but were offset significantly by the consolidation of RMC and
higher energy costs.
Hector Medina, Executive Vice President of Planning and Finance, said: "We are
very pleased with our results for the quarter, which reflect strong
contributions from RMC and good underlying growth in our core markets. We
continue to experience strong demand in all our markets, particularly
residential, which continues to be the strongest driver of cement and ready-mix
consumption in our markets."
Consolidated Corporate Results, Including the Effect of RMC from March 1, 2005
- ------------------------------------------------------------------------------
Cost of goods sold and selling, general, and administrative expenses (SG&A)
increased 140% and 158%, respectively, versus the second quarter of last year
due mainly to the effect of RMC. CEMEX is in the preliminary stages of
incorporating its standardized financial and operational practices into the
newly acquired operations, designed to reduce costs and expenses and improve
efficiencies. In most of the Company's markets, energy and transportation costs
have risen due to the widespread increase of these costs.
Majority net income for the second quarter of 2005 rose 197%, to US$733
million. This increase is due to strong consolidated operating performance and
gains resulting from CEMEX's derivative positions.
Net debt at the end of the second quarter 2005 was US$9.62 billion, a reduction
of US$811 million during the quarter. The net-debt-to-EBITDA ratio improved to
2.9 times from 3.2 times at the end of first quarter 2005. Interest coverage
decreased from 6.8 times and the end of first quarter 2005 to 6.5 times and the
end of the second quarter, but increased from 6.2 times a year ago.
During the quarter, all of the Company's free cash flow was used to pay down
debt and pay cash dividends. CEMEX's net debt - in US dollar terms - was
further reduced by favorable exchange rate movements during the quarter,
despite other investments and expenses related to the acquisition of RMC,
partially funded with divestitures such as our minority stake in Cementos Bio
Bio.
The following summarizes results in CEMEX's major markets:
CEMEX's Mexican operations reported net sales of US$793 million, 15% higher
than in the second quarter 2004, and EBITDA of US$329 million, an increase of
4% over the prior year period. Cement volumes grew 5% during the quarter, while
ready mix volumes increased 17%. On a quarter-over-quarter basis, adjusting for
the difference in business days during second quarter 2004, cement volumes
remained flat. Cement demand was sustained mainly by government infrastructure
spending and, to a lesser extent, by low- and middle-income housing, both of
which partially offset a weak self-construction sector. Cement demand from this
sector is expected to remain flat or to slightly decline for the year,
primarily due to continued volatility in the price of building materials;
although the trend is downwards.
In The United States, net sales for the quarter were US$1.2 billion, 131%
higher, while EBITDA reached US$284 million, an increase of 161%. US operations
reported a 9% increase of cement volume. On a quarter-over-quarter basis for
the ongoing operations, cement volumes increased 12% for the quarter over 2004.
Ready-mix volumes rose 227% during the quarter. On a quarter-over-quarter basis
for the ongoing operations, ready-mix volumes increased 6%. Cement demand
remains strong as all segments have increased their cement consumption during
the year; construction activity continues to rely heavily on robust growth from
the residential sector, supported by a favorable interest-rate environment
while the infrastructure - particularly streets and highways - and industrial
sectors remain strong and growing.
CEMEX's operations in Spain reported net sales of US$431 million in the second
quarter of 2005, up 34%. EBITDA reached US$122 million, representing an
increase of 22%. Domestic cement volume increased 13% while ready-mix volume
grew 83% in the quarter. The residential sector continues to be one of the main
drivers of demand, with housing starts up 7% for the first 4 months of the
year. Public-works spending is also growing, but at a slower rate during this
quarter as the government updates its infrastructure plan for the coming years.
The sector's primary growth catalyst continues to be Spain's infrastructure
modernization.
Net sales and EBITDA of the Company's operations in the United Kingdom was
US$504 and US$58 million, respectively. Cement volumes were up 5% during the
second quarter versus the comparable period in 2004. Ready-mix volumes
increased 3% during the quarter. Cement demand during the quarter was mainly
driven by infrastructure projects and residential construction. Second quarter
volumes also benefited from delayed construction during the first quarter of
the year due to adverse weather. Commercial building has benefited from low
inflation and lower unemployment rate.
Rest of Europe
During the second quarter of 2005, net sales of the Rest of Europe were US$886
million and EBITDA was US$138 million.
In France, ready-mix volumes increased 11% in second quarter 2005 and
aggregates volumes were up 6% in the second quarter. These increases are due
mainly to a strong housing sector supported by low interest rates, tax
incentives to promote housing construction and the launch of a new social
housing program.
The German economy remains weak with high unemployment, slow disposable income
growth and political uncertainty, which in turn has dampened construction
activity. Cement sales volumes for the quarter declined 12% versus the same
period of 2004
South/Central America and Caribbean
Net sales of South/Central America and Caribbean grew 18% during the second
quarter of 2005 versus same period a year ago to US$339 million, while EBITDA
decreased 30% to US$88 million. Domestic cement volumes in the region increased
19% in the quarter, while ready-mix volumes were 20% higher.
The Venezuelan economy continues to recover, with higher oil revenues driving
public spending and increased activity from the private sector. Unemployment
continues to decline, while bank financing for the first five months of the
year increased 84% versus last year's level. While all sectors of the economy
show increased spending, the self-construction sector has been the main driver
of cement demand during the quarter. Cement volumes in Venezuela increased 34%
versus second quarter 2004.
In Colombia, cement volumes continue to grow due mainly to demand from the
self-construction sector, as unemployment has declined and wages have
increased. The housing and public works sectors have increased their cement and
ready- mix consumption versus last year's levels. The increase in cement
volumes has offset the decrease in prices, resulting in flat net sales for the
first six months of the year versus the same period last year. Cement volumes
grew 50%.
Africa and Middle East
Second quarter net sales of Africa and Middle East were US$143 million, up 204%
as compared to the same quarter of 2004. EBITDA increased 45% to US$33 million.
Construction activity in the Middle East is currently running at a high level,
with increased housing requirements and oil revenues driving public and private
investments.
Asia
Asia region reported 57% increase in net sales to US$76 million, while EBITDA
decrease to US$14 million, down 6%.
CEMEX is a growing global building solutions company that provides products of
consistently high quality and reliable service to customers and communities in
more than 50 countries throughout the world. The company improves the
well-being of those it serves through its relentless focus on continuous
improvement and efforts to promote a sustainable future. For more information,
visit www.CEMEX.com.
Exhibit 2
[CEMEX GRAPHIC OMITTED]
Stock Listing Information
NYSE (ADR)
Ticker: CX
MEXICAN STOCK EXCHANGE
Ticker: CEMEX.CPO
Ratio of CEMEX.CPO to CX = 10:1
Investor Relations
In the United States
1 877 7CX NYSE
In Mexico
52 (81) 8888 4292
E-Mail
ir@cemex.com
www.cemex.com
- -------------------------------------------------------------------------------
2005
SECOND QUARTER RESULTS
- -------------------------------------------------------------------------------
Second quarter (1) Second quarter (1)
---------------------- ---------------------
2005 2004 % Var. 2005 2004
- --------------------------------------------------------------------------------
Net sales 4,376 1,948 125% % of Net Sales
- --------------------------------------------------------------------------------
Gross profit 1,790 871 105% 40.9% 44.7%
- --------------------------------------------------------------------------------
Operating income 751 469 60% 17.2% 24.1%
- --------------------------------------------------------------------------------
Majority net income 733 247 197% 16.8% 12.7%
- --------------------------------------------------------------------------------
EBITDA 989 635 56% 22.6% 32.6%
- --------------------------------------------------------------------------------
Free cash flow 693 444 56% 15.8% 22.8%
- --------------------------------------------------------------------------------
- ------------------------------------- -----------------
Net debt 9,624 4,969 94%
- ------------------------------------- -----------------
Net debt/EBITDA 2.9 2.2
- ------------------------------------- -----------------
Interest coverage 6.5 6.2
- ------------------------------------- -----------------
Quarterly earnings per ADR 2.16 0.75 188%
- ------------------------------------- -----------------
Average ADRs outstanding 339.6 329.2 3%
- -------------------------------------------------------------------------------
In millions of US dollars, except ratios and per-ADR amounts.
Average ADRs outstanding are presented in millions of ADRs.
Consolidated net sales grew to US$4,376 million, representing an increase of
125% over those of second quarter 2004, mainly as a result of the RMC
acquisition. Sales increased in most of our markets due to higher cement and
ready mix volumes, better pricing environment and a stronger Mexican peso
during the quarter. The residential sector continues to be one of the main
drivers of cement and ready-mix consumption in most of our markets.
Cost of goods sold and Selling, general, and administrative expenses (SG&A)
increased 140% and 158%, respectively, versus the second quarter of last year
due mainly to the acquisition of RMC. We are in the preliminary stages of
implementing CEMEX's standardized practices aimed at reducing costs and
expenses in the newly acquired operations. We have experienced increases in
energy and transportation costs throughout our markets due mainly to the
worldwide increase in oil prices.
EBITDA reached US$989 million, representing an increase of 56% over that of
second quarter 2004, mainly due to the acquisition of RMC. EBITDA margin
decreased from 32.6% in second quarter 2004 to 22.6% in second quarter 2005.
The margin was positively affected by higher average volumes and better pricing
conditions - compensating for higher energy costs - but was more than offset by
the effect of the consolidation of RMC.
Gain (loss) on financial instruments for the quarter was a gain of US$89
million, resulting mainly from our cross-currency swaps as the Mexican peso
appreciated during the quarter.
Majority net income for the quarter rose 197%, to US$733 million from US$247
million in second quarter 2004. This increase is due to strong consolidated
operating performance and gains on our financial instruments.
Net debt at the end of the second quarter was US$9,624 million, a reduction of
US$811 million during the quarter. The net-debt-to-EBITDA ratio improved to 2.9
times from 3.2 times at the end of first quarter 2005. Interest coverage
decreased from 6.8 times and the end of first quarter 2005 to 6.5 times and the
end of the second quarter, but increased from 6.2 times a year ago.
(1) Results for second quarter 2004 do not include the effect of the RMC
acquisition.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 1
US dollar translation methodology, and other important disclosures.
CEMEX
EBIDTA and Free Cash Flow (1)
===============================================================================
Second quarter January - June
------------------------ -----------------------------
2005 2004 % Var. 2005 2004 % Var.
- -------------------------------------------------------------------------------------------------------------
Operating income 751 469 60% 1,189 861 38%
- -------------------------------------------------------------------------------------------------------------
+ Depreciation and operating amortization 238 166 430 328
- -------------------------------------------------------------------------------------------------------------
EBITDA 989 635 56% 1,619 1,189 36%
- -------------------------------------------------------------------------------------------------------------
- - Net financial expense 144 79 242 164
- -------------------------------------------------------------------------------------------------------------
- - Capital expenditures 172 70 264 139
- -------------------------------------------------------------------------------------------------------------
- - Change in working capital (86) 2 42 99
- -------------------------------------------------------------------------------------------------------------
- - Taxes paid 63 27 80 40
- -------------------------------------------------------------------------------------------------------------
- - Other cash items (net) 3 13 5 15
- -------------------------------------------------------------------------------------------------------------
Free cash flow 693 444 56% 986 732 35%
- -------------------------------------------------------------------------------------------------------------
In millions of US dollars.
Results for second quarter and first six months of 2004 do not include the
effect of the RMC acquisition.
During the quarter, all of our free cash flow was used to pay down debt and pay
cash dividends in the amount of US$35 million. Our net debt - in US dollar
terms - was further reduced by favorable exchange rate movements during the
quarter, despite other investments and expenses related to the acquisition of
RMC, partially funded with divestitures such as our minority stake in Cementos
Bio Bio.
Debt-Related Information
===============================================================================
Second quarter First quarter Second quarter
------------------------- ----------------- --------------------
2005 2004 % Var. 2005 2005 2004
- ---------------------------------------------------------------------------------- ----------------------------------------
Total debt (2) 11,036 5,296 108% 11,858 Currency denomination
- ---------------------------------------------------------------------------------- ----------------------------------------
Short-term 15% 13% 25% US dollar 71% 68%
- ---------------------------------------------------------------------------------- ----------------------------------------
Long-term 85% 87% 75% Euro 18% 16%
- ---------------------------------------------------------------------------------- ----------------------------------------
Cash and cash equivalents 1,265 327 287% 1,297 British pound 5% 0%
- ---------------------------------------------------------------------------------- ----------------------------------------
Fair value of cross-currency swaps(2) 147 N/A 126 Yen 6% 15%
- ---------------------------------------------------------------------------------- ----------------------------------------
Net debt (2) 9,624 4,969 94% 10,435 Other 0% 1%
- ---------------------------------------------------------------------------------- ----------------------------------------
- ----------------------------------------------------------------------------------
Interest expense 153 85 80% 105 Interest rate
- ---------------------------------------------------------------------------------- ----------------------------------------
Interest coverage 6.5 6.2 6.8 Fixed 58% 70%
- ---------------------------------------------------------------------------------- ----------------------------------------
Net debt/EBITDA 2.9 2.2 3.2 Variable 42% 30%
- ---------------------------------------------------------------------------------- ----------------------------------------
In millions of US dollars, except ratios.
Other developments
During the second quarter, CEMEX and some of its subsidiaries closed or amended
various credit facilities totaling US$4,900 million with an average life of 3.8
years and an average initial rate of LIBOR plus 40 basis points. A total of 48
financial institutions participated in at least one of the credit facilities.
In addition, CEMEX Espana, through a wholly-owned subsidiary, issued a new five
and ten-year US$325 million private placement during June 2005.
The proceeds of these transactions were used to complete the refinancing
process of the debt issued to acquire RMC, finance a cash tender offer of
around US$315 million in RMC privately placed notes, and prepay other debt. The
average spread over LIBOR of the refinanced debt was reduced to about half the
original spread. This refinancing will help us reduce our financing cost and
lengthen our average maturity.
______________________________________
(1) EBITDA and free cash flow (calculated as set forth above) are presented
herein because CEMEX believes that they are widely accepted as financial
indicators of its ability to internally fund capital expenditures and to
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. EBITDA is reconciled above to
operating income, which CEMEX considers to be the most comparable measure
as determined under generally accepted accounting principles in Mexico
(Mexican GAAP). Free cash flow is reconciled to EBITDA. CEMEX is not
required to prepare a statement of cash flows under Mexican accounting
principles and, as such does not have such Mexican-GAAP cash-flow measures
to present as comparable to EBITDA or free cash flow.
(2) During 2004, the Mexican Institute of Public Accountants issued Bulletin
C-10, "Derivative Financial Instruments and Hedging Activities", which is
effective beginning January 1, 2005. Bulletin C-10 details and supplements
issues related to the accounting of derivative financial instruments.
Among other aspects, Bulletin C-10 precludes the presentation of two
financial instruments as If they were a single instrument (synthetic
presentation). For this reason, beginning this year, CEMEX recognizes the
assets and liabilities resulting from the fair value of cross-currency
swaps ("CCS") separately from the financial debt and such debt, is
presented in the currencies originally negotiated. Starting in 2001, CEMEX
has effectively changed the original profile of interest rates and
currencies of financial debt associated to CCS, and accordingly, until
December 31, 2004, financial debt subject to these instruments was
presented in the currencies negotiated in the CCS, through the recognition
within debt, of a portion of the assets or liabilities resulting from the
fair value of such CCS. This reclassification has no impact on
stockholders' equity or net income. For presentation purposes in the table
above, net debt includes the fair value of CCS associated with debt.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 2
US dollar translation methodology, and other important disclosures.
CEMEX
Equity-Related Information
===============================================================================
One CEMEX ADR represents ten CEMEX CPOs. The following amounts are expressed in
CPO terms and reflect the 2 for 1 stock split effective July 1, 2005
Beginning-of-quarter CPO-equivalent units outstanding 3,396,298,424
- -------------------------------------------------------------------------------
CPOs issued due to stock dividend 133,456,500
Exercise of stock options not hedged 190,559
Less increase (decrease) in the number of
CPOs held in subsidiaries 11,239,238
End-of-quarter CPO-equivalent units outstanding 3,518,706,245
- -------------------------------------------------------------------------------
Outstanding units equal total shares issued by CEMEX less shares held in
subsidiaries.
Employee long-term compensation plans
On June 17, 2005, the closing price on the CEMEX CPO exceeded US$8.50 per CPO,
triggering the automatic exercise of 131,996,243 stock options into 41,678,352
restricted CPOs. As of June 30, 2005, executives had outstanding options on a
total of 68,834,124 CPOs (1). Starting in 2005, CEMEX will begin offering
executives a stock-ownership program. The plan's goal is to move CEMEX's
long-term incentives from stock options to programs based on restricted stock.
As of June 30, 2005, executives in these programs (including the automatic
exercise described above) had 124,280,297 restricted CPOs, representing 3.53%
of our total CPOs outstanding. All CPO amounts reflect the 2 for 1 stock split
effective July 1, 2005.
Derivative Instruments
===============================================================================
CEMEX periodically utilizes derivative financial instruments such as
interest-rate and currency swaps, currency and equity forward contracts, and
options in order to execute its corporate financing strategy and to hedge its
stock-option plans. The following table shows the notional amount for each type
of derivative instrument and the aggregate fair market value for all of CEMEX's
derivative instruments as of the last day of each quarter presented.
Second quarter (2) First quarter
------------------ ----------------
Notional amounts 2005 2004 2005
- ------------------------------------------------------------------------------
Equity(1) 1,280 1,068 1,224
Foreign-exchange 3,643 2,722 3,709
Interest-rate 3,489 2,121 4,427
- ------------------------------------------------------------------------------
Estimated aggregate fair market value 149 (225) (112)
- ------------------------------------------------------------------------------
In millions of US dollars.
The estimated aggregate fair market value represents the approximate settlement
result as of the valuation date, based upon quoted market prices and estimated
settlement costs, which fluctuate over time. Fair market values and notional
amounts do not represent amounts of cash currently exchanged between the
parties; cash amounts will be determined upon termination of the contracts
considering the notional amounts and quoted market prices as well as other
derivative items as of the settlement date. Fair market values should not be
viewed in isolation but rather in relation to the fair market values of the
underlying hedge transactions and the overall reduction in CEMEX's exposure to
the risks being hedged.
Note: Mexican GAAP ("Bulletin C-2") requires companies to recognize all
derivative financial instruments in the balance sheet as assets or liabilities,
at their estimated fair market value, with changes in such fair market values
recorded on the income statement. The exceptions to the general rule until
December 31, 2004, as they pertained to CEMEX, occurred when transactions were
entered into for cash-flow hedging purposes. In such cases, changes in the fair
market value of the related derivative instruments were recognized temporarily
in equity and were reclassified into earnings as the inverse effects of the
underlying hedged items flowed through the income statement. Beginning in 2005,
new Bulletin C-10, "Derivative Financial Instruments and Hedging Activities",
establishes the framework for hedge accounting and overrides Bulletin C-2 in
this respect; however, in respect to cash-flow hedges, the new rules are the
same as those applied by CEMEX since 2001. CEMEX has recognized increases in
assets and liabilities, which resulted in a net asset of US$149 million,
arising from the fair market value recognition of its derivatives portfolio as
of June 30, 2005. The notional amounts of derivatives substantially match the
amounts of underlying assets, liabilities, or equity transactions on which the
derivatives are being entered into.
_________________________________________
(1) The aggregate weighted-average exercise price on June 30, 2005, for
CEMEX's outstanding stock options was US$30.44 per ADR. On that same date,
the aggregate weighted-average strike price of CEMEX's equity-forward
agreements put in place to hedge these stock options was US$35.10 per ADR.
The weighted-average strike price of all of CEMEX's equity-forward
agreements was US$41.24 per ADR on that same date.
(2) Notional amounts and fair market values at the end of second quarter 2004
do not include the effect of the RMC acquisition.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 3
US dollar translation methodology, and other important disclosures.
CEMEX
Other Activities
===============================================================================
CEMEX and Ready Mix USA complete joint venture transaction
On July 4, 2005, CEMEX Inc., the U.S. subsidiary of CEMEX and Ready Mix USA, a
private ready-mix concrete company with operations in the Southeastern United
States, announced the establishment of a joint venture to satisfy the growing
construction needs of the Southeast region of the country.
Under the arrangement, CEMEX Inc. will contribute two cement plants (Demopolis,
Alabama and Clinchfield, Georgia), eleven cement terminals, and its ready-mix
aggregates, and block assets in the Florida Panhandle and South Georgia to the
joint venture. Ready Mix USA will contribute all of its ready-mix and aggregate
operations in Alabama, Georgia, the Florida Panhandle and Tennessee, as well as
its block operations in Arkansas, Tennessee, Mississippi, Florida and Alabama.
The cement assets of the joint venture will be managed by CEMEX, and the
ready-mix, aggregate and block assets will be managed by Ready Mix USA.
After the third anniversary of the formation of the joint venture, for an
extended period of time, Ready Mix USA will have the option, but not the
obligation, to require CEMEX to purchase Ready Mix USA's interest in the joint
venture.
CEMEX stock split and ADS ratio modification
On April 28, 2005, CEMEX shareholders approved a stock split, which became
effective on July 1, 2005. In connection with the stock split, each of CEMEX's
series A shares was surrendered in exchange for two new series A shares, and
each of CEMEX's series B shares was surrendered in exchange for two new series
B shares. Each CPO, which represented two series A shares and one series B
share, was surrendered in exchange for two new CPOs. Each new CPO represents
two new series A shares and one new series B share. The new CPOs are identical
in all material respects to the previous CPOs.
The number of CEMEX's ADSs, each of which represented five CPOs, did not change
as a result of the stock split; instead the ratio of CPOs to ADSs was modified
so that each ADS now represents ten new CPOs following the stock split. The
proportional equity interest participation of existing shareholders did not
change as a result of the stock split.
On June 29, 2005, the new CPOs started trading on the Mexican Stock Exchange
and the ADSs trading on the New York Stock Exchange reflected the CPOs-to-ADS
ratio modification, with each ADS representing ten new CPOs.
92% of shareholders receive CPOs under CEMEX's stock dividend program
On June 3, 2005, CEMEX announced the completion of its stock dividend program.
A total of 66,728,250 CPOs were issued on June 3, 2005 and distributed to
92.08% of shareholders. The remaining 7.92% of shareholders elected to receive
a cash payment of MXP 2.60 per CPO (MXP 13.00 per ADS) in lieu of the stock
dividend, for a total of approximately MXP 381 million (US$35 million) paid by
CEMEX. In 2004, 4% of shareholders elected to receive a cash payment in lieu of
the stock dividend.
Under this stock dividend program, CEMEX shareholders received one new CPO for
each 25.557 CPOs held. CEMEX shareholders had the option to receive a cash
payment of MXP 2.60 per CPO in lieu of the stock dividend.
(CPO amounts and cash payment per CPO do not reflect the 2 for 1 CPO split
effective July 1, 2005)
CEMEX divests investment in Cementos Bio Bio, S.A.
On April 26, 2005, CEMEX announced the divestiture of its 11.92% interest in
Cementos Bio Bio, S.A., a cement company in Chile, for approximately US$65
million, or an implied enterprise value to EBITDA of nine times. The proceeds
from the sale were applied towards debt reduction and the extraordinary gains
from this transaction are reflected in net income. CEMEX acquired this holding
for US$34 million in June 1999.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 4
US dollar translation methodology, and other important disclosures.
CEMEX
Operating Results
===============================================================================
Mexico
Our Mexican operations' cement volumes increased 5% during the quarter versus
second quarter 2004, while ready mix volumes increased 17% over the same
period. On a like-to-like basis, adjusting for the fewer business days during
second quarter 2004 versus this year's quarter, cement volumes remained flat.
For the first half of the year, cement volumes decreased 2% versus the same
period in 2004, while ready-mix volumes increased 15% over the same period.
Cement prices were 6% higher in US dollar terms during the quarter versus the
same period a year ago and have increased 3% year to date versus first half
2004. Ready-mix prices, in US dollar terms, were 5% higher during the first
half of the year versus the same period in 2004.
Cement volume during the year has been driven mainly by infrastructure spending
and residential construction - especially low and middle-income housing -
supported by increasing commercial bank and alternative financing. Although
disposable income has increased, cement demand from the self-construction
sector remains stable, primarily because the formal sector has attracted
customers through government financed mortgages.
United States
CEMEX's US operations cement volumes increased 9% in second quarter 2005 versus
the same period a year ago. For the first six months of the year, cement
volumes increased 6%. On a like-to-like basis for the ongoing operations,
cement volumes increased 12% for the quarter and 7% for the first six months of
the year versus the comparable periods of last year. Ready-mix volumes
increased 227% during the quarter and 156% for the first half of the year due
to the consolidation of RMC operations. On a like-to-like basis for the ongoing
operations, ready-mix volumes for the quarter and first half of the year
increased 6% and 3%, respectively, versus the same periods of last year.
Aggregates volume, on a like-to-like basis for the ongoing operations,
increased 20% and 16% for the second quarter and first half of the year,
respectively, over last year's periods.
Cement demand remains strong as all demand segments have increased their cement
consumption during the year; construction activity continues to rely heavily on
robust growth from the residential sector, supported by a favorable
interest-rate environment, while the infrastructure - particularly streets and
highways - and industrial sectors remain strong and growing. Cement prices
continue to recover, showing an increase of 18% on average during the quarter
versus the same quarter of last year.
Spain
Domestic cement volume increased 13% over that of second quarter 2004 while
ready-mix volume increased 83%. For the first half of the year, cement and
ready-mix volumes increased 9% and 54%, respectively, versus the first half of
2004. The residential sector continues to be one of the main drivers of demand,
with housing starts up 7% for the first 5 months of the year. Public-works
spending is also growing, but at a slower rate during this quarter as the
government updates its infrastructure plan for the coming years; the sector's
primary catalyst continues to be Spain's infrastructure plan. Prices in US
dollars for domestic cement increased 9% and 10% for second quarter and first
half of the year, respectively, versus the comparable periods in 2004.
United Kingdom
Cement sales volumes in the UK were up 5% during the second quarter and
remained flat for the first half of the year versus the comparable periods in
2004. Ready-mix volumes increased 3% during the quarter and 1% in the first
half of the year. Cement demand during the quarter was mainly driven by
infrastructure projects and residential construction. Second quarter volumes
also benefited from delayed construction during the first quarter of the year
due to adverse weather. Commercial building has benefited from low inflation
and a lower unemployment rate. Cement and ready-mix prices increased 9% and 7%,
respectively, in dollar terms during the first half of the year versus the
first half of 2004.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 5
US dollar translation methodology, and other important disclosures.
CEMEX
Operating Results
===============================================================================
Rest of Europe
In France, ready-mix volumes increased 11% in second quarter 2005 and 4% during
the first half of the year versus the same periods of 2004. Aggregates volumes
increased 6% in second quarter and remained flat during the first half of the
year. Prices of ready-mix in US dollars increased 7% during the first half of
the year versus the same period in 2004. These increases are due mainly to a
strong housing sector supported by low interest rates, tax incentives to
promote housing construction and the launch of a new social housing program.
In Germany, the economy remains weak with high unemployment, slow disposable
income growth and political uncertainty, which in turn has dampened
construction activity. Cement sales volumes for the quarter and for the first
half of the year declined 12% and 18%, respectively, versus the comparable
periods of 2004. Ready-mix volumes in Germany have declined 17% during the
first half of the year versus the same period of 2004. Cement prices in Germany
have increased 31% for the first six months of the year versus the same period
in 2004.
South/Central America and Caribbean
Domestic cement volumes in the region increased 19% in the quarter and 14%
during the first half of the year, versus the same periods of last year. The
Venezuelan economy continues to recover, with higher oil revenues driving
public spending and increased activity from the private sector. Unemployment
continues to decline, while bank financing for the first five months of the
year increased 84% versus last year's level. While all sectors of the economy
show increased spending, the self-construction sector has been the main driver
of cement demand during the quarter. For the quarter, cement volumes in
Venezuela increased 34% versus second quarter 2004.
In Colombia, cement volumes grew 50% due mainly to high demand from the
self-construction sector, as unemployment has declined and wages have
increased. The housing and public works sectors have increased their cement and
ready- mix consumption versus last year's levels. The increase in cement
volumes has offset the decrease in prices, resulting in flat net sales for the
first six months of the year versus the same period last year.
Africa and Middle East
Construction activity in the Middle East is currently running at a high level,
with increased housing requirements and oil revenues driving public and private
investments. Our operations in Egypt have increased their cement volumes
throughout the year, supported by infrastructure spending and private
construction. Disposable income has increased in Egypt due to higher tourism
and oil revenues, as well as a sharp increase in foreign direct investment.
Overall, domestic cement volumes for the region during the quarter increased
17% versus the same period in 2004.
Asia
In aggregate, our cement volumes in the region increased 9% during the quarter
and 4% for the first six months of the year, versus the same periods of last
year. Cement demand in the Philippines increased during the quarter due to the
improved performance of the residential sector. In Thailand, the volume of
cement sold increased versus last year's level due also to strong demand from
the residential sector, and higher cement production derived from higher
efficiency.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 6
US dollar translation methodology, and other important disclosures.
Consolidated Income Statement & Balance Sheet
Includes the results of RMC begining March 1, 2005. Results for 2004 do not include RMC
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of U.S. Dollars, except per ADR amounts)
January - June Second quarter
INCOME STATEMENT 2005 2004 % Var. 2005 2004 % Var.
===================================================================================================================================
Net Sales 6,947,578 3,751,369 85% 4,375,937 1,947,775 125%
Cost of Sales (4,116,099) (2,106,380) 95% (2,585,820) (1,076,481) 140%
- -----------------------------------------------------------------------------------------------------------------------------------
Gross Profit 2,831,479 1,644,989 72% 1,790,117 871,294 105%
Selling, General and Administrative Expenses (1,642,130) (784,026) 109% (1,038,681) (401,999) 158%
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Income 1,189,349 860,963 38% 751,436 469,295 60%
Financial Expenses (257,969) (174,643) 48% (153,115) (85,002) 80%
Financial Income 15,995 10,411 54% 8,981 5,563 61%
Exchange Gain (Loss), Net (57,187) (80,505) (29%) (18,461) (92,647) (80%)
Monetary Position Gain (Loss) 193,887 203,575 (5%) 143,222 75,565 90%
Gain (Loss) on Financial Instruments 269,987 (11,188) N/A 88,703 23 N/A
Total Comprehensive Financing (Cost) Income 164,712 (52,350) N/A 69,329 (96,499) N/A
Other Expenses, Net (10,534) (166,179) (94%) 18,115 (90,847) N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Income Taxes 1,343,527 642,435 109% 838,880 281,950 198%
Income Tax (169,284) (76,102) 122% (105,699) (33,101) 219%
Employees' Statutory Profit Sharing (5,172) (4,528) 14% (2,475) (2,243) 10%
Total Income Tax & Profit Sharing (174,457) (80,630) 116% (108,174) (35,344) 206%
- -----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Participation
of Uncons. Subs. and Ext. Items 1,169,070 561,805 108% 730,706 246,606 196%
Participation in Unconsolidated Subsidiaries 26,875 11,593 132% 20,635 9,570 116%
Consolidated Net Income 1,195,945 573,397 109% 751,342 256,177 193%
Net Income Attributable to Min. Interest 21,689 16,103 35% 18,681 9,237 102%
MAJORITY INTEREST NET INCOME 1,174,257 557,294 111% 732,661 246,939 197%
===================================================================================================================================
EBITDA 1,619,228 1,189,406 36% 989,357 634,538 56%
Earnings per ADR 3.46 1.71 103% 2.16 0.75 188%
===================================================================================================================================
As of June 30
BALANCE SHEET 2005 2004 % Var.
===================================================================================================================================
Total Assets 26,267,538 16,022,792 64%
Cash and Temporary Investments 1,264,807 327,034 287%
Trade Accounts Receivables 1,870,546 443,994 321%
Other Receivables 609,973 482,640 26%
Inventories 1,116,917 635,253 76%
Other Current Assets 175,715 86,134 104%
Current Assets 5,037,957 1,975,055 155%
Fixed Assets 13,289,809 8,994,562 48%
Other Assets 7,939,772 5,053,175 57%
- -------------------------------------------------------------------------------------------
Total Liabilities 16,878,682 8,970,877 88%
Current Liabilities 4,882,472 2,438,443 100%
Long-Term Liabilities 9,342,974 4,615,546 102%
Other Liabilities 2,653,236 1,916,888 38%
- -------------------------------------------------------------------------------------------
Consolidated Stockholders' Equity 9,388,857 7,051,915 33%
Stockholders' Equity Attributable to
Minority Interest 531,141 424,308 25%
Stockholders' Equity Attributable to
Majority Interest 8,857,715 6,627,607 34%
===================================================================================================================================
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 7
and other important disclosures.
Consolidated Income Statement & Balance Sheet
Includes the results of RMC begining March 1, 2005. Results for 2004 do not include RMC
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of Mexican Pesos in real terms as of June 30, 2005
except per ADR amounts)
January - June Second quarter
INCOME STATEMENT 2005 2004 % Var. 2005 2004 % Var.
- ----------------------------------------------------------------------------------------------------------------------------------
Net Sales 74,686,466 42,827,371 74% 47,041,323 22,236,702 112%
Cost of Sales (44,248,063) (24,047,411) 84% (27,797,563) (12,289,602) 126%
- ----------------------------------------------------------------------------------------------------------------------------------
Gross Profit 30,438,403 18,779,960 62% 19,243,760 9,947,100 93%
Selling, General and Administrative Expenses (17,652,902) (8,950,807) 97% (11,165,824) (4,589,407) 143%
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income 12,785,501 9,829,152 30% 8,077,936 5,357,694 51%
Financial Expenses (2,773,171) (1,993,803) 39% (1,645,988) (970,427) 70%
Financial Income 171,943 118,862 45% 96,549 63,511 52%
Exchange Gain (Loss), Net (614,756) (919,078) (33%) (198,461) (1,057,704) (81%)
Monetary Position Gain (Loss) 2,084,283 2,324,102 (10%) 1,539,637 862,680 78%
Gain (Loss) on Financial Instruments 2,902,355 (127,731) N/A 953,552 266 N/A
Total Comprehensive Financing (Cost) Income 1,770,655 (597,648) N/A 745,291 (1,101,674) N/A
Other Expenses, Net (113,246) (1,897,173) (94%) 194,738 (1,037,149) N/A
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Income Taxes 14,442,910 7,334,331 97% 9,017,965 3,218,871 180%
Income Tax (1,819,806) (868,815) 109% (1,136,263) (377,898) 201%
Employees' Statutory Profit Sharing (55,602) (51,692) 8% (26,608) (25,603) 4%
Total Income Tax & Profit Sharing (1,875,408) (920,507) 104% (1,162,871) (403,502) 188%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Participation
of Uncons. Subs. and Ext. Items 12,567,502 6,413,824 96% 7,855,095 2,815,370 179%
Participation in Unconsolidated Subsidiaries 288,911 132,348 118% 221,828 109,260 103%
Consolidated Net Income 12,856,414 6,546,172 96% 8,076,923 2,924,630 176%
Net Income Attributable to Min. Interest 233,154 183,843 27% 200,817 105,459 90%
MAJORITY INTEREST NET INCOME 12,623,260 6,362,329 98% 7,876,106 2,819,171 179%
==================================================================================================================================
EBITDA 17,406,701 13,578,813 28% 10,635,586 7,244,185 47%
Earnings per ADR 37.17 19.60 90% 23.19 8.62 169%
==================================================================================================================================
As of June 30
BALANCE SHEET 2005 2004 % Var.
==================================================================================================================================
Total Assets 282,376,034 182,923,625 54%
Cash and Temporary Investments 13,596,675 3,733,568 264%
Trade Accounts Receivables 20,108,367 5,068,847 297%
Other Receivables 6,557,210 5,510,039 19%
Inventories 12,006,854 7,252,340 66%
Other Current Assets 1,888,933 983,350 92%
Current Assets 54,158,038 22,548,145 140%
Fixed Assets 142,865,451 102,686,093 39%
Other Assets 85,352,544 57,689,387 48%
- -------------------------------------------------------------------------------------------
Total Liabilities 181,445,834 102,415,691 77%
Current Liabilities 52,486,569 27,838,392 89%
Long-Term Liabilities 100,436,974 52,693,212 91%
Other Liabilities 28,522,292 21,884,087 30%
- -------------------------------------------------------------------------------------------
Consolidated Stockholders' Equity 100,930,209 80,507,935 25%
Stockholders' Equity Attributable to
Minority Interest 5,709,770 4,844,096 18%
Stockholders' Equity Attributable to
Majority Interest 95,220,439 75,663,839 26%
==================================================================================================================================
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 8
and other important disclosures.
Operating Summary per Country
Includes the results of RMC begining March 1, 2005. Results for 2004 do not include RMC
In thousands of U.S. dollars
January - June Second quarter
---------------------------- --------------------------
NET SALES 2005 2004 % Var. 2005 2004 % Var.
===============================================================================================================================
Mexico 1,502,314 1,365,055 10% 793,255 690,619 15%
U.S.A. 1,807,789 904,098 100% 1,156,616 500,132 131%
Spain 761,403 610,133 25% 431,419 320,924 34%
United Kingdom 675,019 N/A N/A 504,117 N/A N/A
Rest of Europe 1,100,267 N/A N/A 885,631 N/A N/A
South / Central America and Caribbean 633,902 566,686 12% 338,852 287,725 18%
Africa and Middle East 233,607 89,712 160% 143,111 47,107 204%
Asia 136,036 96,544 41% 75,835 48,192 57%
- -------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 97,243 119,141 (18%) 47,102 53,075 (11%)
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL 6,947,578 3,751,369 85% 4,375,937 1,947,775 125%
===============================================================================================================================
GROSS PROFIT
===============================================================================================================================
Mexico 827,586 787,848 5% 443,523 400,526 11%
U.S.A. 669,805 283,948 136% 446,633 160,166 179%
Spain 272,936 223,232 22% 148,520 118,454 25%
United Kingdom 239,361 N/A N/A 195,692 N/A N/A
Rest of Europe 286,932 N/A N/A 251,761 N/A N/A
South / Central America and Caribbean 216,662 260,124 (17%) 110,682 138,947 (20%)
Africa and Middle East 75,166 46,087 63% 39,097 25,669 52%
Asia 46,408 41,543 12% 23,984 21,968 9%
- -------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 196,623 2,207 8810% 130,226 5,566 2240%
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL 2,831,479 1,644,989 72% 1,790,117 871,294 105%
===============================================================================================================================
OPERATING INCOME
===============================================================================================================================
Mexico 542,413 547,758 (1%) 290,985 279,222 4%
U.S.A. 314,171 104,947 199% 228,076 69,534 228%
Spain 189,634 151,216 25% 101,825 80,441 27%
United Kingdom 42,606 N/A N/A 33,869 N/A N/A
Rest of Europe 95,927 N/A N/A 104,873 N/A N/A
South / Central America and Caribbean 116,292 182,824 (36%) 55,907 98,395 (43%)
Africa and Middle East 48,033 26,617 80% 21,648 14,901 45%
Asia 20,227 15,273 32% 8,686 8,217 6%
- -------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (179,954) (167,671) 7% (94,432) (81,415) 16%
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL 1,189,349 860,963 38% 751,436 469,295 60%
===============================================================================================================================
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 9
and other important disclosures.
Operating Summary per Country
Includes the results of RMC begining March 1, 2005. Results for 2004 do not include RMC
EBITDA in thousands of US dollars. EBITDA margin as a percentage of net sales
January - June Second quarter
------------------------------ -------------------------------
EBITDA 2005 2004 % Var. 2005 2004 % Var.
=================================================================================================================================
Mexico 620,542 621,947 (0%) 329,467 316,364 4%
U.S.A. 415,464 183,329 127% 284,435 108,997 161%
Spain 229,805 190,522 21% 121,969 100,153 22%
United Kingdom 74,491 N/A N/A 57,602 N/A N/A
Rest of Europe 139,509 N/A N/A 138,026 N/A N/A
South / Central America and Caribbean 180,427 237,845 (24%) 87,603 125,388 (30%)
Africa and Middle East 67,660 41,576 63% 32,521 22,400 45%
Asia 30,764 28,912 6% 14,064 14,950 (6%)
- ---------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (139,435) (114,725) 22% (76,331) (53,714) 42%
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL 1,619,228 1,189,406 36% 989,357 634,538 56%
=================================================================================================================================
EBITDA MARGIN
=================================================================================================================================
Mexico 41.3% 45.6% 41.5% 45.8%
U.S.A. 23.0% 20.3% 24.6% 21.8%
Spain 30.2% 31.2% 28.3% 31.2%
United Kingdom 11.0% N/A 11.4% N/A
Rest of Europe 12.7% N/A 15.6% N/A
South / Central America and Caribbean 28.5% 42.0% 25.9% 43.6%
Africa and Middle East 29.0% 46.3% 22.7% 47.6%
Asia 22.6% 29.9% 18.5% 31.0%
- ---------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED MARGIN 23.3% 31.7% 22.6% 32.6%
=================================================================================================================================
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 10
and other important disclosures.
Volume Summary
Includes the results of RMC begining March 1, 2005. Results for 2004 do not include RMC
Consolidated volume summary
Cement and aggregates: Thousands of metric tons
Ready-mix: Thousands of cubic meters
January - June Second quarter
------------------------- --------------------------
2005 2004 % Var. 2005 2004 % Var.
- ---------------------------------------------------------------------------------------------------------------------------------
Consolidated cement volume 38,249 32,462 18% 21,851 16,776 30%
Consolidated ready-mix volume 30,680 11,670 163% 20,761 6,055 243%
Consolidated aggregates volume 70,240 21,801 222% 49,755 11,590 329%
- ---------------------------------------------------------------------------------------------------------------------------------
Per-country volume summary (1)
January - June Second quarter Second quarter 2005 Vs.
------------------------
DOMESTIC CEMENT VOLUME 2005 Vs. 2004 2005 Vs. 2004 First quarter 2005
- ---------------------------------------------------------------------------------------------------------------------------------
Mexico (2%) 5% 11%
U.S.A. 6% 9% 33%
Spain 9% 13% 18%
United Kingdom N/A N/A 205%
Rest of Europe N/A N/A 491%
South / Central America and Caribbean 14% 19% 11%
Africa and Middle East 13% 17% 5%
Asia 4% 9% 5%
- ---------------------------------------------------------------------------------------------------------------------------------
READY-MIX VOLUME
- ---------------------------------------------------------------------------------------------------------------------------------
Mexico 15% 17% 16%
U.S.A. 156% 227% 103%
Spain 54% 83% 55%
United Kingdom N/A N/A 208%
Rest of Europe N/A N/A 308%
South / Central America and Caribbean 13% 20% 20%
Africa and Middle East N/A N/A N/A
Asia N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
AGGREGATES VOLUME
- ---------------------------------------------------------------------------------------------------------------------------------
Mexico 4% 14% 22%
U.S.A. 104% 148% 91%
Spain 69% 99% 80%
United Kingdom N/A N/A 203%
Rest of Europe N/A N/A 324%
South / Central America and Caribbean 22% 21% 10%
Africa and Middle East N/A N/A N/A
Asia N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
1) Includes only the month of March in first quarter 2005 for RMC operations.
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 11
and other important disclosures.
Price Summary
==================================================================================================================================
Includes the results of RMC begining March 1, 2005. Results for 2004 do not include RMC
Variation in US Dollars (1)
January - June Second quarter Second quarter 2005 Vs.
--------------------- -------------------------
DOMESTIC CEMENT PRICE 2005 Vs. 2004 2005 Vs. 2004 First quarter 2005
- ----------------------------------------------------------------------------------------------------------------------------------
Mexico 3% 6% 4%
U.S.A. 18% 18% 3%
Spain 10% 9% (3%)
United Kingdom N/A N/A 4%
Rest of Europe (2) N/A N/A (4%)
South / Central America and Caribbean (2) (9%) (11%) (68%)
Africa and Middle East (2) 22% 19% 2%
Asia (2) 13% 12% 3%
- ----------------------------------------------------------------------------------------------------------------------------------
READY-MIX PRICE
- ----------------------------------------------------------------------------------------------------------------------------------
Mexico 5% 7% 2%
U.S.A. 27% 27% 2%
Spain 9% 8% (3%)
United Kingdom N/A N/A (2%)
Rest of Europe (2) N/A N/A (8%)
South / Central America and Caribbean (2) 6% 4% (3%)
Africa and Middle East (2) N/A N/A N/A
Asia (2) N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
AGGREGATES PRICE
- ----------------------------------------------------------------------------------------------------------------------------------
Mexico (5%) (17%) (21%)
U.S.A. 19% 16% (1%)
Spain 12% 15% (3%)
United Kingdom N/A N/A (2%)
Rest of Europe (2) N/A N/A (4%)
South / Central America and Caribbean (2) 6% 3% (6%)
Africa and Middle East (2) N/A N/A N/A
Asia (2) N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------------
1) Includes only the month of March in first quarter 2005 for RMC operations.
2) Volume weighted-average price.
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 12
and other important disclosures.
Price Summary
Includes the results of RMC begining March 1, 2005. Results for 2004 do not include RMC
Variation in Local Currency (1)
January - June Second quarter Second quarter 2005 Vs.
------------------------ ----------------------
DOMESTIC CEMENT PRICE 2005 Vs. 2004 2005 Vs. 2004 First quarter 2005
- ----------------------------------------------------------------------------------------------------------------------------
Mexico (2) (3%) (4%) 1%
U.S.A. 18% 18% 3%
Spain 5% 6% 1%
United Kingdom N/A N/A 7%
- ----------------------------------------------------------------------------------------------------------------------------
READY-MIX PRICE
- ----------------------------------------------------------------------------------------------------------------------------
Mexico (2) (2%) (3%) (1%)
U.S.A. 27% 27% 2%
Spain 5% 5% 1%
United Kingdom N/A N/A 0%
- ----------------------------------------------------------------------------------------------------------------------------
AGGREGATES PRICE
- ----------------------------------------------------------------------------------------------------------------------------
Mexico (2) (11%) (24%) (23%)
U.S.A. 19% 16% (1%)
Spain 8% 12% 2%
United Kingdom N/A N/A 0%
- ----------------------------------------------------------------------------------------------------------------------------
1) Includes only the month of March in first quarter 2005 for RMC operations.
2) In constant Mexican pesos as of June 30, 2005
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 13
and other important disclosures.
CEMEX
Definition of Terms and Disclosures
===============================================================================
Methodology for consolidation and presentation of results
CEMEX consolidates its results in Mexican pesos under Mexican generally
accepted accounting principles (GAAP). For the reader's convenience, US dollar
amounts for the consolidated entity are calculated by converting the constant
Mexican peso amounts at the end of each quarter using the period-end MXN/USD
exchange rate for each quarter. The exchange rates used to convert results for
second quarter 2005, first quarter 2005, and second quarter 2004 are 10.75,
11.16, and 11.49 Mexican pesos per US dollar, respectively. CEMEX's
weighted-average inflation factor between June 30, 2004, and June 30, 2005, was
1.15%.
Per-country/region figures are presented in US dollars for the reader's
convenience. In the consolidation process, each country's figures (except those
of CEMEX Mexico) are converted to US dollars and then to Mexican pesos under
Mexican GAAP. Figures presented in US dollars for Mexico, Spain and Great
Britain as of June 30, 2005, and June 30, 2004, can be converted into their
original local currency amount by multiplying the US-dollar figure by the
corresponding exchange rate provided below.
To convert June 30, 2004, US-dollar figures for Mexico to constant Mexican
pesos as of June 30, 2005, it is necessary to first convert the June 30, 2004,
US-dollar figure to Mexican pesos using the exchange rate provided below, and
then multiply the resulting amount by 1.0438, the inflation-rate factor between
June 30, 2004 and June 30, 2005.
June 30
-------------------------
Exchange Rate 2005 2004
- ---------------------------------------------------
Mexican Peso 10.75 11.49
Euro 0.83 0.82
British Pound 0.56 0.55
- ---------------------------------------------------
Amounts provided in units of local currency per US dollar.
Breakdown of regions
The South/Central America and Caribbean region includes CEMEX's operations in
Argentina, Colombia, Costa Rica, the Dominican Republic, Jamaica, Nicaragua,
Panama, Puerto Rico and Venezuela, as well as our trading operations in the
Caribbean region.
Rest of Europe includes operations in Austria, Croatia, Czech Republic,
Denmark, Finland, France, Germany, Hungary, Ireland, Latvia, Lithuania, Norway,
Poland, Portugal and Sweden.
Africa and Middle East includes operations in Egypt, Israel and the United Arab
Emirates.
The Asia region includes operations in Bangladesh, Malaysia, the Philippines,
Taiwan and Thailand.
Definition of terms
EBITDA equals operating income plus depreciation and operating amortization.
Free cash flow equals EBITDA minus net interest expense, 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).
Capital expenditures consist of maintenance and expansion spending on our
cement, ready-mix, and other core businesses in existing markets.
Working capital equals operating accounts receivable (including other current
assets received as payment in kind) plus historical inventories minus operating
payables.
Net debt equals total debt minus the fair value of cross-currency swaps
associated with debt minus cash and cash equivalents (please refer to footnote
2 on the second page of this report for further details).
Interest coverage is calculated by dividing EBITDA for the last twelve months
by interest expense for the last twelve months.
Net debt/EBITDA is calculated by dividing net debt at the end of the quarter by
EBITDA for the last twelve months. This ratio includes CEMEX's EBITDA for the
last twelve months plus the estimated EBITDA of RMC for the last twelve months
(please refer to footnote 2 on the second page of this report for further
details).
Earnings per ADR
The number of average ADRs outstanding used for the calculation of earnings per
ADR was 339.6 million for both second quarter and first half of 2005, 329.2
million for second quarter 2004 and 326.7 million for the first six months of
2004.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 14
US dollar translation methodology, and other important disclosures.
CEMEX
Definition of Terms and Disclosures
===============================================================================
Effect of the purchase of RMC in our financial statements
The acquisition of RMC was concluded on March 1, 2005. The processes to
allocate the purchase price paid for RMC's shares of approximately US$4.1
billion, not including other direct purchase costs, to the fair values of the
assets acquired and liabilities assumed, substantially began during March 2005
concurrent with the assumption of control by CEMEX; consequently, as of June
30, 2005, CEMEX is in a preliminary stage in terms of determining the fair
values of the net assets of RMC, including acquired intangible assets.
Therefore, as of June 30, 2005, the difference between the purchase price paid
and the book value of RMC as of March 1, 2005, was fully allocated to goodwill
for an amount of approximately U.S.$2.2 billion.
In subsequent periods, as we move forward in our determination of the fair
values of RMC's assets and liabilities, the amount of initial goodwill will be
adjusted against the corresponding balance-sheet accounts. Under Mexican GAAP,
entities have up to a one-year window period after the purchase to conclude the
purchase-price allocation.