==============================================================================
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: October 22, 2004
CEMEX, S.A. de C.V.
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(Exact name of Registrant as specified in its charter)
CEMEX Corp.
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(Translation of Registrant's name into English)
United Mexican States
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(Jurisdiction of incorporation or organization)
Av. Ricardo Margain Zozaya #325, Colonia del Valle Campestre
Garza Garcia, Nuevo Leon, Mexico 66265
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(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 announcing CEMEX's results for the third
quarter of 2004 (attached hereto as exhibit 1).
2. 2004 third quarter earnings release
(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: October 22, 2004 By: /s/ Rafael Garza
-----------------------------
Name: Rafael Garza
Title: Chief Comptroller
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1. Press release announcing CEMEX's results for the
third quarter of 2004.
2. 2004 third quarter earnings release.
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 THIRD QUARTER 2004 OPERATING INCOME GROWS 22%;
FREE CASH FLOW INCREASES 17%
MONTERREY, MEXICO, October 22, 2004 - CEMEX, S.A. de C.V. (NYSE: CX) announced
today that its consolidated net sales for the third quarter of 2004 were
US$2.0 billion, 12% higher than in the same period of 2003. This increase is
due to higher average volumes of domestic cement and ready-mix in most of our
markets, a gradual recovery in prices and incremental sales of our high-growth
multiproduct strategy. In real peso terms, net sales increased 7% to MXP 23.3
billion.
Consolidated cement sales volumes grew 1% in the quarter to 17 million metric
tons while ready-mix volumes were 6.2 million cubic meters, an increase of 12%
versus third quarter 2003.
Free cash flow increased 17% in the third quarter of 2004 versus the same
period of 2003, reaching US$451 million. EBITDA (operating income plus
depreciation and amortization) grew 15% to US$656 million. The consolidated
EBITDA margin improved 1.0 percentage point to 32.1% from 31.1% in the third
quarter of 2003. These increases are due to the continued recovery in cement
prices, higher domestic cement and ready-mix volumes, and a lower cost
structure. In real peso terms, EBITDA increased 10% to MXP 7.5 billion.
Operating income for the quarter was US$495 million, up 22% over the same
period of 2003. In real peso terms, operating income grew 17% to MXP 5.6
billion.
Hector Medina, Executive Vice President of Planning and Finance, said: "We are
encouraged by our better-than-planned consolidated performance for the
quarter. The marked improvement in our EBITDA for the quarter resulted
primarily from higher domestic volumes, efficiency gains, and a price recovery
for the average of our portfolio in the absence of any acquisitions".
Selling, general and administrative expenses (SG&A) as percentage of net sales
decreased 1.21 percentage points versus third quarter of 2003, and decreased
1.09 percentage points for the first nine months of the year versus the same
period of 2003. Higher consolidated transportation costs were more than offset
by our ongoing cost-reduction initiatives, which have produced significant
savings at the corporate and operating levels.
For the third quarter, majority net income was 158% higher, reaching US$361
million versus US$140 million a year ago, and increased 76% for the first nine
months of the year, reaching US$931 million. For the quarter, CEMEX reported a
foreign-exchange gain of US$24 million versus a loss of US$118 million in the
same quarter of 2003.
At the end of the third quarter net debt was US$4,679 million, US$290 million
lower than that at the end of the second quarter of 2004. Year to date, net
debt has been reduced by US$962 million. Our net debt to EBITDA ratio at the
end of the quarter was 1.95 times, versus 2.18 times three months ago, and
2.85 times twelve months ago.
Interest coverage (EBITDA divided by interest expense plus preferred
dividends, all for the last twelve months) was 6.72 times, versus 5.02 times a
year ago.
Our Mexican operations reported net sales of US$709 million, 7% higher than in
third quarter 2003, and EBITDA of US$304 million, a reduction of 1%. Domestic
cement sales volumes were up 2% versus third quarter 2003. Low-income housing
construction continues to be strong in Mexico and has been one of the main
drivers of demand in 2004. Spending in infrastructure also remains strong
despite some delays in the execution and granting of several projects, while
the self-construction sector remains relatively weak.
In the United States, net sales were US$552 million, 17% higher than in third
quarter 2003, while EBITDA reached US$149 million, an increase of 34%.
Domestic cement and ready-mix sales volumes for the quarter grew 9% and 15%,
respectively, versus third quarter 2003. The residential sector has continued
to remain strong as mortgage rates remain relatively low. The industrial and
commercial sector continues its upward trend that started at the end of last
year; current vacancy rates are low and capital expenditures have grown due to
the increased level of economic activity. Spending in infrastructure remains a
strong source of demand for cement and ready-mix.
Our operations in Spain reported net sales of US$317 million for the third
quarter of 2004, up 13% from the year-earlier period. EBITDA reached US$97
million, an increase of 28%. Domestic cement sales volumes grew 9%, while
ready-mix volumes increased 1%, compared to third quarter 2003. Residential
construction has remained strong and better than previously expected,
supported by a low interest rate environment. The industrial and commercial
sector in Spain was a robust source of demand, while infrastructure spending
remained healthy due to the Spanish infrastructure program.
In Venezuela, third-quarter net sales grew 6% to US$84 million, while EBITDA
increased 4% to US$41 million versus the same period of 2003. Domestic cement
sales volumes increased 12%, while ready-mix volumes grew 13% compared to
third quarter 2003. The level of government spending has increased
significantly versus 2003, with new infrastructure projects underway which
have fueled cement demand. The self construction and commercial sectors have
also been strong, driven by the overall increased level of economic activity.
Our Colombian operation's net sales were US$66 million, up 13% versus third
quarter 2003, while EBITDA increased 11% to US$40 million. Cement sales
volumes were up 2%, while ready-mix volumes grew 8% versus third quarter 2003.
The main drivers of cement demand have been the self-construction, housing and
commercial sectors. Public spending has not increased this year, but is now
showing signs of recovery with new projects underway in several regions of the
country.
In Egypt, net sales grew 33% to US$52 million, and EBITDA increased 31%,
reaching US$25 million. Domestic cement sales volumes declined 5% versus third
quarter 2003. Tourism revenues and remittances from abroad have increased in
Egypt during the year, fueling the economy and allowing us to recover cement
prices.
Our operations in Central America and the Caribbean reported net sales of
US$165 million, up 9% from third quarter 2003, while EBITDA grew 13% reaching
US$42 million. Cement sales volumes were 4% higher while ready-mix volumes
decreased 9%.
Our Asian operations, which include the Philippines, Thailand, Taiwan, and
Bangladesh, reported net sales of US$51 million, 13% higher than in third
quarter 2003, while EBITDA increased 167% to US$14 million. Domestic cement
sales volume grew 8% compared to third quarter 2003.
CEMEX is a leading global producer and marketer of cement and ready-mix
products, with operations concentrated in the world's most dynamic cement
markets across four continents. CEMEX combines a deep knowledge of the local
markets with its global network and information technology systems to provide
world-class products and services to its customers, from individual
homebuilders to large industrial contractors. For more information, visit
www.cemex.com.
-----------------------------------------
EXHIBIT 2
CEMEX
Stock Listing Information
NYSE (ADR)
Ticker: CX
MEXICAN STOCK EXCHANGE
Ticker: CEMEX.CPO
Ratio of CEMEX.CPO to CX= 5:1
Investor Relations
In the United States
1 877 7CX NYSE
In Mexico
52 (81) 8888 4292
E-Mail
ir@cemex.com
www.cemex.com
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2004
THIRD QUARTER RESULTS
- -------------------------------------------------------------------------------
THIRD QUARTER THIRD QUARTER
-------------------------- --------------------
2004 2003 % VAR. 2004 2003
===============================================================================
Net sales 2,047 1,834 12% % OF NET SALES
- -------------------------------------------------------------------------------
Gross profit 902 791 14% 44.0% 43.1%
- -------------------------------------------------------------------------------
Operating income 495 405 22% 24.2% 22.1%
- -------------------------------------------------------------------------------
Majority net income 361 140 158% 17.6% 7.6%
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EBITDA 656 570 15% 32.1% 31.1%
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Free cash flow 451 384 17% 22.0% 20.9%
- -------------------------------------------------------------------------------
- -------------------------------------------------------
Net debt 4,679 5,676 (18%)
- -------------------------------------------------------
Net debt/EBITDA 1.95 2.85
- -------------------------------------------------------
Interest coverage 6.72 5.02
- -------------------------------------------------------
Quarterly earnings per ADR 1.07 0.43 146%
- -------------------------------------------------------
Average ADRs outstanding 339.0 323.3 5%
=======================================================
In millions of US dollars, except ratios and per-ADR amounts. Average ADRs
outstanding presented in millions of ADRs.
CONSOLIDATED NET SALES increased 12% over third quarter 2003 to US$2,047
million, due to higher average volumes of domestic cement and ready-mix in most
of our markets, a gradual recovery in prices, and incremental sales of our
high-growth mutiproduct strategy. Spending on infrastructure and housing
remains strong, while industrial and commercial development has continued its
upward trend since the beginning of the year.
COST OF GOODS SOLD as a percentage of net sales decreased 0.92 percentage
points versus third quarter 2003 and decreased 1.58 percentage points for the
first nine months of the year versus the comparable period in 2003. This
decrease is due mainly to higher volumes and average prices in most of our
markets as well as higher utilization rates.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (SG&A) as a percentage of net
sales during the quarter decreased 1.21 percentage points versus third quarter
2003, and decreased 1.09 percentage points for the first nine months of the
year versus the same period in 2003. Higher consolidated transportation costs
were more than offset by our ongoing cost-reduction initiatives, which have
produced significant savings at the corporate and operating levels.
EBITDA reached US$656 million, representing an increase of 15% over that of
third quarter 2003. Our consolidated EBITDA MARGIN in the third quarter
increased 1.0 percentage point to 32.1% from 31.1% in the same period of 2003.
These increases are due to the continued recovery in cement prices, higher
domestic cement and ready-mix volumes, and a lower cost structure.
FOREIGN-EXCHANGE GAIN (LOSS) for the quarter was a gain of US$24 million,
versus a loss of US$118 million in third quarter 2003. The gain was due mainly
to the appreciation of the Mexican peso against the US dollar during the
quarter.
MAJORITY NET INCOME for the quarter rose 158% to US$361 million, versus US$140
million in the third quarter of 2003. Majority net income for the first nine
months of the year increased 76%, reaching US$931 million, versus US$529
million in the same period of 2003.
NET DEBT at the end of the third quarter was US$4,679 million, US$290 million
lower than that at the end of second quarter 2004. Year to date, net debt has
been reduced by US$962 million. The ratio of NET DEBT TO EBITDA reached 1.95
times, versus 2.18 times three months ago, and 2.85 times twelve months ago.
INTEREST COVERAGE reached 6.72 times, versus 5.02 times twelve months ago.
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PLEASE REFER TO THE END OF THIS REPORT FOR DEFINITION Page 1
OF TERMS, US DOLLAR TRANSLATION METHODOLOGY AND
OTHER IMPORTANT DISCLOSURES.
CEMEX
EBITDA AND FREE CASH FLOW (1)
======================================================================================================================
THIRD QUARTER JANUARY - SEPTEMBER
------------------------- -----------------------------
2004 2003 % VAR. 2004 2003 % VAR.
- --------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 495 405 22% 1,376 1,095 26%
- --------------------------------------------------------------------------------------------------------------------
+ Depreciation and operating amortization 161 165 497 478
- --------------------------------------------------------------------------------------------------------------------
EBITDA 656 570 15% 1,873 1,573 19%
- --------------------------------------------------------------------------------------------------------------------
- - Net financial expense 78 91 246 268
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- - Capital expenditures 103 96 243 261
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- - Change in working capital (31) (34) 68 53
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- - Taxes paid 28 13 67 57
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- - Preferred dividend payments (2) N/A 7 N/A 21
- --------------------------------------------------------------------------------------------------------------------
- - Other cash items (net) 27 13 43 39
- --------------------------------------------------------------------------------------------------------------------
FREE CASH FLOW 451 384 17% 1,206 874 38%
- --------------------------------------------------------------------------------------------------------------------
In millions of US dollars.
During the quarter, US$451 million of free cash flow was used as follows:
US$302 million to reduce net debt (however net debt was reduced by US$290
million as a result of foreign exchange movements in the amount of US$12
million); US$112 million for the acquisition of minorities in CEMEX Asia
Holdings; and for other investments.
DEBT-RELATED INFORMATION
===============================================================================================================================
THIRD QUARTER SECOND QUARTER THIRD QUARTER
------------------------ ---------------- ---------------
2004 2003 % VAR. 2004 2004 2003
- ------------------------------------------------------------------------------ ------------------------------------------
Total debt (2) 5,730 5,368 7% 5,296 CURRENCY DENOMINATION
- ------------------------------------------------------------------------------
Short-term 23% 21% 13%
- ------------------------------------------------------------------------------ -----------------------------------------
Long-term 77% 79% 87% US dollar 71% 75%
- ------------------------------------------------------------------------------ -----------------------------------------
Equity obligations (2) N/A 716 N/A Yen 13% 13%
- ------------------------------------------------------------------------------ -----------------------------------------
Cash and cash equivalents 1,051 409 157% 327 Euro 15% 11%
- ------------------------------------------------------------------------------ ----------------------------------------
Net debt 4,679 5,676 (18%) 4,969 Other 1% 1%
- ------------------------------------------------------------------------------ ----------------------------------------
- ------------------------------------------------------------------------------
Interest expense 84 94 (10%) 85 INTEREST RATE
- ------------------------------------------------------------------------------
Preferred dividends (2) N/A 7 N/A
- ------------------------------------------------------------------------------ ----------------------------------------
Interest coverage 6.72 5.02 6.2 Fixed 65% 69%
- ------------------------------------------------------------------------------ ----------------------------------------
Net debt/EBITDA 1.95 2.85 2.2 Variable 35% 31%
- ------------------------------------------------------------------------------ ----------------------------------------
Capitalization ratio 43.4% 44.4% 42.9%
- ------------------------------------------------------------------------------ ----------------------------------------
In millions of US dollars, except ratios which are calculated for the last-twelve-month period.
OTHER DEVELOPMENTS
On October 14, 2004, CEMEX announced the completion of its cash tender offers
for its 12 3/4% Notes due 2006 (the "2006 Notes") and its 9.625% Notes due 2009
(the "2009 Notes"). Holders of the 2006 Notes tendered US$39,749,000 aggregate
principal amount of the 2006 Notes, representing 43.4% of the total 2006 Notes
outstanding. Holders of the 2009 Notes tendered US$138,484,000 aggregate
principal amount of the 2009 Notes, representing 69.2% of the total 2009 Notes
outstanding. CEMEX also announced that it received consents from holders
representing a majority of the principal amount of its outstanding 2006 Notes
authorizing certain proposed amendments to the indenture governing the 2006
Notes. CEMEX had previously announced that the requisite holders of the 2009
Notes had authorized certain amendments to the indenture governing the 2009
Notes in a related consent solicitation that expired on October 4, 2004.
(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 (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 GAAP cash flow measures to present as comparable to
EBITDA or free cash flow.
(2) Prior to 2004, according to Mexican accounting rules existing at that time,
the outstanding balance of preferred equity and capital securities was
recognized in the minority interest of the stockholders' equity, and its
corresponding preferred dividend in the minority interest of net income.
Effective January 1, 2004, resulting from a new regulation under Mexican
GAAP, the approximately US$66 million balance of preferred capital
securities is now treated as a liability, and not as a minority interest,
and its preferred dividend is treated as financial expense.
- -------------------------------------------------------------------------------
PLEASE REFER TO THE END OF THIS REPORT FOR DEFINITION OF Page 2
TERMS, US DOLLAR TRANSLATION METHODOLOGY AND OTHER
IMPORTANT DISCLOSURES.
CEMEX
EQUITY-RELATED INFORMATION
===============================================================================
One CEMEX ADR represents five CEMEX CPOs. The following amounts are expressed
in CPO terms.
BEGINNING-OF-QUARTER CPO-EQUIVALENT UNITS OUTSTANDING 1,694,690,092
- -------------------------------------------------------------------------------
Exercise of stock options not hedged 284,426
LESS increase (decrease) in the number of CPOs held in (134,195)
subsidiaries
END-OF-QUARTER CPO-EQUIVALENT UNITS OUTSTANDING 1,695,108,713
- -------------------------------------------------------------------------------
Outstanding units equal total shares issued by CEMEX less shares held in
subsidiaries.
EMPLOYEE STOCK-OPTION PLANS
As of September 30, 2004, directors, officers and other employees under our
employee stock-option plans had outstanding options to acquire 177,679,365
CEMEX CPOs. The total amount of CPOs underlying options in these programs is
equivalent to 10.5% of our total CPOs outstanding. However, as 97.3% of the
total options outstanding are hedged through equity forward agreements, only
the remaining 2.7% will dilute existing shares when exercised.
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 and other equity-related obligations.
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.
THIRD QUARTER SECOND QUARTER
----------------- ---------------
NOTIONAL AMOUNTS 2004 2003 2004
- --------------------------------------------------------------------------------
Equity (1) 1,179 1,532 1,068
Foreign-exchange (2) 5,953 3,090 2,722
Interest-rate 2,120 3,233 2,121
- --------------------------------------------------------------------------------
Estimated aggregate fair market value (197) (162) (225)
- --------------------------------------------------------------------------------
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 the other
derivative items as of the settlement date. Fair market values should not be
viewed in isolation but rather in relation to the fair values of the underlying
hedge transactions and the overall reduction in CEMEX's exposure to the risks
being hedged.
(1) The aggregate weighted-average exercise price on September 30, 2004 for
CEMEX's outstanding stock options and warrants and the CEMEX Asia Holdings
obligation described in prior quarterly reports was US$25.11 per ADR. On
that same date, the aggregate weighted-average strike price of CEMEX's
equity forward agreements put in place to hedge its obligations under the
abovementioned stock options was US$27.92 per ADR.
(2) Please refer to page 4 (Other events related to the RMC transaction) for
further explanation.
Under Mexican GAAP ("Bulletin C-2"), companies are required 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 values recorded
on the income statement. The exceptions to the rule, as they pertain to CEMEX,
are presented when transactions are entered into for cash-flow hedging
purposes. In such cases, changes in the fair value of the related derivative
instruments are recognized temporarily in equity and are reclassified into
earnings as the inverse effects of the underlying hedged items flow through the
income statement. CEMEX has recognized increases in assets and liabilities,
which resulted in a net liability of US$466 million, arising from the fair
value recognition of its derivatives portfolio as of September 30, 2004. The
notional amounts of derivatives substantially match the amounts of underlying
assets, liabilities or equity transactions on which the derivatives are being
entered into.
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PLEASE REFER TO THE END OF THIS REPORT FOR DEFINITION OF Page 3
TERMS, US DOLLAR TRANSLATION METHODOLOGY AND OTHER
IMPORTANT DISCLOSURES.
CEMEX
OTHER ACTIVITIES
===============================================================================
CEMEX TO ACQUIRE RMC IN A US$5.8 BILLION TRANSACTION
On September 27, 2004, CEMEX announced the recommended acquisition of RMC Group
p.l.c. ("RMC") for US$4.1 billion in cash. Including the assumption of debt,
the enterprise value of the transaction is approximately US$5.8 billion. The
boards of directors of both companies unanimously approved the transaction.
The combined company will be one of the world's largest building materials
companies, with pro-forma revenues of more than US$15 billion. The transaction
is expected to close around the end of 2004.
RMC, headquartered in the UK, is a leading international producer and supplier
of materials, products and services used primarily in the construction
industry. It is one of Europe's largest producers of cement and one of the
world's largest suppliers of ready mixed concrete and aggregates. In 2003, RMC
sold approximately 15.7 million tons of cement, 55.5 million cubic meters of
ready mix concrete and 158 million tons of aggregates, generating revenues,
excluding joint ventures and associated undertakings, of US$7.9 billion.
CEMEX expects to achieve approximately US$200 million of annual synergies by
2007 as a result of the acquisition of RMC, mainly from centralizing
management, trading-network benefits, logistics, global procurement, energy and
overall best practices.
The acquisition is expected to be immediately accretive to free cash flow and
cash earnings per share for CEMEX. CEMEX expects that the acquisition will
achieve its 10 percent return on capital employed target in 2007 and expects to
achieve a ratio of net debt to EBITDA of 2.7 times by the end of 2005. This
would be the same level of net debt to EBITDA that CEMEX had at the end of
2003.
The terms of the acquisition represent a premium of approximately 39 percent to
the volume weighted-average price of approximately 615 pence per RMC share over
the 30-day period ended on September 24, 2004. The terms of the acquisition
value the existing issued share capital of RMC at approximately US$4.1 billion.
CEMEX's acquisition is subject to customary UK takeover conditions, including
regulatory approvals and the approval by a majority in number representing 75%
or more in value of the RMC shareholders voting. CEMEX expects the transaction
to close around the end of 2004.
CEMEX has obtained committed facilities, arranged by Citigroup Global Markets
Limited and Goldman Sachs International, sufficient to satisfy in full the cash
consideration payable to RMC shareholders under the terms of the acquisition.
Citigroup Global Markets Limited and Goldman Sachs International are acting as
financial advisers to CEMEX in relation to the acquisition.
OTHER EVENTS RELATED TO THE RMC TRANSACTION
On September 27, 2004 CEMEX announced that CEMEX UK, its wholly owned
subsidiary, acquired in the market a total of 50,000,000 RMC Shares
representing approximately 18.8% of the issued share capital of RMC. The
consideration was (pound)8.55 plus the previously declared interim dividend of
(pound)0.094 representing, in aggregate, a price of (pound)8.644 per RMC Share.
A total of (pound)435 million (approximately US$780 million) were drawn from
the committed facilities provided to us by Citibank and Goldman Sachs for this
transaction.
CEMEX has hedged the purchase price of the remaining 81.2% of RMC shares mainly
through foreign exchange derivative contracts in the amount of (pound)1,869
million. The purchase price under these contracts will not exceed 1.795
US$/(pound).
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PLEASE REFER TO THE END OF THIS REPORT FOR DEFINITION OF Page 4
TERMS, US DOLLAR TRANSLATION METHODOLOGY AND OTHER
IMPORTANT DISCLOSURES.
CEMEX
OPERATING RESULTS - MEXICO
===============================================================================
In Mexico, NET SALES were US$709 million, representing an increase of 7% versus
third quarter 2003.
DOMESTIC GRAY CEMENT VOLUME increased 2%, and READY-MIX VOLUME increased 20%,
versus third quarter 2003. Low-income housing construction continues to be
strong in Mexico and has been one of the main drivers of demand in 2004.
Spending in infrastructure also remains strong despite some delays in the
execution and granting of several projects, while the self-construction sector
remains relatively weak.
CEMEX's AVERAGE REALIZED GRAY CEMENT PRICE in Mexico decreased 3% in constant
peso terms, and 3% in dollar terms, versus third quarter 2003. The AVERAGE
READY-MIX PRICE decreased 1% in constant peso terms and 1% in dollar terms
compared to third quarter 2003.
The EBITDA MARGIN decreased to 42.8% from 46.4% in the third quarter of 2003.
The main reasons for the decline were a change in the product mix and lower
average prices, partially offset by lower fuel costs.
UNITED STATES
===============================================================================
NET SALES for CEMEX's US operations were US$552 million, representing an
increase of 17% compared to third quarter 2003.
DOMESTIC CEMENT VOLUME increased 9%, and READY-MIX VOLUME increased 15%,
compared to third quarter 2003. Cement consumption has been strong from both
the public and private sectors. The residential sector has remained strong as
mortgage rates remain relatively low. The industrial and commercial sector
continues its upward trend that started at the end of last year; current
vacancy rates are low and capital expenditures have grown due to the increased
level of economic activity. Spending in infrastructure remains a strong source
of demand for cement and ready-mix.
The AVERAGE REALIZED CEMENT PRICE increased 7%, while the AVERAGE READY-MIX
PRICE increased 15%, versus third quarter 2003.
The EBITDA MARGIN increased to 27.0% from 23.6% in third quarter 2003. The
increase of 3.4 percentage points was due mainly to higher cement and ready-mix
volumes and prices, which were partially offset by higher fuel, import and
transportation costs.
SPAIN
===============================================================================
NET SALES for CEMEX Spain were US$317 million, representing an increase of 13%
versus third quarter 2003.
DOMESTIC CEMENT VOLUME increased 9%, while READY-MIX VOLUME increased 1%,
compared to third quarter 2003. Residential construction has remained strong
and better than previously expected, supported by a low interest-rate
environment. The industrial and commercial sector in Spain was a robust source
of demand, while infrastructure spending remained healthy due to the Spanish
infrastructure program.
The average DOMESTIC CEMENT PRICE increased 3% in euro terms and 11% in dollar
terms compared to third quarter 2003. The AVERAGE READY-MIX PRICE increased 5%
in euro terms and 14% in dollar terms versus third quarter 2003.
The EBITDA MARGIN increased to 30.7% from 27.1% in third quarter of 2003. The
increase of 3.6 percentage points was due mainly to better cement and ready-mix
prices, which were partially offset by higher raw-material and fuel costs.
- -------------------------------------------------------------------------------
PLEASE REFER TO THE END OF THIS REPORT FOR DEFINITION OF Page 5
TERMS, US DOLLAR TRANSLATION METHODOLOGY AND OTHER
IMPORTANT DISCLOSURES.
CEMEX
VENEZUELA
===============================================================================
NET SALES for CEMEX Venezuela were US$84 million, representing an increase of
6% versus third quarter 2003.
DOMESTIC CEMENT VOLUME increased 12%, while READY-MIX VOLUME increased 13%,
compared to third quarter 2003. The level of government spending has increased
significantly versus 2003, with new infrastructure projects underway that have
fueled cement demand. The self construction and commercial sectors have also
been strong and are driven by the overall increased level of economic activity.
EXPORT VOLUME from CEMEX's Venezuelan operations increased 11% compared to
third quarter 2003. Exports to North America and the Caribbean accounted for
73% and 27%, respectively, of CEMEX Venezuela's third-quarter exports.
DOMESTIC CEMENT PRICES decreased 11% in constant bolivar terms and 10% in
dollar terms compared to third quarter 2003, while the average READY-MIX PRICE
decreased 3% in constant bolivar terms and 2% in dollar terms compared to third
quarter 2003.
The EBITDA MARGIN decreased to 48.3% from 49.5% in third quarter 2003. The
decrease of 1.2 percentage points was due mainly to lower cement prices and
higher transportation costs.
COLOMBIA
===============================================================================
NET SALES for CEMEX Colombia were US$66 million, representing an increase of
13% versus third quarter 2003.
DOMESTIC CEMENT VOLUME increased 2%, while READY-MIX VOLUME increased 8%,
compared to third quarter 2003. The main drivers of cement demand have been the
self-construction, housing and commercial sectors. Public spending has not
increased this year, but is now showing signs of recovery with new projects
underway in several regions of the country.
The AVERAGE REALIZED CEMENT PRICE decreased 4% in Colombian peso terms and
increased 6% in dollar terms versus third quarter 2003, while the AVERAGE
READY-MIX PRICE increased 9% in Colombian peso terms and 20% in dollar terms
versus third quarter 2003.
The EBITDA MARGIN decreased to 59.8% from 60.7% in third quarter 2003. The
decrease of 0.9 percentage points was due mainly to higher fuel costs, which
were partially offset by higher cement and ready-mix volumes and higher
ready-mix prices.
OTHER OPERATIONS
===============================================================================
NET SALES for our Central American and Caribbean operations increased 9% versus
third quarter 2003, reaching US$165 million. DOMESTIC CEMENT VOLUME increased
4% as higher volumes in Costa Rica, Nicaragua, Panama and Puerto Rico were
offset by lower volumes in the Dominican Republic and the Caribbean region.
READY-MIX VOLUME decreased 9% versus third quarter 2003 due mainly to lower
ready-mix volumes in Puerto Rico, Costa Rica and the Dominican Republic.
In Egypt, NET SALES and EBITDA increased 33% and 31%, respectively, while
DOMESTIC CEMENT VOLUME decreased 5% versus third quarter 2003. DOMESTIC CEMENT
PRICES increased 24% in Egyptian pound terms and 23% in dollar terms versus
third quarter 2003. Tourism revenues and remittances from abroad have increased
in Egypt during the year, fueling the economy and allowing us to recover cement
prices.
Our Asian operations, which include the Philippines, Thailand, Taiwan and
Bangladesh, increased NET SALES by 13% compared to third quarter 2003. EBITDA
was 167% higher compared to third quarter 2003 due mainly to better volumes and
prices in dollar terms. DOMESTIC CEMENT VOLUME for the region increased 8%
compared to third quarter 2003 due to higher cement volumes in the Philippines
- - fueled primarily by strong residential construction - and Thailand. Our
weighted-average DOMESTIC CEMENT PRICES in the region increased 16% in dollar
terms versus the same period in 2003. The EBITDA MARGIN for the region
increased to 26.6% from 11.2% in third quarter 2003. The increase of 15.4
percentage points was due mainly to the strong recovery of cement prices and
volumes and a reduction in SG&A expenses.
- -------------------------------------------------------------------------------
PLEASE REFER TO THE END OF THIS REPORT FOR DEFINITION OF Page 6
TERMS, US DOLLAR TRANSLATION METHODOLOGY AND OTHER
IMPORTANT DISCLOSURES.
CONSOLIDATED INCOME STATEMENT & BALANCE SHEET
CEMEX S.A. DE C.V. AND SUBSIDIARIES
(Thousands of U.S. Dollars, except per adr amounts)
JANUARY - SEPTEMBER THIRD QUARTER
INCOME STATEMENT 2004 2003 % VAR. 2004 2003 % VAR.
- ---------------------------------------------------------------------------------------------------------------------------------
Net Sales 5,885,220 5,288,249 11% 2,047,409 1,834,365 12%
Cost of Sales (3,300,649) (3,049,114) 8% (1,145,732) (1,043,323) 10%
- ---------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 2,584,571 2,239,135 15% 901,678 791,042 14%
Selling, General and Administrative (1,208,502) (1,143,973) 6% (406,410) (386,320) 5%
Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 1,376,069 1,095,162 26% 495,268 404,722 22%
Financial Expenses (262,513) (282,164) (7%) (83,846) (93,588) (10%)
Financial Income (Loss), Net 16,199 13,953 16% 5,548 2,168 156%
Exchange Gain (58,778) (140,138) (58%) 23,582 (117,756) N/A
Monetary Position Gain (Loss) 271,805 233,306 17% 63,537 68,313 (7%)
Gain (Loss) on Marketable Securities (1,556) (34,335) (95%) 9,890 6,425 54%
Total Comprehensive Financing (Cost) (34,843) (209,379) (83%) 18,710 (134,438) N/A
Income Other Expenses, Net (279,388) (264,601) 6% (109,381) (91,271) 20%
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE INCOME TAXES 1,061,838 621,182 71% 404,597 179,012 126%
Income Tax (125,896) (75,047) 68% (48,040) (23,133) 108%
Employees' Statutory Profit Sharing (7,459) (7,711) (3%) (2,827) (2,714) 4%
Total Income Tax & Profit Sharing (133,356) (82,759) 61% (50,867) (25,847) 97%
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE PARTICIPATION
OF UNCONS. SUBS. AND EXT. ITEMS 928,482 538,423 72% 353,730 153,165 131%
Participation in Unconsolidated
Subsidiaries 25,149 17,133 47% 13,289 3,138 324%
CONSOLIDATED NET INCOME 953,631 555,556 72% 367,019 156,303 135%
Net Income Attributable to Min. Interest 22,286 27,027 (18%) 5,812 16,072 (64%)
MAJORITY INTEREST NET INCOME 931,345 528,529 76% 361,207 140,231 158%
- ---------------------------------------------------------------------------------------------------------------------------------
EBITDA 1,873,102 1,572,962 19% 656,290 569,986 15%
EARNINGS PER ADR 2.82 1.69 66% 1.07 0.43 146%
- ---------------------------------------------------------------------------------------------------------------------------------
AS OF SEPTEMBER 30
BALANCE SHEET 2004 2003 % VAR.
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 16,767,007 16,201,050 3%
Cash and Temporary 1,051,209 408,678 157%
Investments
Trade Accounts 426,042 443,787 (4%)
Receivables
Other Receivables 334,324 466,098 (28%)
Inventories 644,450 686,004 (6%)
Other Current Assets 89,827 92,017 (2%)
Current 2,545,851 2,096,584 21%
Assets
Fixed Assets 9,030,870 8,906,298 1%
Other Assets 5,190,285 5,198,169 (0%)
- ---------------------------------------------------------------------------------
TOTAL 9,301,105 8,829,701 5%
LIABILITIES
Current Liabilities 2,934,340 2,730,423 7%
Long-Term Liabilities 4,404,380 4,254,781 4%
Other 1,962,384 1,844,497 6%
Liabilities
- ---------------------------------------------------------------------------------
CONSOLIDATED STOCKHOLDERS' EQUITY 7,465,902 7,371,350 1%
Stockholders' Equity Attributable to
Minority Interest 368,597 1,173,812 (69%)
Stockholders' Equity Attributable to
Majority Interest 7,097,304 6,197,538 15%
- ---------------------------------------------------------------------------------------------------------------------------------
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
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of Mexican Pesos in real terms as of September 31, 2004
except per ADR amounts)
JANUARY - SEPTEMBER THIRD QUARTER
INCOME STATEMENT 2004 2003 % Var. 2004 2003 % Var.
- ----------------------------------------------------------------------------------------------------------------------------
Net Sales 66,973,803 62,801,128 7% 23,299,518 21,784,188 7%
Cost of Sales (37,561,387) (36,210,059) 4% (13,038,427) (12,390,092) 5%
- ----------------------------------------------------------------------------------------------------------------------------
Gross Profit 29,412,415 26,591,068 11% 10,261,091 9,394,096 9%
Selling, General and Administrative (13,752,748) (13,585,363) 1% (4,624,942) (4,587,780) 1%
Expenses
- ----------------------------------------------------------------------------------------------------------------------------
Operating Income 15,659,667 13,005,705 20% 5,636,149 4,806,316 17%
Financial Expenses (2,987,402) (3,350,867) (11%) (954,171) (1,111,412) (14%)
Financial Income 184,347 165,699 11% 63,134 25,742 145%
Exchange Gain (Loss), Net (668,897) (1,664,224) (60%) 268,359 (1,398,423) N/A
Monetary Position Gain (Loss) 3,093,139 2,770,644 12% 723,050 811,255 (11%)
Gain (Loss) on Marketable Securities (17,704) (407,752) (96%) 112,547 76,301 48%
Total Comprehensive Financing (Cost) (396,517) (2,486,500) (84%) 212,919 (1,596,537) N/A
Income Other Expenses, Net (3,179,437) (3,142,300) 1% (1,244,752) (1,083,899) 15%
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE INCOME TAXES 12,083,713 7,376,906 64% 4,604,317 2,125,880 117%
Income Tax (1,432,700) (891,230) 61% (546,699) (274,723) 99%
Employees' Statutory Profit Sharing (84,887) (91,577) (7%) (32,172) (32,226) (0%)
Total Income Tax & Profit Sharing (1,517,587) (982,807) 54% (578,871) (306,950) 89%
- ----------------------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE PARTICIPATION
OF UNCONS. SUBS. AND EXT. ITEMS 10,566,126 6,394,098 65% 4,025,446 1,818,931 121%
Participation in Unconsolidated
Subsidiaries 286,193 203,466 41% 151,228 37,260 306%
Consolidated Net Income 10,852,319 6,597,564 64% 4,176,673 1,856,191 125%
Net Income Attributable to
Min. Interest 253,615 320,960 (21%) 66,137 190,865 (65%)
MAJORITY INTEREST NET INCOME 10,598,704 6,276,604 69% 4,110,536 1,665,326 147%
- ----------------------------------------------------------------------------------------------------------------------------
EBITDA 21,315,905 18,679,868 14% 7,468,578 6,768,923 10%
Earnings per ADR 32.04 18.62 72% 12.13 4.77 154%
- ----------------------------------------------------------------------------------------------------------------------------
AS OF SEPTEMBER 30
BALANCE SHEET 2004 2003 % Var.
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 190,808,535 192,397,194 (1%)
Cash and Temporary 11,962,762 4,853,295 146%
Investments
Trade Accounts 4,848,354 5,270,235 (8%)
Receivables
Other Receivables 3,804,607 5,535,194 (31%)
Inventories 7,333,837 8,146,709 (10%)
Other Current Assets 1,022,228 1,092,753 (6%)
Current Assets 28,971,789 24,898,187 16%
Fixed Assets 102,771,301 105,767,633 (3%)
Other Assets 59,065,445 61,731,374 (4%)
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 105,846,574 104,857,994 1%
Current Liabilities 33,392,794 32,425,411 3%
Long-Term Liabilities 50,121,849 50,528,076 (1%)
Other Liabilities 22,331,930 21,904,507 2%
- --------------------------------------------------------------------------------
Consolidated Stockholders' Equity 84,961,961 87,539,201 (3%)
Stockholders' Equity Attributable
to Minority Interest 4,194,639 13,939,722 (70%)
Stockholders' Equity Attributable
to Majority Interest 80,767,322 73,599,479 10%
- ----------------------------------------------------------------------------------------------------------------------------
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
In thousands of U.S. dollars
JANUARY - SEPTEMBER THIRD QUARTER
---------------------- ----------------------
NET SALES 2004 2003 % Var. 2004 2003 % Var.
- -----------------------------------------------------------------------------------------------------------------------------
Mexico 2,109,107 1,975,647 7% 708,746 663,249 7%
U.S.A. 1,455,914 1,272,641 14% 551,816 470,733 17%
Spain 939,036 848,220 11% 316,911 279,953 13%
Venezuela 251,465 223,085 13% 84,464 79,540 6%
Colombia 184,670 153,758 20% 66,137 58,702 13%
Egypt 140,779 93,296 51% 51,704 38,942 33%
Central America & the Caribbean region 500,255 435,521 15% 164,978 151,403 9%
Asia region 150,310 143,111 5% 50,995 45,214 13%
- -----------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 153,684 142,970 7% 51,657 46,629 11%
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL 5,885,220 5,288,249 11% 2,047,409 1,834,365 12%
=============================================================================================================================
GROSS PROFIT
- -----------------------------------------------------------------------------------------------------------------------------
Mexico 1,205,765 1,141,710 6% 397,541 389,576 2%
U.S.A. 478,763 397,605 20% 194,814 160,004 22%
Spain 344,790 300,854 15% 117,170 93,160 26%
Venezuela 116,862 103,366 13% 41,254 38,589 7%
Colombia 115,131 83,335 38% 41,646 31,341 33%
Egypt 73,908 40,274 84% 28,148 19,852 42%
Central America & the Caribbean region 181,764 136,820 33% 53,859 49,822 8%
Asia region 62,310 39,503 58% 21,000 12,434 69%
- -----------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 5,279 (4,334) N/A 6,246 (3,736) N/A
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL 2,584,571 2,239,135 15% 901,678 791,042 14%
=============================================================================================================================
OPERATING INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Mexico 827,902 790,543 5% 265,978 272,050 (2%)
U.S.A. 215,358 160,667 34% 110,411 73,971 49%
Spain 231,959 186,042 25% 77,770 57,037 36%
Venezuela 80,986 73,178 11% 29,304 28,205 4%
Colombia 87,613 60,325 45% 32,446 23,854 36%
Egypt 44,402 19,969 122% 17,974 11,953 50%
Central America & the Caribbean region 122,050 74,463 64% 33,200 28,283 17%
Asia region 22,295 (8,893) N/A 7,114 (2,748) N/A
- -----------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (256,495) (261,132) (2%) (78,929) (87,882) (10%)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL 1,376,069 1,095,162 26% 495,268 404,722 22%
=============================================================================================================================
EBITDA
- -----------------------------------------------------------------------------------------------------------------------------
Mexico 941,614 896,330 5% 303,582 307,823 (1%)
U.S.A. 332,536 270,650 23% 149,206 111,284 34%
Spain 291,662 240,007 22% 97,396 75,863 28%
Venezuela 115,336 108,735 6% 40,824 39,380 4%
Colombia 110,048 91,729 20% 39,574 35,627 11%
Egypt 66,627 41,698 60% 25,346 19,304 31%
Central America & the Caribbean region 149,984 101,818 47% 42,340 37,347 13%
Asia region 42,301 14,927 183% 13,557 5,074 167%
- -----------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (177,006) (192,931) (8%) (55,536) (61,715) (10%)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL 1,873,102 1,572,962 19% 656,290 569,986 15%
=============================================================================================================================
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
As a percentage of net sales
JANUARY - SEPTEMBER THIRD QUARTER
------------------------- ------------------------
OPERATING INCOME MARGIN 2004 2003 2004 2003
- ----------------------------------------------------------------------------------------------------------------------
Mexico 39.3% 40.0% 37.5% 41.0%
U.S.A. 14.8% 12.6% 20.0% 15.7%
Spain 24.7% 21.9% 24.5% 20.4%
Venezuela 32.2% 32.8% 34.7% 35.5%
Colombia 47.4% 39.2% 49.1% 40.6%
Egypt 31.5% 21.4% 34.8% 30.7%
Central America & the Caribbean region 24.4% 17.1% 20.1% 18.7%
Asia region 14.8% (6.2%) 13.9% (6.1%)
- ----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED MARGIN 23.4% 20.7% 24.2% 22.1%
======================================================================================================================
EBITDA MARGIN
- ----------------------------------------------------------------------------------------------------------------------
Mexico 44.6% 45.4% 42.8% 46.4%
U.S.A. 22.8% 21.3% 27.0% 23.6%
Spain 31.1% 28.3% 30.7% 27.1%
Venezuela 45.9% 48.7% 48.3% 49.5%
Colombia 59.6% 59.7% 59.8% 60.7%
Egypt 47.3% 44.7% 49.0% 49.6%
Central America & the Caribbean region 30.0% 23.4% 25.7% 24.7%
Asia region 28.1% 10.4% 26.6% 11.2%
- ----------------------------------------------------------------------------------------------------------------------
CONSOLIDATED MARGIN 31.8% 29.7% 32.1% 31.1%
======================================================================================================================
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
CONSOLIDATED VOLUME SUMMARY
Cement: Thousands of metric tons
Ready-mix: Thousands of cubic meters
JANUARY - SEPTEMBER THIRD QUARTER
------------------------ ---------------------
INCOME STATEMENT 2004 2003 % Var. 2004 2003 % Var.
- ----------------------------------------------------------------------------------------------------------------------------
Consolidated cement volume 49,492 48,466 2% 17,030 16,851 1%
Consolidated ready-mix volume 17,900 16,205 10% 6,229 5,568 12%
- ----------------------------------------------------------------------------------------------------------------------------
PER-COUNTRY VOLUME SUMMARY
JANUARY - SEPTEMBER THIRD QUARTER
------------------------ --------------------- THIRD QUARTER 2004 VS.
DOMESTIC CEMENT VOLUME 2004 Vs. 2003 2004 Vs. 2003 SECOND QUARTER 2004
- ----------------------------------------------------------------------------------------------------------------------------
Mexico 2% 2% 0%
U.S.A. 11% 9% 8%
Spain 2% 9% 0%
Venezuela 24% 12% 4%
Colombia 8% 2% 11%
Egypt (6%) (5%) 3%
Central America & the Caribbean region (1%) 4% (0%)
Asia Region (4%) 8% (0%)
- ----------------------------------------------------------------------------------------------------------------------------
READY-MIX VOLUME
- ----------------------------------------------------------------------------------------------------------------------------
Mexico 13% 20% 8%
U.S.A. 10% 15% 0%
Spain 1% 1% 3%
Venezuela 18% 13% (4%)
Colombia 20% 8% 14%
Central America & the Caribbean region (2%) (9%) (3%)
Asia Region N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------------
EXPORT CEMENT VOLUME
- ----------------------------------------------------------------------------------------------------------------------------
Mexico 23% 70% 30%
Spain (24%) (15%) 5%
Venezuela 25% 11% (10%)
- ----------------------------------------------------------------------------------------------------------------------------
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
US Dollars
JANUARY - SEPTEMBER THIRD QUARTER
------------------- ------------------ THIRD QUARTER 2004 VS.
DOMESTIC CEMENT PRICE 2004 Vs. 2003 2004 Vs. 2003 SECOND QUARTER 2004
- ------------------------------------------------------------------------------------------------------------------------------
Mexico (3%) (3%) (3%) (1%) (2%)
U.S.A. 3% 7% 7% 3% 3%
Spain 12% 11% 3% 0% (0%)
Venezuela (9%) (10%) (11%) 4% 0%
Colombia 4% 6% (4%) 2% (2%)
Egypt 30% 23% 24% 8% 8%
Central America & the Caribbean region (2) 8% 6% N/A 3% N/A
Asia Region (2) 22% 16% N/A 0% N/A
- ------------------------------------------------------------------------------------------------------------------------------
READY-MIX PRICE
- ------------------------------------------------------------------------------------------------------------------------------
Mexico (2%) (1%) (1%) 3% 1%
U.S.A. 7% 15% 15% 10% 10%
Spain 14% 14% 5% (1%) (2%)
Venezuela (0%) (2%) (3%) 5% 1%
Colombia 18% 20% 9% 5% 1%
Central America & the Caribbean region (2) 5% 7% N/A 1% N/A
- ------------------------------------------------------------------------------------------------------------------------------
Local Currency
JANUARY - SEPTEMBER THIRD QUARTER
------------------- ------------------ THIRD QUARTER 2004 VS.
DOMESTIC CEMENT PRICE 2004 Vs. 2003 2004 Vs. 2003 SECOND QUARTER 2004
- ------------------------------------------------------------------------------------------------------------------------------
Mexico (1) (2%) (3%) 0% (2%) 0%
U.S.A. 3% 7% 0% 3% 0%
Spain 3% 3% 0% (0%) 0%
Venezuela (1) (13%) (11%) 0% 0% 0%
Colombia (5%) (4%) 0% (2%) 0%
Egypt 36% 24% 0% 8% 0%
Central America & the Caribbean region (2) N/A N/A N/A N/A N/A
Asia Region (2) N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
READY-MIX PRICE
- ------------------------------------------------------------------------------------------------------------------------------
Mexico (1) (1%) (1%) 0% 1% 0%
U.S.A. 7% 15% 0% 10% 0%
Spain 4% 5% 0% (2%) 0%
Venezuela (1) (4%) (3%) 0% 1% 0%
Colombia 9% 9% 0% 1% 0%
Central America & the Caribbean region (2) N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
(1) Local currency price variation for Mexico and Venezuela is presented in constant currency terms as of September 30, 2004.
(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.
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 Mexican
peso/US dollar exchange rate for each quarter. The exchange rates used to
convert results for third quarter 2004, second quarter 2004, and third quarter
2003 are 11.38, 11.49, and 11.00 Mexican pesos per US dollar, respectively.
CEMEX's weighted-average inflation factor between September 30, 2003, and
September 30, 2004, was 7.96%
Per-country 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. Each country's figures presented in US dollars as of September 30, 2004,
and September 30, 2003, can be converted into its original local currency
amount by multiplying the US dollar figure by the corresponding exchange rate
provided below.
To convert September 30, 2003 US dollar figures for Mexico and Venezuela to
constant Mexican pesos and bolivars, respectively, as of September 30, 2004, it
is necessary to first convert the September 30, 2003 US dollar figure to the
corresponding local currency (using the exchange rates provided below), and
then multiply the resulting amount by the inflation-rate factor provided in the
table below.
September 31
---------------------------
Exchange rate 2004 2003 Inflation-rate factor
- -------------------------------------------------------------------------------
Mexico 11.38 11.00 1.049
Spain 0.80 0.86
Venezuela 1,920 1,600 1.208
Colombia 2,595 2,889
Egypt 6.25 6.16
- -------------------------------------------------------------------------------
Amounts provided in units of local currency per US dollar.
The Central America and Caribbean region includes CEMEX's operations in Costa
Rica, the Dominican Republic, Panama, Nicaragua, and Puerto Rico as well as our
trading operations in the Caribbean region. The Asia region includes CEMEX's
operations in the Philippines, Taiwan, Thailand, and Bangladesh.
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, dividends on preferred equity, and other
cash items (net other expenses less non-operating asset disposals). 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 receivables (including other current
assets received as payment in kind) plus historic inventories minus operating
payables.
Equity obligations for the year 2003 equaled the outstanding US$650 million of
preferred equity and US$66 million of capital securities. Effective January 1,
2004, the remaining US$66 million of capital securities will be treated as a
liability. Net debt equals total debt plus equity obligations, minus cash and
cash equivalents. Interest coverage is calculated by dividing EBITDA for the
last twelve months by the sum of interest expense and preferred dividend
payments for the last twelve months (all amounts in constant currency terms).
Net debt/EBITDA is calculated by dividing net debt at the end of the quarter by
EBITDA for the last twelve months (EBITDA in constant currency terms).
Capitalization ratio is calculated by dividing total debt by the sum of total
debt and consolidated stockholders' equity.
EARNINGS PER ADR
The number of average ADRs outstanding used for the calculation of earnings per
ADR was 339.0 million for third quarter 2004, 330.8 million for the first nine
months of 2004, 323.3 million for third quarter 2003 and 312.3 million for the
first nine months of 2003.
- -------------------------------------------------------------------------------
PLEASE REFER TO THE END OF THIS REPORT FOR DEFINITION OF Page 13
TERMS, US DOLLAR TRANSLATION METHODOLOGY AND OTHER
IMPORTANT DISCLOSURES.
