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
For the month of July, 2017
Commission File Number: 001-14946
CEMEX, S.A.B. de C.V.
(Translation of Registrant’s name into English)
Avenida Ricardo Margáin Zozaya #325, Colonia Valle del Campestre
San Pedro Garza García, Nuevo León, México 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 ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Contents
| 1. | Press release, dated July 26, 2017, announcing second quarter 2017 results for CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 2. | Second quarter 2017 results for CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 3. | Presentation regarding second quarter 2017 results for CEMEX, S.A.B. de C.V. (NYSE:CX). | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, CEMEX, S.A.B. de C.V. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CEMEX, S.A.B. de C.V. | ||||||||||
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| (Registrant) | ||||||||||
| Date: | July 26, 2017 | By: | /s/ Rafael Garza | |||||||
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| Name: Rafael Garza Title: Chief Comptroller | ||||||||||
EXHIBIT INDEX
| EXHIBIT NO. |
DESCRIPTION | |
| 1. | Press release, dated July 26, 2017, announcing second quarter 2017 results for CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 2. | Second quarter 2017 results for CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 3. | Presentation regarding second quarter 2017 results for CEMEX, S.A.B. de C.V. (NYSE:CX). | |
Exhibit 1
| Media Relations Jorge Pérez |
Investor Relations Eduardo Rendón |
Analyst Relations Lucy Rodriguez | ||
| +52(81) 8888-4334 mr@cemex.com |
+52(81) 8888-4256 ir@cemex.com |
+1(212) 317-6007 ir@cemex.com |
CEMEX’S NET INCOME GROWS 41%
| • | Net income was U.S.$289 million in the second quarter of 2017, an increase of 41% compared to the same period last year. For the first half of the year it reached U.S.$626 million, the highest net income for this period since 2008. |
| • | Total debt plus perpetual notes decreased by U.S.$676 million during the quarter. |
MONTERREY, MEXICO, JULY 26, 2017– CEMEX, S.A.B. de C.V. (“CEMEX”) (NYSE: CX), announced today that consolidated net sales reached U.S.$3.6 billion during the second quarter of 2017, an increase of 2% on a like-to-like basis for the ongoing operations and adjusting for currency fluctuations, versus the comparable period in 2016. Operating EBITDA decreased by 8% during the quarter to U.S.$696 million versus the same period in 2016. Operating EBITDA adjusted for working days, reflecting the effect of Holy Week and Ramadan, declined 5% during the quarter on a year-over-year basis.
CEMEX’s Consolidated Second-Quarter 2017 Financial and Operational Highlights
| • | The increase in consolidated net sales on a like-to-like basis was due to higher prices of our products in local currency terms in Mexico and the U.S., as well as higher volumes in our Europe region. |
| • | Operating earnings before other expenses, net, in the second quarter decreased by 11%, to U.S.$478 million. |
| • | Controlling interest net income during the quarter improved to U.S.$289 million, from an income of U.S.$205 million in the same period last year. |
| • | Operating EBITDA decreased during the quarter by 8% on a like-to-like basis, to U.S.$696 million. |
| • | Operating EBITDA margin decreased by 1.6 percentage points on a year-over-year basis to 19.5%, reflecting in part an increase in raw materials in some of our ready-mix operations, higher energy and freight costs, as well as an unfavorable regional mix effect. |
| • | Free cash flow after maintenance capital expenditures for the quarter was U.S.$353 million, compared with U.S.$478 million in the same quarter of 2016. The conversion rate of EBITDA into free cash flow after maintenance capex during the quarter reached 51 percent. |
Fernando A. Gonzalez, Chief Executive Officer, said: “Our second quarter operating and financial performance was essentially in line with our expectations as of the first quarter: good results in Mexico, the U.S. and Europe; increasing challenges in Colombia and Egypt, and to a much lesser extent the Philippines. In addition, we continue to further strengthen our balance sheet where the financial markets have allowed us to execute on our targets a bit faster than we anticipated earlier in the year.
Regarding our debt, we are pleased to see our discipline and consistency in reducing our leverage continues to translate into an improvement in our credit ratings. During the quarter, S&P placed our BB-minus credit rating on positive credit watch.
In line with our targets, we applied the proceeds from our free cash flow generation and asset sales mainly for debt reduction. Our total debt declined by U.S.$676 million during the quarter and by U.S.$3.4 billion since the end of 2015.
As we announced last week, we entered into a new facilities agreement for U.S.$4.05 billion under enhanced conditions reflecting our improved credit profile, extending the average life and reducing the cost of debt.”
Consolidated Corporate Results
During the second quarter of 2017, controlling interest net income was U.S.$289 million, an improvement over a gain of U.S.$205 million in the same period last year.
Total debt plus perpetual notes decreased by U.S.$676 million during the second quarter and by U.S.$1.1 billion during the first six months of the year.
Geographical Markets Second-Quarter 2017 Highlights
Net sales in our operations in Mexico increased 5% on a like-to-like basis in the second quarter of 2017 to U.S.$810 million, compared with U.S.$796 million in the second quarter of 2016. Operating EBITDA increased by 3% on a like-to-like basis versus the same period of last year, to U.S.$302 million.
CEMEX’s operations in the United States reported net sales of U.S.$916 million in the second quarter of 2017, an increase of 4% on a like-to-like basis from the same period in 2016. Operating EBITDA reached U.S.$170 million in the quarter, an increase of 19% on a like-to-like basis versus a gain of U.S.$156 million in the same quarter of 2016.
CEMEX’s operations in South, Central America and the Caribbean reported net sales of U.S.$479 million during the second quarter of 2017, representing a decrease of 9% on a like-to-like basis over the same period of 2016. Operating EBITDA decreased 33% on a like-to-like basis to U.S.$120 million in the second quarter of 2017, from U.S.$153 million in the second quarter of 2016.
In Europe, net sales for the second quarter of 2017 increased 2% on a like-to-like and on a year-over-year basis to U.S.$934 million. Operating EBITDA was U.S.$109 million for the quarter, 11% lower on a like-to-like basis than the same period last year.
Operations in Africa, Middle East and Asia reported a 5% decrease on a like-to-like basis in net sales for the second quarter of 2017, to U.S.$327 million, versus the second quarter of 2016, and operating EBITDA for the quarter was U.S.$49 million, down 38% on a like-to-like basis from the same period last year.
CEMEX is a global building materials company that provides high-quality products and reliable services to customers and communities in more than 50 countries. CEMEX has a rich history of improving the well-being of those it serves through innovative building solutions, efficiency advancements, and efforts to promote a sustainable future.
###
This press release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of CEMEX to be materially different from those expressed or implied in this release, including, among others, changes in general economic, political, governmental and business conditions globally and in the countries in which CEMEX does business, changes in interest rates, changes in inflation rates, changes in exchange rates, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. CEMEX assumes no obligation to update or correct the information contained in this press release.
Operating EBITDA is defined as operating income plus depreciation and operating amortization. Free Cash Flow is defined as Operating EBITDA minus net interest expense, maintenance and expansion capital expenditures, change in working capital, taxes paid, and other cash items (net other expenses less proceeds from the disposal of obsolete and/or substantially depleted operating fixed assets that are no longer in operation). Net debt is defined as total debt minus the fair value of cross-currency swaps associated with debt minus cash and cash equivalents. The Consolidated Funded Debt to Operating EBITDA ratio is calculated by dividing Consolidated Funded Debt at the end of the quarter by Operating EBITDA for the last twelve months. All of the above items are presented under the guidance of International Financial Reporting Standards as issued by the International Accounting Standards Board. Operating EBITDA and Free Cash Flow (as defined above) are presented herein because CEMEX believes that they are widely accepted as financial indicators of CEMEX’s ability to internally fund capital expenditures and service or incur debt. Operating 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.
Exhibit 2
2017
SECOND QUARTER RESULTS
◾ Stock Listing Information
NYSE (ADS)
Ticker: CX
Mexican Stock Exchange
Ticker: CEMEXCPO
Ratio of CEMEXCPO 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
Operating and financial highlights
January - June
Second Quarter
l-t-l l-t-l
2017 2016 % Var. % Var.* 2017 2016 % Var. % Var.*
Consolidated cement volume 33,850 34,716 (2%) 17,918 18,479 (3%)
Consolidated ready-mix volume 25,436 25,221 1% 13,207 13,502 (2%)
Consolidated aggregates volume 72,764 71,198 2% 38,854 38,565 1%
Net sales
6,704 6,715 (0%) 3% 3,577 3,598 (1%) 2%
Gross profit 2,248 2,326 (3%) 1% 1,244 1,306 (5%) (3%)
as % of net sales 33.5% 34.6% (1.1pp) 34.8% 36.3% (1.5pp)
Operating earnings before other
expenses, net 824 895 (8%) (6%) 478 537 (11%) (11%)
as % of net sales 12.3% 13.3% (1.0pp) 13.4% 14.9% (1.5pp)
Controlling interest net income (loss) 626 242 159% 289 205 41%
Operating
EBITDA 1,248 1,333 (6%) (4%) 696 760 (8%) (8%)
as % of net sales 18.6% 19.9% (1.3pp) 19.5% 21.1% (1.6pp)
Free cash flow after maintenance capital expenditures 183 488 (63%) 353 478 (26%)
Free cash flow 126 388 (68%) 324 422 (23%)
Total debt plus perpetual notes
11,927 14,848 (20%) 11,927 14,848 (20%)
Earnings (loss)of continuing operations per ADS 0.30 0.15 98% 0.18 0.12 43%
Fully diluted earnings (loss) of continuing operations per ADS (1) 0.30 0.15 98% 0.17 0.12 43%
Average ADSs outstanding 1,494.1 1,483.7 1% 1,497.6 1,484.9 1%
Employees
40,079 41,715 (4%) 40,079 41,715 (4%)
This information does not include discontinued operations. Please see page 14 on this report for additional
information.
Cement and aggregates volumes in thousands of metric tons. Ready-mix volumes in thousands of cubic meters.
In millions of US dollars, except volumes, percentages, employees, and per-ADS amounts. Average ADSs outstanding are
presented in millions.
Please refer to page 7 for end-of quarter CPO-equivalent
units outstanding.
*Like-to-like (“l-t-l”) percentage variations adjusted for investments/divestments and currency fluctuations.
(1)For the six-month periods ended June 30, 2017 and 2016, the effect of the potential dilutive shares generate anti-dilution; therefore, there is no change
between the reported basic and diluted earnings per share.
Consolidated net sales in the
second quarter of 2017 decreased to US$3.6 billion, representing a decline of 1%, or an increase of 2% on a like-to-like basis for the ongoing operations and for
foreign exchange fluctuations compared with the second quarter of 2016. The increase on a like to like basis was due to higher prices of our products, in local currency terms in Mexico and the U.S., as well as higher volumes
in our Europe region.
Cost of sales as a percentage of net sales increased by 1.5pp during the second quarter of 2017 compared with the same period last year, from
63.7% to 65.2%. The increase was mainly driven by higher energy costs.
Operating expenses as a percentage of net sales remained flat during the second quarter of
2017 compared with the same period last year in 21.4%.
Operating EBITDA decreased by 8% to US$696 million during the second quarter of 2017 compared with the
same period last year. The decrease on a like to like basis was mainly due to lower contributions in our South, Central America and the Caribbean, Europe and Asia, Middle East and Africa regions, partially offset by higher contributions in Mexico
and USA.
Operating EBITDA margin decreased by 1.6pp from 21.1% in the second quarter of 2016 to 19.5% this quarter.
Gain (loss) on financial instruments for the quarter was a gain of US$8 million, resulting mainly from derivatives related to CEMEX shares.
Foreign exchange results for the quarter was a loss of US$21 million, mainly due to the fluctuation of the Mexican peso versus the U.S. dollar.
Income tax for the quarter had a positive effect of US$92 million mainly due to the reversal of the valuation allowance previously set for some net operating losses
(NOL’s).
Discontinued operations for the quarter was a positive effect of US$28 million mainly due to the effect on the sale of our Pacific Northwest
operations.
Controlling interest net income (loss) was an income of US$289 million in the second quarter of 2017 versus an income of US$205 million in
the same quarter of 2016. The income primarily reflects lower financial expenses, a gain from financial instruments, a positive effect of income tax and lower non-controlling interest net income, partially
offset by lower operating earnings, a foreign exchange loss and lower equity in gain of associates.
Total debt plus perpetual notes decreased by
US$676 million during the quarter.
Page 2
Operating results
Mexico
January - June Second Quarter
2017 2016 % Var.l-t-l % Var.*2017 2016 %
Var.l-t-l % Var.*
Net sales 1,533 1,430 7%15%810 796 2%5%
Operating EBITDA
567 529 7%15%302 302 0%3%
Operating EBITDA margin 37.0% 37.0% 0.0pp 37.3% 37.9% (0.6pp)
In millions of US dollars, except percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January - June Second Quarter January - JuneSecond QuarterJanuary -
JuneSecond Quarter
Volume (1%)(10%)0%(6%)(2%)(8%)
Price (USD) 12%17%2%6%8%10%
Price (local currency) 20%20%9%9%15%14%
In Mexico, our domestic gray cement,
ready mix and aggregates volumes decreased by 10%, 6%, and 8%, respectively, during the second quarter versus the same period last year. During the first six months of the year, domestic gray cement volumes and aggregates volumes decreased 1% and
2%, respectively, while ready-mix volumes remained flat, versus the comparable period of 2016. Domestic gray cement prices in local currency increased on a year over year and sequential basis by 20% and 3%,
respectively, during the quarter.
Our volumes during the quarter declined mainly due to a high base of comparison as well as three fewer working days. Cement, ready-mix and aggregates volumes on a sequential basis increased by 3%, 1% and 5%, respectively. In the industrial-and-commercial
sector, construction of shopping centers and hotels, as well as some manufacturing projects, was supported by growth in consumption and improved manufacturing confidence indicators. The self-construction sector was sustained by sound economic
indicators including, job creation, consumption credit and remittances. In the formal residential sector, private bank mortgage lending supported higher value, more cement-intensive home investment, while affordable housing was affected by lower
subsides.
United States
January - June Second Quarter
2017 2016 % Var.l-t-l
% Var.*2017 2016 % Var.l-t-l
% Var.*
Net sales
1,731 1,757 (1%)3%916 931 (2%)4%
Operating EBITDA 287 253 14%23%170 156 9%19%
Operating EBITDA margin 16.6% 14.4% 2.2pp 18.6% 16.8% 1.8pp
In millions of US dollars, except
percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January - June Second Quarter January - JuneSecond QuarterJanuary - JuneSecond Quarter
Volume (7%)(8%)(4%)(3%)(2%)2%
Price (USD) 3%3%1%0%4%3%
Price (local currency) 3%3%1%0%4%3%
In the United States, our domestic gray cement and ready-mix volumes decreased by 8% and 3%, respectively, while our aggregates volumes increased by 2%, during the second quarter of 2017 on a year-over-year basis. During the first six months of the year, domestic
gray cement, ready-mix and aggregates volumes decreased by 7%, 4% and 2%, respectively, on a year-over-year basis. Cement volumes on a
like-to-like basis, excluding volumes related to the Odessa and Fairborn cement plants, remained flat during both the quarter and first six months of the year. Ready-mix volumes on a like-to-like basis, excluding the West Texas operations, declined by 1% during the quarter and by 2% during the
first six months of the year. Aggregates volumes, also on a like-to-like basis, increased by 6% and 1% during the quarter and first six months of the year, respectively,
compared to the same periods last year. Cement prices during the quarter on a like-to-like basis increased by 5% year-over-year and 2% sequentially.
Our flat cement volumes during the quarter on a like-to-like basis continue to reflect a difficult
base of comparison in the second quarter 2016, as well as significant precipitations in our southeastern states. In the residential sector, single family housing starts increased 9% during the quarter, supported by low inventories, wage growth, job
creation, positive consumer sentiment, and improved lending conditions. In the industrial-and-commercial sector, construction spending increased 7% year-to-date May with cement consumption growth in office, lodging and commerce. Regarding the infrastructure sector, although streets-and-highways spending declined 1% year-to-date May, year-over-year spending accelerated during April and May. We
attribute this recent improvement to increased state and local governments spending, as well as easier 2016 comparisons.
Page 3
Operating results
South, Central America and the
Caribbean
January - June Second Quarter
2017 2016 % Var.l-t-l % Var.*2017 2016 % Var.l-t-l % Var.*
Net sales
958 886 8%(6%)479 466 3%(9%)
Operating EBITDA 253 289 (13%)(24%)120 153 (22%)(33%)
Operating EBITDA margin 26.4% 32.6% (6.2pp) 25.0% 32.9% (7.9pp)
In millions of US dollars,
except percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January - June Second Quarter January - JuneSecond QuarterJanuary - JuneSecond Quarter
Volume 13%12%(5%)(11%)2%(1%)
Price (USD) (4%)(7%)2%(0%)(1%)(8%)
Price (local currency) (4%)(5%)1%1%(3%)(7%)
Our domestic gray cement volumes in the region
increased by 12% and 13% during the second quarter and first six months of 2017, respectively, versus the comparable periods of 2016. Cement volumes on a like-to-like
basis, including the regional operations of TCL, decreased by 3% and 1% during the second quarter and first six months of the year, respectively.
In Colombia,
during the second quarter and on a year-over-year basis, our domestic gray cement, ready-mix, and aggregates volumes decreased by 9%, 23% and 26%, respectively. During the first six months of the year, our
domestic gray cement, ready-mix, and aggregates volumes decreased by 5%, 14% and 17%, respectively, versus the same period of 2016. Cement consumption during the quarter was affected by macroeconomic
challenges in the country, adverse weather conditions, as well as by three fewer working days. Despite the soft demand environment, we estimate that our cement market position has remained practically unchanged during the past four consecutive
quarters. Our quarterly cement prices, on a year-over-year and sequential basis, were negatively affected by deteriorating competitive dynamics.
Europe
January - June Second Quarter
2017 2016 % Var.l-t-l % Var.*2017 2016 %
Var.l-t-l % Var.*
Net sales 1,666 1,694 (2%)3%934 941 (1%)2%
Operating EBITDA
139 181 (23%)(18%)109 127 (14%)(11%)
Operating EBITDA margin 8.4% 10.7% (2.3pp) 11.7% 13.5% (1.8pp)
In millions of US dollars, except percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January - June Second Quarter January - JuneSecond QuarterJanuary -
JuneSecond Quarter
Volume 5%4%7%3%7%3%
Price (USD) (4%)(2%)(4%)(2%)(6%)(3%)
Price (local currency) (1%)(0%)(0%)(0%)(1%)0%
In the Europe region, our
domestic gray cement, ready-mix and aggregates volumes increased by 4%, 3%, and 3%, respectively, during the second quarter of 2017 on a year-over-year basis. During the first six months of 2017 our domestic
cement, ready-mix and aggregates volumes increased 5%, 7% and 7%, respectively, compared with the same period of last year.
In the United Kingdom, our domestic gray cement, ready-mix and aggregates volumes decreased by 7%, 5% and 4%, respectively,
during the second quarter of 2017 on a year-over-year basis. For the first six months of the year our domestic gray cement and aggregates volumes decreased 9% and 2%, respectively, while ready-mix volumes
remained flat, versus the comparable period in 2016. Our cement volume decline during the quarter reflects a high base of comparison due to non-recurring industry sales in the same period last year, as well as two fewer working days. Cement volume
during the quarter was driven by the commercial and residential sectors. Page 4
Operating results
In Spain, our domestic gray
cement and aggregates volumes increased 14% and 23%, respectively, while our ready-mix volumes decreased by 4%, during the quarter and on a year-over-year basis. For the first six months of the year our
domestic gray cement and aggregates volumes increased 17% and 30%, respectively, while ready-mix volumes decreased 2%, versus the comparable period in 2016. Our cement volume growth during the quarter reflects
continued favorable activity from the residential sector. This sector benefited from favorable credit conditions and income perspectives, job creation, and pent-up housing demand. The industrial-and-commercial sector was supported by agricultural and tourism projects.
In
Germany, our domestic gray cement and ready-mix volumes increased 17% and 1%, respectively, while aggregates decreased by 2%, during the second quarter of 2017 compared with the same period of last year.
During the first six months of the year, our domestic gray cement, ready-mix and aggregates volumes increased 15%, 6% and 2%, respectively, compared with the same period of 2016. Cement volume growth reflects
strong demand driven by the residential and infrastructure sectors. The residential sector continued to benefit from low unemployment and mortgage rates, rising purchasing power as well as immigration, while the infrastructure sector benefited from
increased central government spending.
In Poland, domestic gray cement volumes during the second quarter and the first six months of the year decreased by 6% and
1%, respectively, versus the comparable periods in 2016. Our cement prices in local currency terms during the quarter increased 3%, both on a year-over-year and on a sequential basis. Cement volume decline during the quarter mainly reflects two
fewer working days. The residential sector was supported by growth in housing starts and permits, while the infrastructure sector by the continuation of projects.
In our operations in France, ready-mix and aggregates volumes increased by 5% and 9%, respectively, during the second
quarter and on a year-over-year basis. During the first six months of the year and on a year-over-year basis, ready-mix and aggregates volumes increased 9% and 14%, respectively. During the quarter and first
six months of the year, there was higher activity in traded aggregates volumes. Volume growth during the quarter reflects continued activity in the residential sector as well as “Grand Paris” related projects. The residential sectors was
supported by low interest rates and government’s initiatives including a buy-to-let program and zero-rate loans for first
time buyers.
Asia, Middle East and Africa
January - June Second Quarter
2017 2016 % Var.l-t-l
% Var.*2017 2016 % Var.l-t-l
% Var.*
Net sales
653 803 (19%)(7%)327 396 (18%)(5%)
Operating EBITDA 113 197 (43%)(31%)49 93 (47%)(38%)
Operating EBITDA margin 17.3% 24.5% (7.2pp) 15.0% 23.5% (8.5pp)
In millions of US dollars,
except percentages.
Domestic gray cement Ready-mix Aggregates
Year-over-year percentage variation January - June Second Quarter January - JuneSecond QuarterJanuary - JuneSecond Quarter
Volume (11%)(3%)0%(4%)7%2%
Price (USD) (25%)(27%)(0%)0%8%10%
Price (local currency) (1%)(4%)(0%)(1%)4%4%
Our domestic gray cement volumes in the Asia,
Middle East and Africa region during the second quarter and first six months of the year decreased by 3% and 11%, respectively, on a year-over-year basis.
In the
Philippines, our domestic gray cement volumes during the second quarter and first six months of 2017 decreased by 3% and 6%, respectively, versus the comparable periods of previous year. Our volume decline during the quarter reflects two fewer
working days, a high base of comparison during the first half of last year, with strong construction activity prior to the presidential elections, heightened competition due to growth in import volumes, as well as challenges in supply due to
extended repairs in our Apo cement plant. The residential and industrial sectors were the main drivers of demand during the quarter.
In Egypt, our domestic gray
cement volumes decreased by 7% and 20% during the second quarter of 2017 and the first six months of the year, respectively, versus the comparable periods in the previous year. Volume decline reflects reduced consumer purchasing power resulting from
the currency devaluation and increased inflation, as well as 2 fewer working days. Government projects related to the Suez Canal tunnels, the port platforms in the city of Port Said, as well as the new administrative capital, continued during the
quarter, albeit at a slow pace.
Page 5
Operating EBITDA, free cash flow and debt-related information
Operating EBITDA and free cash flow
January - June Second Quarter
2017 2016 % Var2017 2016 % Var
Operating earnings before other expenses,
net 824 895 (8%) 478 537 (11%)
+ Depreciation and operating amortization 424 438 218 222
Operating EBITDA 1,248 1,333 (6%) 696 760 (8%)
- Net financial expense
438 528 213 259
- Maintenance capital expenditures 156 156 99 99
- Change in working capital 298 (31) (90) (235)
- Taxes paid
162 210 115 154
- Other cash items (net)
21 9 9 20
- Free cash flow discontinued operations (10) (27) (4) (15)
Free cash flow after maintenance capital expenditures 183 488 (63%) 353 478 (26%)
- Strategic capital expenditures 57 100 29 56
Free cash flow
126 388 (68%) 324 422 (23%)
During the quarter, free cash flow plus proceeds from asset divestments were mainly used for debt repayment.
Our debt during the quarter reflects a negative foreign exchange conversion effect of US$186 million.
Information on debt and perpetual notes
First Second
Second Quarter Quarter Quarter
2017 2016 % Var2017 2017 2016
Total debt (1) 11,483 14,406 (20%) 12,164 Currency denomination
Short-term5% 1%
7% US dollar75% 80%
Long-term95% 99% 93% Euro21% 19%
Perpetual notes
444 442 0% 439 Mexican peso1% 1%
Cash and cash equivalents 418 614 (32%) 435 Other3% 1%
Net debt plus perpetual notes 11,509 14,233 (19%) 12,168
Interest rate
Consolidated funded debt (2)/EBITDA (3) 4.04 4.93 4.07 Fixed72% 73%
Variable28%
27%
Interest coverage (3) (4) 3.39 2.80 3.30
In millions of US
dollars, except percentages and ratios.
(1) Includes convertible notes and capital leases, in accordance with International Financial Reporting Standards (IFRS).
(2) Consolidated funded debt as of June 30, 2017 was US$10,827 million, in accordance with our contractual obligations under the 2014 Credit Agreement.
(3) EBITDA calculated in accordance with IFRS.
(4) Interest expense
calculated in accordance with our contractual obligations under the 2014 Credit Agreement.
Page 6
Equity-related and derivative instruments information
Equity-related information
One CEMEX ADS represents ten CEMEX CPOs. The following amounts are
expressed in CPO terms.
Beginning-of-quarter
CPO-equivalent units outstanding 14,060,791,574
CPOs issued due to recapitalization of retained
earnings562,431,663
Stock-based compensation17,741,914
CPO’s issued as a
result of the conversion of a portion of our 3.75% Convertible Subordinated Notes due 2018 into CEMEX ADS’s378,619,910
End-of-quarter CPO-equivalent units outstanding 15,019,585,061
Outstanding units
equal total CEMEX CPO-equivalent units less CPOs held in subsidiaries, which as of June 30, 2017 were 20,541,277.
CEMEX has outstanding mandatorily convertible securities which, upon conversion, will increase the number of CPOs outstanding by approximately 236 million,
subject to antidilution adjustments.
Employee long-term compensation plans
As
of June 30, 2017, our executives held 31,728,968 restricted CPOs, representing 0.2% of our total CPOs outstanding as of such date.
Derivative instruments
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 First Quarter
2017 2016 2017
In millions of US
dollars. Notional amount Fair value Notional amount Fair value Notional amount Fair value
Exchange rate derivatives (1)
888 (41)3818639(22)
Equity related derivatives (2) (5) 289 24690646136
Interest rate swaps (3) 142 21152 3214722
Fuel derivatives
(4) 91 - 44 778 7
1,410 4 1,26753 1,32543
(1) Exchange rate derivatives are used to manage currency exposures that arise from the regular operations and from expected sale of assets.
(2) Equity derivatives related with options on CEMEX’s own shares.
(3) Interest-rate swap
related to our long-term energy contracts.
(4) Forward contracts negotiated to hedge the price of the fuel consumed in certain operations.
(5) As required by IFRS, the equity related derivatives fair market value as of June 30, 2017 and 2016 includes a liability of US$44 million and US$21 million,
respectively, relating to an embedded derivative in CEMEX’s mandatorily convertible securities.
Under IFRS, companies are required to recognize all derivative
financial instruments on the balance sheet as assets or liabilities, at their estimated fair market value, with changes in such fair market values recorded in the income statement, except when transactions are entered into for cash-flow-hedging
purposes, in which case changes in the fair market value of the related derivative instruments are recognized temporarily in equity and then reclassified into earnings as the inverse effects of the underlying hedged items flow through the income
statement, and/or transactions related to net investment hedges, in which case changes in fair value are recorded directly in equity as part of the currency translation effect, and are reclassified to the income statement only upon disposal of the
net investment. As of June 30, 2017, in connection with the fair market value recognition of its derivatives portfolio, CEMEX recognized increases in its assets and liabilities resulting in a net asset of US$4 million, including a
liability of US$44 million corresponding to an embedded derivative related to our mandatorily convertible securities, which according to our debt agreements, is presented net of the assets associated with the derivative instruments. Page 7
Operating results
Consolidated Income
Statement & Balance Sheet
CEMEX, S.A.B. de C.V. and Subsidiaries
(Thousands of U.S. Dollars, except per ADS amounts)
January - June Second
Quarter
like-to-like like-to-like
INCOME STATEMENT 2017 2016 % Var.% Var.*2017 2016 % Var.% Var.*
Net sales 6,703,909 6,715,113 (0%)3%3,576,672 3,597,534 (1%)2%
Cost of sales (4,456,121) (4,389,553) (2%) (2,332,812) (2,291,709) (2%)
Gross profit 2,247,788 2,325,561 (3%)1%1,243,860 1,305,824 (5%)(3%)
Operating expenses (1,423,679) (1,430,103) 0% (765,771) (768,435) 0%
Operating earnings before other expenses, net 824,109 895,458 (8%)(6%)478,089 537,389 (11%)(11%)
Other expenses, net 135,434 (55,569) N/A (9,539) (40,557) 76%
Operating earnings 959,544 839,889 14% 468,551 496,832 (6%)
Financial expense (540,895) (613,611) 12% (272,444) (342,978) 21%
Other
financial income (expense), net 3,412 91,953 (96%) (22,191) 73,617 N/A
Financial income 9,079 11,065 (18%)
4,301 3,355 28%
Results from financial instruments, net 108,676 (2,251) N/A 7,712 (24,324) N/A
Foreign exchange results (87,966) 111,493 N/A (20,570) 108,316 N/A
Effects of net
present value on assets and liabilities and others, net (26,378) (28,354) 7% (13,635) (13,730) 1%
Equity in gain (loss) of
associates 9,576 16,306 (41%) 7,912 13,857 (43%)
Income (loss) before income
tax 431,637 334,537 29% 181,827 241,328 (25%)
Income tax 42,199 (80,309) N/A
92,327 (38,960) N/A
Profit (loss) of continuing operations 473,836 254,228 86% 274,153 202,368 35%
Discontinued operations 184,963 22,830 710% 27,757 25,104 11%
Consolidated net income (loss) 658,799 277,059 138% 301,910 227,471 33%
Non-controlling interest net income (loss) 32,570 35,536 (8%) 13,259 22,070 (40%)
Controlling interest net income (loss) 626,229 241,522 159% 288,652 205,402 41%
Operating EBITDA 1,248,129 1,332,970 (6%)(4%)695,682 759,670 (8%)(8%)
Earnings (loss) of continued operations per ADS 0.30 0.15 98% 0.18 0.12 43%
Earnings (loss) of discontinued operations per ADS 0.12 0.02 705% 0.02 0.02 10%
As of June 30
BALANCE SHEET 2017 2016 % Var.
Total assets 29,382,731 30,784,048 (5%)
Cash and cash
equivalents 417,706 620,541 (33%)
Trade receivables less allowance for doubtful accounts 1,744,028 1,746,431 (0%)
Other accounts receivable 293,376 258,715 13%
Inventories, net
1,009,237 965,593 5%
Assets held for sale 247,142 436,898 (43%)
Other current assets 183,428 185,278 (1%)
Current
assets 3,894,916 4,213,455 (8%)
Property, machinery and equipment, net 11,812,024 11,992,028 (2%)
Other assets 13,675,791 14,578,564 (6%)
Total liabilities 18,605,340 21,350,783 (13%)
Liabilities held for sale 384 17,899 (98%)
Other current
liabilities 4,589,702 4,049,254 13%
Current liabilities 4,590,086 4,067,153 13%
Long-term liabilities 10,306,408 12,999,393 (21%)
Other
liabilities 3,708,846 4,284,237 (13%)
Total Stockholder’s equity 10,777,391 9,433,265 14%
Non-controlling interest and perpetual instruments 1,467,831 1,198,245 22%
Total Controlling interest 9,309,560 8,235,019 13%
Page
8
Operating results
Consolidated Income
Statement & Balance Sheet
CEMEX, S.A.B. de C.V. and Subsidiaries
(Thousands of Mexican Pesos in nominal terms, except per ADS amounts)
January
- June Second Quarter
INCOME STATEMENT 2017 2016 % Var.2017 2016 % Var.
Net sales 128,782,094 120,334,833 7%66,275,737 64,719,628 2%
Cost of sales
(85,602,084) (78,660,781) (9%)(43,227,011) (41,227,849) (5%)
Gross profit 43,180,010 41,674,052 4%23,048,726 23,491,780 (2%)
Operating expenses (27,348,867) (25,627,446) (7%)(14,189,729) (13,824,151) (3%)
Operating
earnings before other expenses, net 15,831,143 16,046,606 (1%)8,858,996 9,667,629 (8%)
Other expenses, net 2,601,693 (995,789)
N/A(176,749) (729,615) 76%
Operating earnings 18,432,837 15,050,817 22%8,682,248 8,938,014 (3%)
Financial expense (10,390,593) (10,995,901) 6%(5,048,395) (6,170,172) 18%
Other financial
income (expense), net 65,546 1,647,791 (96%)(411,205) 1,324,363 N/A
Financial income 174,416 198,280 (12%)79,694 60,358 32%
Results from financial instruments, net 2,087,672 (40,339) N/A142,908 (437,584) N/A
Foreign exchange results (1,689,819) 1,997,958 N/A(381,157) 1,948,598 N/A
Effects of
net present value on assets and liabilities and others, net (506,723) (508,108) 0%(252,650) (247,009) (2%)
Equity in gain (loss) of associates
183,960 292,196 (37%)146,602 249,289 (41%)
Income (loss) before income tax 8,291,750 5,994,902 38%3,369,249 4,341,494 (22%)
Income tax 810,639 (1,439,130) N/A1,710,814 (700,898) N/A
Profit
(loss) of continuing operations 9,102,389 4,555,772 100%5,080,063 3,640,595 40%
Discontinued operations
3,553,142 409,120 768%514,337 451,614 14%
Consolidated net income (loss) 12,655,531 4,964,891 155%5,594,401 4,092,209 37%
Non-controlling net income (loss) 625,676 636,813 (2%)245,680 397,031 (38%)
Controlling net income (loss) 12,029,856 4,328,078 178%5,348,720 3,695,178 45%
Operating EBITDA 23,976,565 23,886,816 0%12,890,996 13,666,464 (6%)
Earnings (loss) of continued operations per ADS 5.71 2.68 113%3.24 2.21 47%
Earnings (loss) of discontinued operations per ADS 2.38 0.28 762%0.34 0.30 13%
As of June 30
BALANCE SHEET 2017 2016 % Var.
Total assets 533,002,737 563,348,074 (5%)
Cash and cash equivalents
7,577,192 11,355,899 (33%)
Trade receivables less allowance for doubtful accounts 31,636,665 31,959,696 (1%)
Other accounts receivable 5,321,832 4,734,479 12%
Inventories, net
18,307,560 17,670,345 4%
Assets held for sale 4,483,150 7,995,225 (44%)
Other current assets 3,327,376 3,390,591 (2%)
Current assets
70,653,776 77,106,236 (8%)
Property, machinery and equipment, net 214,270,116 219,454,111 (2%)
Other assets 248,078,845 266,787,727 (7%)
Total liabilities
337,500,873 390,719,332 (14%)
Liabilities held for sale 6,974 327,547 (98%)
Other current liabilities 83,257,189 74,101,346 12%
Current liabilities
83,264,163 74,428,893 12%
Long-term liabilities 186,958,247 237,888,896 (21%)
Other liabilities 67,278,463 78,401,543 (14%)
Total stockholders’ equity
195,501,864 172,628,742 13%
Non-controlling interest and perpetual instruments
26,626,449 21,927,888 21%
Total controlling interest 168,875,415 150,700,855 12%
Page 9
Operating results
Operating Summary per Country
In thousands of U.S. dollars
January - June Second Quarter
like-to-like
like-to-like
NET SALES 2017 2016 % Var.% Var. *2017 2016 %
Var.% Var. *
Mexico 1,532,538 1,430,188 7%15% 810,175 796,478 2%5%
U.S.A. 1,730,738 1,756,942 (1%)3% 916,160 931,463 (2%)4%
South, Central
America and the Caribbean 958,273 886,357 8%(6%) 478,766 465,529 3%(9%)
Europe 1,665,602 1,693,566 (2%)3%
933,926 941,137 (1%)2%
Asia, Middle East and Africa 652,887 803,220 (19%)(7%) 326,576 396,141 (18%)(5%)
Others and intercompany eliminations 163,872 144,839 13%8% 111,069 66,785 66%75%
TOTAL 6,703,909 6,715,113 (0%)3% 3,576,672 3,597,534 (1%)2%
GROSS PROFIT
Mexico 818,080 756,888 8%16% 443,721 433,679 2%5%
U.S.A.
447,012 435,056 3%8% 252,450 246,998 2%8%
South, Central America and the Caribbean 365,216 379,459 (4%)(14%)
177,708 200,793 (11%)(21%)
Europe 406,089 451,510 (10%)(5%) 259,833 278,777 (7%)(4%)
Asia, Middle East and Africa 199,521 273,835 (27%)(16%) 94,373 135,630 (30%)(21%)
Others and intercompany eliminations 11,869 28,813 (59%)(48%) 15,776 9,947 59%40%
TOTAL 2,247,788 2,325,561 (3%)1% 1,243,860 1,305,824 (5%)(3%)
OPERATING
EARNINGS BEFORE OTHER EXPENSES, NET
Mexico 509,072 462,758 10%18% 272,166 268,310 1%5%
U.S.A. 111,994 75,274 49%102% 82,191 66,652 23%54%
South, Central America
and the Caribbean 207,691 251,601 (17%)(29%) 96,374 133,944 (28%)(40%)
Europe 45,288 80,918 (44%)(38%)
59,579 75,459 (21%)(18%)
Asia, Middle East and Africa 82,170 158,746 (48%)(40%) 33,558 74,356 (55%)(48%)
Others and intercompany eliminations (132,106) (133,839) 1%(10%) (65,778) (81,331) 19%12%
TOTAL 824,109 895,458 (8%)(6%) 478,089 537,389 (11%)(11%)
Page 10
Operating results
Operating Summary per Country
EBITDA in thousands of U.S. dollars. EBITDA margin as a percentage of net sales.
January - June Second Quarter
like-to-like
like-to-like
OPERATING EBITDA 2017 2016 % Var.% Var.
*2017 2016 % Var.% Var. *
Mexico 567,468 528,928 7%15% 301,965 301,544 0%3%
U.S.A. 287,039 252,792 14%23% 170,134 156,372 9%19%
South, Central America
and the Caribbean 252,791 289,015 (13%)(24%) 119,673 153,173 (22%)(33%)
Europe 139,256 180,954 (23%)(18%)
108,862 127,091 (14%)(11%)
Asia, Middle East and Africa 112,977 196,648 (43%)(31%) 49,071 93,280 (47%)(38%)
Others and intercompany eliminations (111,401) (115,368) 3%(10%) (54,023) (71,790) 25%16%
TOTAL 1,248,129 1,332,970 (6%)(4%) 695,682 759,670 (8%)(8%)
OPERATING EBITDA MARGIN
Mexico 37.0% 37.0% 37.3% 37.9%
U.S.A. 16.6% 14.4% 18.6% 16.8%
South, Central America and the Caribbean 26.4% 32.6% 25.0%
32.9%
Europe 8.4% 10.7% 11.7% 13.5%
Asia, Middle East and Africa 17.3% 24.5%
15.0% 23.5%
TOTAL 18.6% 19.9% 19.5% 21.1%
Page 11
Operating results
Volume Summary
Consolidated volume summary
Cement and aggregates: Thousands of metric tons.
Ready-mix: Thousands of cubic meters.
January - June
Second Quarter
2017 2016 % Var.2017 2016 % Var.
Consolidated cement volume 1 33,850 34,716 (2%)17,918 18,479 (3%)
Consolidated ready-mix volume 25,436 25,221 1%13,207 13,502 (2%)
Consolidated aggregates volume 72,764 71,198 2%38,854 38,565 1%
Per-country volume summary
January - June Second Quarter Second Quarter 2017 Vs.
DOMESTIC GRAY CEMENT VOLUME 2017 Vs. 2016 2017 Vs. 2016 First Quarter 2017
Mexico (1%) (10%)
3%
U.S.A. (7%) (8%) 11%
South, Central America and the Caribbean 13% 12% 5%
Europe 5% 4% 37%
Asia, Middle East and Africa (11%) (3%) 12%
READY-MIX VOLUME
Mexico 0% (6%) 1%
U.S.A. (4%) (3%) 13%
South, Central America and the Caribbean (5%) (11%) (4%)
Europe 7% 3% 20%
Asia, Middle East and Africa 0% (4%) (8%)
AGGREGATES VOLUME
Mexico (2%) (8%) 5%
U.S.A. (2%) 2% 17%
South, Central America and the Caribbean 2% (1%) 3%
Europe 7% 3% 25%
Asia, Middle East and Africa 7% 2% (9%)
1 Consolidated cement volume includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker.
Page 12
Operating results
Price Summary
Variation in U.S. Dollars
January - June Second Quarter Second Quarter 2017 Vs.
DOMESTIC GRAY CEMENT PRICE 2017 Vs. 2016 2017 Vs. 2016 First Quarter 2017
Mexico 12% 17% 10%
U.S.A. 3% 3% 2%
South, Central America and the Caribbean (*) (4%) (7%) (3%)
Europe (*) (4%) (2%) 2%
Asia, Middle East and Africa (*) (25%) (27%) (4%)
READY-MIX PRICE
Mexico 2% 6% 8%
U.S.A. 1% 0% (2%)
South, Central America and the Caribbean (*) 2% (0%) (2%)
Europe (*) (4%) (2%) 2%
Asia, Middle East and Africa (*) (0%) 0% 1%
AGGREGATES PRICE
Mexico 8% 10% 7%
U.S.A. 4% 3% (1%)
South, Central America and the Caribbean (*) (1%) (8%) (5%)
Europe (*) (6%) (3%) (1%)
Asia, Middle East and Africa (*) 8% 10% 2%
Variation in Local Currency
January - June Second Quarter Second Quarter 2017 Vs.
DOMESTIC GRAY CEMENT PRICE 2017 Vs. 2016 2017 Vs. 2016 First Quarter 2017
Mexico 20% 20% 3%
U.S.A. 3% 3% 2%
South, Central America and the Caribbean (*) (4%) (5%) (2%)
Europe (*) (1%) (0%) (2%)
Asia, Middle East and Africa (*) (1%) (4%) (4%)
READY-MIX PRICE
Mexico 9% 9% 1%
U.S.A. 1% 0% (2%)
South, Central America and the Caribbean (*) 1% 1% (1%)
Europe (*) (0%) (0%) (3%)
Asia, Middle East and Africa (*) (0%) (1%) (1%)
AGGREGATES PRICE
Mexico 15% 14% (0%)
U.S.A. 4% 3% (1%)
South, Central America and the Caribbean (*) (3%) (7%) (4%)
Europe (*) (1%) 0% (5%)
Asia, Middle East and Africa (*) 4% 4% (1%)
(*) Volume weighted-average price.
Page 13
Other information
Mexican Tax Reform 2016
In October 2015, a new tax reform approved by Congress (the “new tax reform”) which became effective in January 1, 2016 granted entities the option
to settle a portion of the liability for the exit of the tax consolidation regime using available tax loss carryforwards of the previously consolidated entities, considering a discount factor, and a tax credit to offset certain items of the
aforementioned liability. Consequently, during 2015, as a result of payments made, the liability was further reduced to approximately US$784 million, which after the application of tax credits and assets for tax loss carryforwards (as provided
by the new tax reform) which had a book value for CEMEX before discount of approximately US$537 million, as of December 31, 2015, the Parent Company’s liability was reduced to approximately US$192 million. In the first half of
2016, CEMEX paid US$41 million regarding this liability. In the first half of 2017, CEMEX paid US$46 million regarding this liability. All USD amounts are based on an exchange rate of Ps20.72 to US$1.00 as of December 31, 2016.
Capped Calls
In relation to the capped calls that had been purchased by CEMEX
with proceeds of its subordinated convertibles notes issued in March 2011 and due in March 2018, we have amended during this year as of July 26, 2017, capped calls transactions over approximately 54 million CEMEX ADSs maturing in March
2018, with the purpose of unwinding the position. As a result, CEMEX has received during this year as of July 26, 2017, an aggregate amount of approximately US$78 million in cash. After these amendments, CEMEX retains an amount of capped
calls over approximately 17 million CEMEX ADSs maturing in March 2018 with strike prices of US$7.8 and US$11.5.
Discontinued Operations, Other Disposal Groups
and Assets held for Sale
Discontinued Operations
On June 30, 2017, CEMEX
announced that after approval from regulators, one of its subsidiaries in the U.S. closed the divestment of its Pacific Northwest Materials Business consisting of aggregate, asphalt and ready mix concrete operations in Oregon and Washington to
Cadman Materials, Inc., part of Lehigh Hanson, Inc. and the U.S. subsidiary of HeidelbergCement Group, for approximately US$150 million. Considering the disposal of the entire Pacific Northwest Materials Business, their operations for the six-month periods ended June 30, 2017 and 2016, included in CEMEX’s statements of operations were reclassified net of tax to the single line item “Discontinued Operations.” CEMEX determined a net
gain on disposal of these assets for approximately US$22 million recognized during June 2017 as part of discontinued operations, which included a proportional allocation of goodwill for approximately US$73 million.
On November 28, 2016, CEMEX announced that one of its subsidiaries in the United States signed a definitive agreement to divest its Concrete Reinforced Pipe Manufacturing
Business (“Concrete Pipe Business”) in the United States to Quikrete Holdings, Inc. (“Quikrete”) for approximately US$500 million plus an additional US$40 million contingent consideration based on future performance. On
January 31, 2017, after the satisfaction of certain conditions precedent including approval from regulators, CEMEX announced the closing of the sale to Quikrete according to the agreed upon price conditions. Considering the disposal of the
entire Concrete Pipe Business, their operations for the one-month period ended January 31, 2017 and the six-month period ended June 30 2016, included in
CEMEX’s statements of operations were reclassified net of tax to the single line item “Discontinued Operations.” CEMEX determined a net gain on disposal of these assets for approximately US$148 million recognized during January
2017 as part of discontinued operations, which included a proportional allocation of goodwill for approximately US$260 million.
On May 26, 2016, CEMEX
concluded the sale to SIAM City Cement Public Company limited (“SIAM Cement”) of its operations in Bangladesh and Thailand for approximately US$53 million. CEMEX’s operations in Bangladesh and Thailand for the period from
January 1 to May 26, 2016 included in CEMEX’s statement of operations for the six-month period ended June 30, 2016 were reclassified net of tax to the single line item “Discontinued
operations.”
In connection with an agreement signed between CEMEX and Duna-Dráva Cement on August 12, 2015
for the sale of its Croatian operations, including assets in Bosnia and Herzegovina, Montenegro and Serbia (jointly the “Croatian Operations”), which mainly consist of three cement plants with aggregate annual production capacity of
approximately 2.4 million tons of cement, two aggregates quarries and seven ready-mix plants, for approximately € 230.9 million, CEMEX reported its Croatian Operations net of tax in the
single line item of discontinued operations until the first quarter of 2017. On April 5, 2017, CEMEX announced that the European Commission issued a decision that ultimately did not allow
Duna-Dráva Cement to purchase the aforementioned operations. Consequently, the transaction was cancelled and CEMEX maintained its Croatian Operations and continue to operate them. For the six-month periods ended June 30, 2017 and 2016, the Croatian Operations are presented line-by-line in the statements of
operations.
The following table presents condensed combined information of the statement of operations of CEMEX discontinued operations mainly: a) the Concrete
Pipe Business for the one-month period ended January 31, 2017 and the six-month period ended June 30 2016; b) Pacific Northwest Materials Business for the six-month period ended June 2016 and the six-month period ended June 2017; and c) Bangladesh and Thailand for the period from January 1 to May 26, 2016:
INCOME STATEMENT Jan-June Second Quarter
(Millions of
Mexican pesos) 2017 201620172016
Sales 1,549 4,426 5922,212
Cost of sales and
operating
g expenses (1,531) (4,293) (542)(2,121)
Other expenses, net 14 (7)
16(3)
Interest expense, net and others (3) (63)(2)(5)
Income (loss) before
income tax 29 626584
Income tax - (56)-(35)
Net income (loss) 29 66549
Non controlling interest net income 0 ---
Controlling interest net income 29
66549
Net gain on sale 3,524 403449403
Discontinued operations 3,553
409514452
Page 14
Other information
Other disposal groups
Other disposal groups do not represent the disposal of an entire sector or line of business and, due to the remaining ongoing activities and the relative size, are
not considered discontinued operations and were consolidated by CEMEX line-by-line in the statement of operations for all reported periods. The main disposal groups are
as follows:
On November 18, 2016, a subsidiary of CEMEX in the United States closed the sale to an affiliate of Grupo Cementos de Chihuahua, S.A.B. de C.V.
(“GCC”) of certain assets consisting in CEMEX’s cement plant in Odessa, Texas, two cement terminals and the building materials business in El Paso, Texas and Las Cruces, New Mexico, for an amount of approximately US$306 million.
Odessa plant has an annual production capacity of approximately 537 thousand tons. CEMEX’s statement of operations for the six-month period ended June 30, 2016 includes the operations of these
assets consolidated line-by-line.
On September 12, 2016, CEMEX announced that
one of its subsidiaries in the United States signed a definitive agreement for the sale of its Fairborn, Ohio cement plant and cement terminal in Columbus, Ohio to Eagle Materials Inc. (“Eagle Materials”) for approximately
US$400 million. Fairborn plant has an annual production capacity of approximately 730 thousand tons. On February 10, 2017, CEMEX announced that such subsidiary in the United States closed the divestment of these assets. CEMEX’s
statements of operations include the operations of the Fairborn cement plant and the Columbus cement terminal consolidated line-by-line for the period in 2017 until
their disposal in February 10 and for the six-month period ended June 30, 2016. CEMEX determined a net gain on disposal of these assets for approximately US$188 million recognized during
February 2017 as part of Other expenses, net, which included a proportional allocation of goodwill for approximately US$211 million.
The following table
presents selected combined statement of operations information of the net assets sold to GCC for the six-month period ended June 30, 2016 and those sold to Eagle Materials for the period in 2017 until
their disposal in February 10 and for the six-month period ended June 30, 2016:
SELECTED INFORMATION Jan-Jun Second Quarter
(Millions of Mexican pesos) 20177201620172016
Sales 86 1,5495-878
Cost of sales and operating
expenses
(71) (1,418) - (761)
Operating earnings before
other expenses, net 15 131-117
Page 15
Definitions of terms and disclosures
Methodology
for translation, consolidation, and presentation of results
Under IFRS, beginning January 1, 2008, CEMEX translates the financial statements of foreign
subsidiaries using exchange rates at the reporting date for the balance sheet and the exchange rates at the end of each month for the income statement. CEMEX reports its consolidated results in Mexican pesos.
For the reader’s convenience, beginning June 30, 2008, US dollar amounts for the consolidated entity are calculated by converting the nominal Mexican peso amounts at the
end of each quarter using the average MXN/US$ exchange rate for each quarter. The exchange rates used to convert results for the second quarter of 2017 and the second quarter of 2016 are 18.53 and 17.99 Mexican pesos per US dollar, respectively.
Per-country/region figures are presented in US dollars for the reader’s convenience. Figures presented in US dollars
for Mexico, as of June 30, 2017, and June 30, 2016, can be converted into their original local currency amount by multiplying the US-dollar figure by the corresponding average exchange rates for 2017
and 2016, provided below.
Breakdown of regions
The South, Central America and
the Caribbean region includes CEMEX’s operations in Argentina, Bahamas, Barbados, Brazil, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Haiti, Jamaica, Nicaragua, Panama, Peru, Trinidad & Tobago, and Puerto
Rico, as well as trading operations in the Caribbean region.
Europe includes operations in Spain, Croatia, the Czech Republic, France, Germany, Latvia, Poland, and
the United Kingdom, as well as trading operations in several Nordic countries.
The Asia, Middle East and Africa region includes operations in Egypt, Israel, and
the Philippines.
Definition of terms
Free cash flow equals operating EBITDA
minus net interest expense, maintenance and strategic 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 and coupon payments on our perpetual notes).
Maintenance capital expenditures investments incurred for the purpose of
ensuring the company’s operational continuity. These include capital expenditures on projects required to replace obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply
with governmental regulations or company policies.
Net debt equals total debt (debt plus convertible bonds and financial leases) minus cash and cash equivalents.
Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization.
pp equals percentage points
Prices all references to pricing initiatives, price increases or
decreases, refer to our prices for our products
Strategic capital expenditures investments incurred with the purpose of increasing the company’s
profitability. These include capital expenditures on projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs.
TCL Operations of Trinidad Cement Limited mainly in Trinidad and Tobago, Jamaica and Barbados.
Working capital equals operating accounts receivable (including other current assets received as payment in kind) plus historical inventories minus operating
payables.
Earnings per ADS
The number of average ADSs outstanding used for
the calculation of earnings per ADS was 1,497.6 million for the second quarter of 2017; 1,494.1 million for year-to-date 2017; 1,484.9 million for the
second quarter of 2016; and 1,483.7 million for year-to-date 2016.
According
to the IAS 33 Earnings per share, the weighted-average number of common shares outstanding is determined considering the number of days during the accounting period in which the shares have been outstanding, including shares derived from corporate
events that have modified the stockholder’s equity structure during the period, such as increases in the number of shares by a public offering and the distribution of shares from stock dividends or recapitalizations of retained earnings and the
potential diluted shares (Stock options, Restricted Stock Options and Mandatory Convertible Shares). The shares issued as a result of share dividends, recapitalizations and potential diluted shares are considered as issued at the beginning of the
period.
Exchange rates January - June Second Quarter Second Quarter
2017 2016 2017 2016 2017 2016
Average Average
AverageAverageEnd of periodEnd of period
Mexican peso 19.21 17.92 18.53 17.99 18.14 18.3
Euro 0.9177 0.8976 0.8964 0.8929 0.8755 0.9007
British pound
0.7872 0.7054 0.7734 0.7065 0.7676 0.7517
Amounts provided in units of local currency per US dollar. Page 16
2017 Second Quarter Results Exhibit 3
This presentation contains forward-looking statements within the meaning of the U.S. federal securities laws. CEMEX, S.A.B. de C.V. and its direct and indirect subsidiaries (“CEMEX”) intends, but are not limited to, these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may,” “should,” “could,” “anticipate,” “estimate,” “expect,” “plan,” “believe,” “predict,” “potential” and “intend” or other similar words. These forward-looking statements reflect CEMEX’s current expectations and projections about future events based on CEMEX’s knowledge of present facts and circumstances and assumptions about future events. These statements necessarily involve risks and uncertainties that could cause actual results to differ materially from CEMEX’s expectations. Some of the risks, uncertainties and other important factors that could cause results to differ, or that otherwise could have an impact on CEMEX or its subsidiaries, include, but are not limited to, the cyclical activity of the construction sector; CEMEX’s exposure to other sectors that impact CEMEX’s business, such as the energy sector; competition; general political, economic and business conditions in the markets in which CEMEX operates; the regulatory environment, including environmental, tax, antitrust and acquisition-related rules and regulations; CEMEX’s ability to satisfy CEMEX’s obligations under its material debt agreements, the indentures that govern CEMEX’s senior secured notes and CEMEX’s other debt instruments; expected refinancing of existing indebtedness; the impact of CEMEX’s below investment grade debt rating on CEMEX’s cost of capital; CEMEX’s ability to consummate asset sales, fully integrate newly acquired businesses, achieve cost-savings from CEMEX’s cost-reduction initiatives and implement CEMEX’s global pricing initiatives for CEMEX’s products; the increasing reliance on information technology infrastructure for CEMEX’s invoicing, procurement, financial statements and other processes that can adversely affect operations in the event that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; weather conditions; natural disasters and other unforeseen events; and the other risks and uncertainties described in CEMEX’s public filings. Readers are urged to read these presentations and carefully consider the risks, uncertainties and other factors that affect CEMEX’s business. The information contained in these presentations is subject to change without notice, and CEMEX is not obligated to publicly update or revise forward-looking statements. Readers should review future reports filed by CEMEX with the U.S. Securities and Exchange Commission. Unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases, refer to CEMEX’s prices for CEMEX’s products. UNLESS OTHERWISE NOTED, ALL FIGURES ARE PRESENTED IN DOLLARS, BASED ON INTERNATIONAL FINANCIAL REPORTING STANDARDS, AS APPLICABLE Copyright CEMEX, S.A.B. de C.V. and its subsidiaries
Higher consolidated ready-mix and aggregates volumes during 1H17, on a like-to-like basis; consolidated cement volumes declined 2% Higher like-to-like consolidated prices for our three core products during the quarter, on a year-over-year basis Favorable prices in Mexico and the U.S., as well as higher volumes in our Europe region resulted in a 2% growth in like-to-like sales during 2Q17 Operating EBITDA declined by 8% on a like-to-like basis, due to lower contributions from the Europe, South, Central America and the Caribbean, and Asia, Middle East & Africa regions During 2Q17, operating EBITDA margin declined by 1.6pp Operating EBITDA declined 8% on a like-to-like basis 760 -20 2Q17 715 -110 Var. cost & distr. 100 -65 Vol. 14 2Q16 -8% -8% 2Q17 l-t-l EBITDA variation 774 16 696 2Q16 pro-forma Acq./div.1 Millions of U.S. dollars 1 Includes +US$27 million from Trinidad Cement Limited (“TCL”), which CEMEX began consolidating starting February 2017, -US$10 million from the Fairborn cement plant divestment, which closed in February 2017, and -US$4 million from the Odessa cement plant divestment, which closed in November 2016.
242 626 205 289 Seventh consecutive quarter with positive net income 696 353 -115 90 -99 -213 324 -5 -29 WC Maint. CapEx Net fin. exp. EBITDA2Q17 Taxes Other1 FCF after maint. CapEx FCF 2Q17 Stra-tegic CapEx Controlling interest net income Free cash flow Millions of U.S. dollars 1 Includes Other Cash Items plus Free Cash Flow Discontinued Operations 2Q16 2Q17 6M16 6M17 +41% +159%
Free cash flow generation and divestments proceeds mainly used to reduce debt We have reduced total debt plus perpetuals by US$3.4 billion since December 2015, representing a reduction of approximately 22% S&P Global Ratings ("S&P") placed CEMEX's "BB-" credit rating on positive credit watch Reduction of US$1,147 million in total debt during the first half of the year Total debt plus perpetuals variation 13,073 231 -126 -140 -325 -1,260 Other3 TCL shares + debt Cash balance var. Divest-ments1 4Q16 11,927 2Q17 -1,147 Debt FX effect 231 241 Conv. 2 FCF after strategic CapEx Millions of U.S. dollars 1 Includes: US$500 million from the divestment of the U.S. Concrete Pipe Business, US$400 million from the divestment of the Fairborn cement plant in the U.S., US$210 million from the sale of a stake in Grupo Cementos de Chihuahua, and US$150 million from the divestment of the Pacific Northwest Materials Business in the U.S. 2 Approximately US$325 million principal amount of 3.75% Convertible Subordinated Notes due 2018 were converted into ADSs of CEMEX 3 Includes: US$95 million from the conversion of operating leases to capital leases and US$69 million from financial fees and bond buyback premiums, among others
Second Quarter 2017 Regional Highlights
Daily cement volume declined 6% reflecting a high base of comparison during 2Q16, which had the highest quarterly volumes since 2009, as well as lower infrastructure activity Higher sequential and year-over-year prices for cement and ready mix during the quarter In the industrial-and-commercial sector, projects were supported by growth in consumption and improving manufacturing activity The self-construction sector continued to be favored by job creation, consumer credit and remittances In the formal residential sector, lending from both private banks and INFONAVIT supported more cement-intensive home investment; affordable housing affected by lower government subsidies Mexico
2Q17 operating EBITDA increased by 19% on like-to-like basis, with a margin expansion of 1.8pp Flat cement volumes during the quarter on a like-to-like basis reflect a difficult comparison base and significant precipitations in our southeastern states Cement prices on a like-to-like basis increased 5% year-over-year and 2% sequentially; improved sequential prices reflect the implementation of our April price increase in California and the South Atlantic region Single family housing starts increased 9% during the quarter In the industrial-and-commercial sector, construction spending increased 7% year-to-date May driven by office, lodging and commerce United States
Regional cement volumes on a like-to-like basis decreased by 3% In Colombia, daily cement volumes declined 5% during the quarter, affected by macroeconomic challenges in the country and by adverse weather conditions; we estimate our cement market position remained practically unchanged during the last 12 months In Panama, higher volumes for our three core products reflect a pickup in the infrastructure and residential sectors, as well as a favorable base of comparison Cement volumes from our TCL operations declined by 4% during the quarter, mainly reflecting reduced cement sales in Trinidad and Tobago South, Central America and the Caribbean
Increase in regional volumes for our three core products during both the quarter and the first half of the year In the UK, daily cement volume declined 4% mainly as a result of a high base of comparison during 2Q16 when we had some non-recurring industry sales In Spain, daily cement volume increased 20% driven by continued strong activity in the residential sector In Germany, daily cement, ready-mix and aggregates volumes increased 22%, 5% and 2%, respectively, during the quarter driven by the residential sector and ongoing infrastructure projects In Poland, daily cement volume declined 3%; cement prices increased 3% both on a year-over-year and sequential basis Europe
Increase in quarterly and year-to-date regional aggregates volumes reflects positive performance from our operations in Israel In the Philippines, daily cement volumes remained practically flat during the quarter, reflecting a high base of comparison, heightened competition due to growth in import volumes, as well as supply challenges due to extended repairs in our APO plant In Egypt, daily cement volume declined by 4% during the quarter reflecting reduced consumer purchasing power resulting from the currency devaluation and increased inflation in the country Asia, Middle East and Africa
Second Quarter 2017 2Q17 Results
Operating EBITDA during 2Q17 declined by 8% on a like-to-like basis, mainly due to lower contributions from the Europe, South, Central America and the Caribbean, and Asia, Middle East & Africa regions, and partially offset by higher contributions from Mexico and the U.S. Adjusting for working days, operating EBITDA during 2Q17 declined by 5% Cost of sales, as a percentage of net sales, increased by 1.5pp during the quarter, mainly reflecting higher energy costs, as well as an increase in raw materials in some of our ready-mix operations Operating expenses, as a percentage of net sales, remained flat during the quarter Operating EBITDA, cost of sales and operating expenses
-5 Average working capital days Free cash flow Average working capital days decreased to -1 during 2Q17, from 6 days during the same period in 2016 6 10 -1 1 -1
Other income statement items Other expenses, net, of US$10 million mainly includes severance payments Gain on financial instruments of US$8 million related mainly to CEMEX shares Foreign-exchange loss of US$21 million resulting primarily from the fluctuation of the Mexican peso versus the U.S. dollar Income tax had a positive effect of US$92 million mainly due to the reversal of the valuation allowance previously set for some net operating losses (NOL’s) Gain on discontinued operations of US$28 million related primarily to the sale of our Pacific Northwest materials business operations in the U.S. Controlling interest net income of US$289 million, versus an income of US$205 million in 2Q16, mainly reflects lower financial expenses, a gain in results from financial instruments, a positive effect in income tax, and lower non-controlling interest net income, partially offset by lower operating earnings, a foreign-exchange loss, and lower equity in gain of associates Millions of U.S. dollars 242 626 Controlling interest net income 6M16 6M17
Debt-related information In May, we called €400 million (approximately US$447 million) of our 5.250% euro-denominated Senior Secured Notes due 2021 In June, approximately US$325 million of our 3.750% Convertible Subordinated Notes due 2018 were converted into ADSs of CEMEX In June, S&P Global Ratings ("S&P") placed CEMEX's "BB-" credit rating on positive credit watch In July, CEMEX entered into a new facilities agreement for US$4.05 billion under improved conditions, extending our average life of debt and reducing our cost of debt1: 1 2014 Credit Agreement fully cancelled on July 25 2017 5-year term, with an average debt maturity of 4.3 years Total amount includes a revolving credit line of approximately US$1.135 billion with a 5-year term; remaining amount of US$2.915 billion is under term loan tranches, amortizing in five equal semi-annual payments, beginning on July 2020 Initial cost of LIBOR / EURIBOR + 2.5% subject to a margin grid according to leverage ratio (we lowered the margin between 0.50% & 1.25% when leverage is below 4.5x) Includes maximum leverage ratio starting at 5.5x as of September 2017 and gradually tightening to 4.25x by June 2020 Increased flexibility to incur debt, pay dividends, and make new investments Consolidated Leverage Ratio Applicable Margin > 5.00x 350 bps < 5.00x > 4.50 300 bps < 4.50x > 4.00 250 bps < 4.00x > 3.50 212.5 bps < 3.50x > 3.00 175 bps < 3.00x > 2.50 150 bps < 2.50x 125 bps
Millions of U.S. dollars 98 1,530 944 367 1,687 1,569 1,693 1,970 628 997 Avg. life of debt: 5.1 years 1 CEMEX has perpetual debentures totaling US$444 million 2 Convertible Subordinated Notes include only the debt component of US$860 million; total notional amount is about US$1,211 million CEMEX consolidated debt maturity profile Fixed Income Other bank debt Convertible Subordinated Notes2 Credit Agreement Total debt excluding perpetual notes1 as of June 30, 2017: US$11,483 million
Millions of U.S. dollars 98 646 718 1,267 998 2,468 1,693 1,970 628 997 Avg. life of debt: 5.4 years 1 Debt maturity profile presented on a pro forma basis reflecting the funding of commitments under the 2017 Credit Agreement for the equivalent amount required to fully cancel the 2014 Credit Agreement. 2 CEMEX has perpetual debentures totaling US$444 million 3 Convertible Subordinated Notes include only the debt component of US$860 million; total notional amount is about US$1,211 million CEMEX consolidated debt maturity profile – pro forma1 Fixed Income Other bank debt Convertible Subordinated Notes3 2017 Credit Agreement Total debt excluding perpetual notes2 as of June 30, 2017: US$11,483 million
Second Quarter 2017 2017 Outlook
2017 guidance 1 Including perpetual and convertible securities Consolidated volumes Cement: 1% - 3% Ready mix: 1% - 3% Aggregates: 0% - 3% Energy cost per ton of cement produced Increase of approximately 8% Capital expenditures US$520 million Maintenance CapEx US$210 million Strategic CapEx US$730 million Total CapEx Investment in working capital US$0 million Cash taxes Approximately US$300 million Cost of debt1 Reduction of approximately US$175 million
Progress of initiatives as of 2Q17 to further bolster our road to investment grade Initiatives Progress to date Building Blocks Targets 2016 & 2017 Asset divestments ~ US$2.4 billion US$2,439 divestments to date + other divestments ~ US$2.5 billion Total debt reduction US$3.4 billion US$3,400 debt reduction to date + free cash flow 3Q - 4Q 2017 + other divestments ~ US$4 billion
Second Quarter 2017 Appendix
Year-to-date increases in consolidated ready-mix and aggregates volumes; consolidated cement volumes declined 2% During the quarter, higher year-over-year cement volumes in our Europe region Quarterly and year-to-date increases in consolidated prices for our three core products, on a like-to-like basis Consolidated volumes and prices
Additional information on debt and perpetual notes Euro 21% U.S. dollar 75% Other 4% Fixed 72% Variable 28% Currency denomination Interest rate
Additional information on debt and perpetual notes Total debt1 by instrument
6M17 volume and price summary: Selected countries
2Q17 volume and price summary: Selected countries
2017 expected outlook: Selected countries
Definitions 6M17 / 6M16 Results for the first six months of the years 2017 and 2016, respectively Cement When providing cement volume variations, refers to domestic gray cement operations (starting in 2Q10, the base for reported cement volumes changed from total domestic cement including clinker to domestic gray cement) LC Local currency Like-to-like percentage variation (l-t-l % var) Percentage variations adjusted for investments/divestments and currency fluctuations Maintenance capital expenditures Investments incurred for the purpose of ensuring the company’s operational continuity. These include capital expenditures on projects required to replace obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or company policies Operating EBITDA Operating earnings before other expenses, net plus depreciation and operating amortization pp Percentage points Prices All references to pricing initiatives, price increases or decreases, refer to our prices for our products Strategic capital expenditures Investments incurred with the purpose of increasing the company’s profitability. These include capital expenditures on projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs TCL Operations Operations of Trinidad Cement Limited mainly in Trinidad and Tobago, Jamaica, and Barbados
Contact information Stock Information NYSE (ADS): CX Mexican Stock Exchange: CEMEXCPO Ratio of CEMEXCPO to CX: 10 to 1 Investor Relations In the United States +1 877 7CX NYSE In Mexico +52 81 8888 4292 ir@cemex.com Calendar of Events October 25, 2017 Third quarter 2017 financial results conference call