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 issued by CEMEX Holdings Philippines in the Philippines dated July 27, 2017, announcing second quarter 2017 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). |
| 2. | Second quarter 2017 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). |
| 3. | Presentation regarding second quarter 2017 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of 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. | ||||||||
| (Registrant) | ||||||||
| Date: | July 26, 2017 |
By: | /s/ Rafael Garza | |||||
| Name: Rafael Garza | ||||||||
| Title: Chief Comptroller | ||||||||
EXHIBIT INDEX
| EXHIBIT NO. |
DESCRIPTION | |
| 1. | Press release issued by CEMEX Holdings Philippines in the Philippines dated July 27, 2017, announcing second quarter 2017 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 2. | Second quarter 2017 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 3. | Presentation regarding second quarter 2017 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). | |
Exhibit 1
| Media Relations Chito Maniago +632 849 3600 chito.maniago@cemex.com |
Investor Relations Pierre Co +632 849 3600 pierre.co@cemex.com |
CEMEX HOLDINGS PHILIPPINES REPORTS
SECOND QUARTER 2017 RESULTS
| • | Cement volumes improved sequentially, increasing 6% versus the first quarter of 2017. |
| • | Domestic cement volumes declined 3% in the second quarter of 2017 against same period last year. |
| • | Financial expenses reduced by 34% in the first half of 2017 against same period last year as a result of refinancing U.S. dollar denominated loan with local debt. |
| • | Net income for the first half of 2017 declined 46% against same period last year, from PHP 896 Million to PHP 486 Million. |
MANILA, PHILIPPINES. JULY 27, 2017 – CEMEX HOLDINGS PHILIPPINES, INC. (“CHP”) (PSE: CHP), announced today that the company’s net income in the first half of 2017 declined by 46% versus the same period last year, from PHP 896 Million to PHP 486 Million.
The decrease in net income for the first half was mainly the result of lower prices and volumes and higher operating expenses. Prices declined in response to heightened competitive conditions and continuing presence of imports in the markets. Additionally, a longer-than-expected shutdown of its APO Cement Plant in Cebu during the second quarter temporarily affected cement output.
On a sequential basis, compared against the first quarter of the year, cement volumes in the second quarter increased by 6%.
Financial expenses for the first half of 2017 declined by 34% versus the same period last year as a result of the refinancing of CHP’s U.S. dollar denominated loan with local debt. With the conversion and denomination to local currency, other financial expenses for the first half of the year (mostly foreign exchange losses) also declined 57% for the first half of the year versus the same period last year.
Ignacio Mijares, who was recently elected as President & CEO of CHP, said, “I am confident that the company’s resilience and proven operational excellence, demonstrated throughout the years, will allow us to strengthen our current position. Together with the Philippine government’s positive outlook for construction activity, we remain optimistic for the second half of 2017.”
CHP is one of the leading cement producers in the Philippines, based on annual installed capacity. CHP produces and markets cement and cement products, such as ready-mix concrete and clinker, in the Philippines through direct sales using its extensive marine and land distribution network. Moreover, CHP’s cement manufacturing subsidiaries have been operating in the Philippines with well-established brands, such as “APO,” “Island,” and “Rizal,” each of which has a multi-decade history in the country.
CHP is an indirect subsidiary of CEMEX, S.A.B. de C.V., one of the largest cement companies in the world based on annual installed cement production capacity. The shares of CEMEX, S.A.B. de C.V. are listed on the Mexican Stock Exchange and the New York Stock Exchange.
For more information on CHP, please visit website: www.cemexholdingsphilippines.com.
# # #
This press release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of CHP 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 CHP 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, changes derived from events affecting CEMEX, S.A.B de C.V. and subsidiaries (“CEMEX”) 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. CHP assumes no obligation to update or correct the information contained in this press release.
2
Exhibit 2
2017 SECOND QUARTER RESULTS Stock Listing Information Philippine Stock Exchange Ticker: CHP Investor Relations + 632 849 3600 E-Mail:
Operating and Financial Highlights January—June Second Quarter 2017 2016 % var 2016 2017 2016 % var 2016 Pro Forma1 Actual Pro Forma1 Actual Cement volume2 2.5 2.6 (5%) 2.5 1.3 1.3 (2%) 1.3 Net sales 10,989 12,718 (14%) 12,718 5,627 6,390 (12%) 6,390 Gross profit 4,892 6,078 (19%) 6,078 2,320 2,981 (22%) 2,981 as % of net sales 44.5% 47.8% (3.3pp) 47.8% 41.2% 46.6% (5.4pp) 46.6% Operating earnings before other 1,203 2,714 (56%) 937 435 1,378 (68%) 404 expenses, net as % of net sales 10.9% 21.3% (10.4pp) 7.4% 7.7% 21.6% (13.9pp) 6.3% Controlling Interest Net Income 486 896 (46%) 44 137 436 (69%) (171) Operating EBITDA 1,824 3,341 (45%) 1,563 753 1,701 (56%) 727 as % of net sales 16.6% 26.3% (9.7pp) 12.3% 13.4% 26.6% (13.2pp) 11.4% Free cash flow after maintenance capital 827 1,067 expenditures Free cash flow 590 904 Net debt 13,863 13,863 Total debt 15,036 15,036 Earnings per share3 0.09 0.06 0.03 (0.06) In millions of Philippine Pesos, except volumes 1 Refer to page 7 for information on pro forma adjustments 2 Cement volume is in millions of metric tons. It includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker 3 In Philippine Pesos Net sales for the second quarter of 2017 was PHP 5,627 million, a Operating EBITDA, at PHP 1,824 million during the first half of 2017, decrease of 12% compared to the second quarter of 2016, reflecting decreased by 45% year-on-year, reflecting lower prices and volumes lower cement prices and volumes. and higher operating expenses. Cost of sales as a percentage of net sales increased by 5.4 pp during the Operating EBITDA margin decreased by 9.7 pp during the first half of second quarter of 2017 compared with the same period last year, from 2017 versus the same period in 2016, from 26.3% to 16.6%. 53.4% to 58.8%. As a percentage of cost of sales, power and fuels accounted for 21% and 20%, respectively. Controlling interest net income was PHP 486 million in the first half of 2017 against a pro forma net income of PHP 896 million in the same Operating expenses as a percentage of net sales increased by 8.4 pp period of 2016. Improvements in other income and reductions in during the second quarter of 2017 compared with the same period last financial and income tax expenses mitigated lower operating earnings year, from 25.1% to 33.5%. Distribution expenses increased 3.6 pp, before other income (expenses). driven by lower utilization and higher diesel prices. Selling and administrative expenses increased 4.8 pp due to additional marketing Total debt at the end of June 2017 stood at PHP 15,036 million, of promotions, and other overhead expenses. which PHP 13,977 million pertained to long-term debt owed to BDO Unibank, Inc. 2017 Second Quarter Results Page 2
Operating Results Domestic Gray Cement January—June Second Quarter Second Quarter 2017 2017 vs. 2016 2017 vs. 2016 vs. First Quarter 2017 Volume (6%) (3%) 6% Price in USD (14%) (15%) (2%) Price in PHP (8%) (9%) (2%) Domestic gray cement volumes declined by 3% during the second quarter of 2017 and by 6% year-to-date, compared with the same periods last year. Sequential activity improved with cement volumes increasing by 6% versus the first quarter. Daily cement volumes remained practically flat during the quarter. A longer-than-expected shutdown of our APO Cement Plant in Cebu during the second quarter temporarily affected cement output. For the second quarter of 2017, domestic gray cement prices declined by 9% on a year-over-year basis and by 2% on a sequential basis. The decline in prices reflects heightened competitive conditions and the continued presence of imports in the markets. 2017 Second Quarter Results Page 3
Operating EBITDA, Free Cash Flow and Debt Information Operating EBITDA and Free Cash Flow January—June Second Quarter 2017 2016 % var 2017 2016 % var Pro Forma1 Pro Forma1 Operating earnings before other expenses, 1,203 2,714 (56%) 435 1,378 (68%) net + Depreciation and operating amortization 621 626 (1%) 319 323 (1%) Operating EBITDA 1,824 3,341 (45%) 753 1,701 (56%) —Net financial expenses 459 200 —Capital expenditures for maintenance 196 147 —Change in working Capital 58 (862)—Taxes paid 306 204 —Other cash items (Net) (22) (3) Free cash flow after maintenance capital 827 1,067 —Strategic Capital expenditures 237 163 Free cash flow 590 904 In millions of Philippine Pesos, except volumes and percentages 1 Refer to page 7 for information on pro forma adjustments Debt Information Second Quarter Second Quarter 2017 2017 Total debt 15,036 Currency denomination Short term 0% U.S. dollar 7% Long term 100% Philippine peso 93% Cash and cash equivalents 1,173 Interest rate Net debt 13,863 Fixed 37% Variable 63% In millions of Philippine Pesos, except percentages U.S. dollar-denominated debt converted using end June 2017 exchange rate of PHP 50.47 2017 Second Quarter Results Page 4
Financial Results Income Statement & Balance Sheet Information CEMEX Holdings Philippines, Inc. (Thousands of Philippine Pesos in nominal terms, except per share amounts) January—June Second Quarter INCOME STATEMENT 2017 2016 % var 2016 2017 2016 % var 2016 Pro Forma1 Actual Pro Forma1 Actual Net sales 10,989,341 12,718,249 (14%) 12,718,249 5,626,964 6,390,040 (12%) 6,390,040 Cost of sales (6,096,885) (6,640,693) (8%) (6,640,693) (3,307,369) (3,409,218) (3%) (3,409,218) Gross profit 4,892,456 6,077,556 (19%) 6,077,556 2,319,595 2,980,822 (22%) 2,980,822 Operating expenses (3,689,719) (3,363,239) 10% (5,140,487) (1,884,971) (1,602,370) 18% (2,576,826) Operating earnings before other 1,202,737 2,714,317 (56%) 937,069 434,624 1,378,452 (68%) 403,996 expenses, net Other income (expenses), net 21,780 (16,737) (230%) (68,522) 2,614 (24,853) (111%) (76,640) Operating earnings 1,224,517 2,697,580 (55%) 868,547 437,238 1,353,599 (68%) 327,356 Financial expenses (439,946) (671,042) (34%) (481,742) (190,763) (336,568) (43%) (463,801) Other financial income (147,993) (341,645) (57%) (341,645) (50,653) (142,341) (64%) (142,340) (expenses), net Net income before income taxes 636,578 1,684,893 (62%) 45,160 195,822 874,690 (78%) (278,785) Income tax (150,525) (789,057) (81%) (1,513) (59,308) (438,577) (86%) 108,130 Consolidated net income 486,053 895,836 (46%) 43,647 136,514 436,113 (69%) (170,655) Non-controlling Interest Net Income 15 14 7% 14 7 8 (13%) 8 Controlling Interest Net Income 486,068 895,850 (46%) 43,661 136,521 436,121 (69%) (170,647) Operating EBITDA 1,824,128 3,340,732 (45%) 1,563,485 753,433 1,701,032 (56%) 726,575 Earnings per share 0.09 0.03 1 Refer to page 7 for information on pro forma adjustments as of June 30 BALANCE SHEET 2017 Total Assets 51,340,280 Cash and Temporary Investments 1,173,039 Trade Accounts Receivables 986,888 Other Receivables 78,938 Inventories 3,179,122 Other Current Assets 1,442,582 Current Assets 6,860,569 Fixed Assets 15,592,084 Other Assets 28,887,627 Total Liabilities 22,128,537 Current Liabilities 6,261,559 Long-Term Liabilities 15,036,198 Other Liabilities 830,780 Consolidated Stockholders’ Equity 29,211,743 Non-controlling Interest 231 Stockholders’ Equity Attributable to Controlling Interest 29,211,512 2017 Second Quarter Results Page 5
Financial Results Income Statement & Balance Sheet Information CEMEX Holdings Philippines, Inc. (Thousands of U.S. Dollars, except per share amounts) January—June Second Quarter INCOME STATEMENT 2017 2016 % var 2016 2017 2016 % var 2016 Pro Forma1 Actual Pro Forma1 Actual Net sales 219,549 270,630 (19%) 270,630 112,401 136,243 (17%) 136,243 Cost of sales (121,806) (141,306) (14%) (141,306) (66,066) (72,689) (9%) (72,689) Gross profit 97,743 129,324 (24%) 129,324 46,335 63,554 (27%) 63,554 Operating expenses (73,715) (71,566) 3% (109,384) (37,653) (34,164) 10% (54,941) Operating earnings before other 24,028 57,758 (58%) 19,940 8,682 29,390 (70%) 8,613 expenses, net Other income (expenses), net 435 (356) (222%) (1,458) 52 (530) (110%) (1,634) Operating earnings 24,463 57,402 (57%) 18,482 8,734 28,860 (70%) 6,979 Financial expenses (8,789) (14,279) (38%) (10,251) (3,811) (7,176) (47%) (9,889) Other financial income (2,957) (7,270) (59%) (7,270) (1,012) (3,035) (67%) (3,035) (expenses), net Net income before income taxes 12,717 35,853 (65%) 961 3,911 18,649 (79%) (5,945) Income tax (3,007) (16,790) (82%) (32) (1,185) (9,351) (87%) 2,305 Consolidated net income 9,710 19,063 (49%) 929 2,726 9,298 (71%) (3,640) Non-controlling Interest Net Income 0 0 0 0 0 0 Controlling Interest Net Income 9,710 19,063 (49%) 929 2,726 9,298 (71%) (3,640) Operating EBITDA 36,443 71,087 (49%) 33,269 15,050 36,268 (59%) 15,491 Earnings per share 0.00 0.00 0.00 0.00 1 Refer to page 7 for information on pro forma adjustments as of June 30 BALANCE SHEET 2017 Total Assets 1,017,243 Cash and Temporary Investments 23,242 Trade Accounts Receivables 19,554 Other Receivables 1,564 Inventories 62,990 Other Current Assets 28,583 Current Assets 135,933 Fixed Assets 308,938 Other Assets 572,372 Total Liabilities 438,449 Current Liabilities 124,065 Long-Term Liabilities 297,923 Other Liabilities 16,461 Consolidated Stockholders’ Equity 578,794 Non-controlling Interest 5 Stockholders’ Equity Attributable to Controlling Interest 578,789 2017 Second Quarter Results Page 6
Definitions of Terms and Disclosures Methodology for translation, consolidation, and presentation of Nevertheless and for the convenience of the reader, and in order to results present a comprehensive comparative operating information for the six-month and the three-month periods ended June 30, 2017, CHP CEMEX Holdings Philippines, Inc. (“CHP”) reports its interim financial continued to use pro forma selected consolidated income statement statements under Philippine Financial Reporting Standards (“PFRS”). information for the six-month and the three-month periods ended June When reference is made in 2017 and 2016 to consolidated interim 30, 2016, intended in all cases and to the extent possible, to present the financial statements, it means CHP financial information together with operating performance of CHP on a like-to-like basis under a its subsidiaries. “normalized” expected ongoing operation; therefore, as if the new For the purpose of presenting figures in U.S. dollars, the consolidated royalty scheme and insurance agreements would have been effective balance sheet as of June 30, 2017 has been converted at the end of from the beginning of 2016. period exchange rate of 50.47 Philippine pesos per US dollar while the CHP Pro forma consolidated income statement for the six-month and consolidated income statement for the six-month period ended June the three-month periods ended June 30, 2016 appearing in this report 30, 2017 has been converted at the January to June, 2017 average represent combined historical selected income statement information exchange rate of 50.05 Philippine pesos per US dollar. On the other of CHP subsidiaries, adjusted to reflect the 5% corporate service charges hand, the consolidated income statement for the three-month period and royalties, and reinsurance agreements (on a like-to-like basis) for ended June 30, 2017 has been converted at the April to June, 2017 the six-month and the three-month periods ended June 30, 2016. average exchange rate of 50.06 Philippine pesos per US dollar. In addition: Pro forma financial information included in the report (1) beginning fiscal year of 2017, a change in accounting treatment of For the purpose of the below clarification, the term “Company” refers the effects from the new reinsurance agreements is adopted to CEMEX Holdings Philippines, Inc., “CHP”” refers to the Company and recognizing the same as a reduction in operating expenses instead of an its subsidiaries, and “CEMEX” refers CEMEX, S.A.B. de C.V. and its increase of revenue (which was the accounting treatment utilized in subsidiaries excluding CHP. 2016). CEMEX Holdings Philippines, Inc. was incorporated on September 17, This change in accounting treatment is presented in this report’s Pro 2015 for purposes of the initial equity offering concluded on July 18, Forma consolidated income statement information for the six-month 2016 (the “IPO”). For accounting purposes, the group reorganization by and the three-month periods ended June 30, 2016 This difference in means of which the Company acquired its consolidated subsidiaries was presentation does not have an effect on the reported Pro Forma effective January 1, 2016. Several strategies discussed in the CHP operating income, reported Pro Forma Operating EBITDA or reported primary offer prospectus (“the Prospectus”) were implemented upon Pro Forma net income for the six-month and the three-month periods conclusion of the initial equity offering: a) the new royalty scheme was ended June 30, 2016. implemented in July 2016 with retroactive effects as of January 1, 2016, and b) the new reinsurance scheme was incorporated prospectively (2) the Pro Forma selected consolidated income statement information effective August 1, 2016. These strategies are already in full effect in for the six-month and the three-month periods ended June 30, 2016 2017. appearing in this report was prepared by (a) removing interest payments on short-term debt, and (b) annualizing long-term debt. 2017 Second Quarter Results Page 7
Definition of Terms and Disclosures Definition of terms PHP refers to Philippine Pesos. pp equals percentage points. Prices all references to pricing initiatives, price increases or decreases, refer to our prices for our products. Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization. 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). 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. 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. Change in Working capital in the Free cash flow statements only include trade receivables, trade payables, receivables and payables from and to related parties, other current receivables, inventories, other current assets, and other accounts payable and accrued expense. Net debt equals total debt minus cash and cash equivalents. January—June Second Quarter January—June 2017 2016 2017 2016 2017 2016 average average average average End of period End of period Philippine peso 50.05 47.00 50.06 46.90 50.47 47.06 Amounts provided in units of local currency per US dollar 2017 Second Quarter Results Page 8
Exhibit 3
2Q 2017 Results July 27, 2017
This presentation contains forward-looking statements. 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 current expectations and projections about future events of CEMEX Holdings Philippines, Inc. (“CHP”) based on CHP’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 CHP’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 CHP or its subsidiaries, include, but are not limited to, the cyclical activity of the construction sector; CHP’s exposure to other sectors that impact CHP’s business, such as the energy sector; competition; general political, economic and business conditions in the markets in which CHP operates; the regulatory environment, including environmental, tax, antitrust and acquisition-related rules and regulations; CHP’s ability to satisfy its debt obligations and the ability of CEMEX, S.A.B. de C.V. (“CEMEX”), the ultimate parent company of the major shareholder of CHP, 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 CEMEX’s existing indebtedness; the impact of CEMEX’s below investment grade debt rating on CHP’s and CEMEX’s cost of capital; CEMEX’s ability to consummate asset sales and fully integrate newly acquired businesses; achieve cost-savings from CHP’s cost-reduction initiatives and implement CHP’s pricing initiatives for CHP’s products; the increasing reliance on information technology infrastructure for CHP’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 CHP’s public filings. Readers are urged to read these presentations and carefully consider the risks, uncertainties and other factors that affect CHP’s business. The information contained in these presentations is subject to change without notice, and CHP is not obligated to publicly update or revise forward-looking statements. Unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases, refer to CHP’s prices for products sold or distributed by CHP or its subsidiaries. Copyright CEMEX Holdings Philippines, Inc. and its subsidiaries 2
Net Sales Net sales during 2Q17 declined by 12% on a year-over-year basis reflecting lower cement prices and volumes during the quarter. Net Sales1 -14% -12% 12,718 6,390 5,627 10,989 2Q16 2Q172 6M16 6M17 1 Millions of Philippine Pesos 2 2Q17 net sales breakdown: 99% cement, 1% others 3
Domestic Cement Volumes and Prices 6M17 vs. 2Q17 vs. 2Q17 vs. 6M16 2Q16 1Q17 Volume (6%) (3%) 6% Domestic Gray Price (USD) (14%) (15%) (2%) Cement Price (PHP) (8%) (9%) (2%) Domestic gray cement volumes declined by 3% during 2Q17 versus same period last year mainly due to: Weak demand growth, with delayed infrastructure spending and stable growth in the private sector. Longer-than-expected shutdown, which temporarily affected cement output in our APO cement plant in May. Sequential activity improved with our cement volumes increasing by 6% versus the prior quarter. Domestic gray cement prices during 2Q17 declined by 9% year-over-year and by 2% sequentially. Prices declined in response to heightened competitive conditions and continued presence of imports in the markets. Imports increased in the second quarter versus the same period last year. Nevertheless, on a sequential basis, we have seen a slight deceleration in import volumes. 4
Residential Sector Residential sector permits posted positive growth in 1Q17, presumed to have translated into positive construction activity in 2Q17. Low inflation rate environment prevailing. Persistent housing shortage will support continuing investments into residential construction, although the focus will be greater on private mid-range and high-end residence than social housing. Approved Residential Building Permits 20% based on floor area1 15% 10% 5% 0% -5% -10% 1Q16 2Q16 3Q16 4Q16 1Q17 Year-on-Year Growth 1 Source: Philippine Statistics Authority 5
Industrial-and-Commercial Sector Growth in industrial and commercial sector permits accelerated in 1Q17, gains in the industrial sector offsetting slight slowdown in the commercial segment. The Philippines’ industrial and commercial developments buoyed by investments in the growing manufacturing, tourism, and service industries. Sustained demand in offices and industrial space especially in business districts and emerging cities will support new construction. Approved Non-Residential Building Permits 60% based on floor area1 50% 40% 30% 20% 10% 0% -10% 1Q16 2Q16 3Q16 4Q16 1Q17 Year-on-Year Growth 1Source: Philippine Statistics Authority 6
Infrastructure Sector Public Infrastructure Spending (PHP billion)1 829 864 Budget Actual 506 493 465 345 297 262 276 Jan-May ‘17 242 252 251 159 197 2011 2012 2013 2014 2015 2016 2017 66% 99% 88% 59% 68% 59% % of Budget Spent Government Infrastructure and Capital Outlay vs. Full Year Budget, (PHP billion)1 Jan-May Spending 2016 182 829 Full-year Budget 2017 197 864 * Government infrastructure spending for first five months only at 23% of the 2017 budget Bureaucratic obstacles continued to weigh down on the government’s infrastructure project implementation in the first half of the year. Implementation and funding policy reversals by the administration are seen to further delay outlay as the government’s low absorptive capacity may curb its ability to facilitate the projects. Tax reform, which should support infrastructure program, has progressed slowly. 1 Source: Department of Budget and Management * Includes expenditures for military equipment 7
Cost of Sales Millions of Percentage Philippine Pesos of Net Sales +5.4pp -8% +3.3pp -3% 6,641 58.8% 3,409 6,097 53.4% 52.2% 55.5% 3,307 2Q16 2Q17 6M16 6M17 2Q16 2Q17 6M16 6M17 Pro Pro Forma Forma Cost of sales, as a percentage of net sales in the quarter, increased due to timing of annual maintenance shutdowns. Cost management, despite inflationary factors, has been key. Following the annual shutdown, our targeted increase in production at APO cement plant has increased as planned. NOTE: Refer to slides 22 and 23 for information on pro forma adjustments 8
Operating Expenses Distribution1 Selling and Administrative1 +7% +13% +9% +31% 1,972 2,118 1,572 1,392 981 1,069 621 816 2Q16 2Q17 6M16 6M17 2Q16 2Q17 6M16 6M17 Pro Forma % of Net Sales 15.4% 19.0% 15.5% 19.3% 9.7% 14.5% 10.9% 14.3% As a percentage of net sales, Distribution expenses increased 3.6 pp in the quarter, driven by lower transport utilization and higher diesel prices. As a percentage of net sales, S&A Expenses increased 4.8 pp in the quarter due to additional marketing promotions, and other overhead expenses. 1 Millions of Philippine Pesos NOTE: Refer to slides 22 and 23 for information on pro forma adjustments 9
Operating EBITDA and Operating EBITDA Margin Millions of Percentage Philippine Pesos of Net Sales -45% -13.2pp -9.7pp -56% 3,341 26.6% 26.3% 1,701 753 1,824 13.4% 16.6% 2Q16 2Q17 6M16 6M17 2Q16 2Q17 6M16 6M17 Pro Forma The decline in operating EBITDA during the second quarter is mainly the result of lower prices and volumes and higher operating expenses. Operating EBITDA margin declined by 9.7pp in the first half. Lower prices account for ~70% of the margin decrease. NOTE: Refer to slides 22 and 23 for information on pro forma adjustments 10
Net Income Net income year-to-date declined by 46% mainly due to lower operating EBITDA. Financial expenses during the first half declined 34% as a result of the refinancing of CHP’s U.S. dollar denominated loan with local debt. With the conversion and denomination to local currency, other financial expenses, mostly foreign exchange losses, also declined 57% in the first half. Effective tax rate for the first half of the year was at 23.6% versus 46.6% last year due to the over provision of tax for CHP’s foreign subsidiaries Net Income1 -46% -69% 896 436 486 137 2Q16 2Q172 6M16 6M17 Pro Pro Forma Forma 1 Millions of Philippine Pesos 11
Free Cash Flow 2q 2017 & Guidance 12
Free Cash Flow Free cash flow during the second quarter of 2017 was positive PHP 904 million, mainly due to management of working capital. January—June Second Quarter 2017 2016 2017 2016 % var % var Pro Forma Pro Forma Operating EBITDA 1,824 3,341 (45%) 753 1,701 (56%) —Net Financial Expenses 459 200 —Maintenance Capex 196 147 —Change in Working Capital 58 (862) —Taxes Paid 306 204 —Other Cash Items (net) (22) (3) Free Cash Flow after 827 1,067 Maintenance Capex —Strategic Capex 237 163 Free Cash Flow 590 904 Millions of Philippine Pesos NOTE: Refer to slides 22 and 23 for information on pro forma adjustments 13
Solid Plant Capacity Expansion New line expected to start operations in the fourth quarter of 2019. Expected total investment: US$ 225 million 14
2017 Guidance Cement volumes 3% PHP 918 million Maintenance CAPEX PHP 889 million Solid Plant Expansion CAPEX Capital expenditures PHP 277 million Other Strategic CAPEX PHP 2,084 million Total CAPEX 15
Q&A SESSION 2Q 2017 RESULTS 16
2Q 2017 appendix 17
Income Statement Information (Thousands of Philippine Pesos in nominal terms, except per share amounts) January—June Second Quarter INCOME STATEMENT 2017 2016 % var 2016 2017 2016 % var 2016 Pro Forma1 Actual Pro Forma1 Actual Net sales 10,989,341 12,718,249 (14%) 12,718,249 5,626,964 6,390,040 (12%) 6,390,040 Cost of sales (6,096,885) (6,640,693) (8%) (6,640,693) (3,307,369) (3,409,218) (3%) (3,409,218) Gross profit 4,892,456 6,077,556 (19%) 6,077,556 2,319,595 2,980,822 (22%) 2,980,822 Operating expenses (3,689,719) (3,363,239) 10% (5,140,487) (1,884,971) (1,602,370) 18% (2,576,826) Operating earnings before other 1,202,737 2,714,317 (56%) 937,069 434,624 1,378,452 (68%) 403,996 expenses, net Other income (expenses), net 21,780 (16,737) (230%) (68,522) 2,614 (24,853) (111%) (76,640) Operating earnings 1,224,517 2,697,580 (55%) 868,547 437,238 1,353,599 (68%) 327,356 Financial expenses (439,946) (671,042) (34%) (481,742) (190,763) (336,568) (43%) (463,801) Other financial income (147,993) (341,645) (57%) (341,645) (50,653) (142,341) (64%) (142,340) (expenses), net Net income before income taxes 636,578 1,684,893 (62%) 45,160 195,822 874,690 (78%) (278,785) Income tax (150,525) (789,057) (81%) (1,513) (59,308) (438,577) (86%) 108,130 Consolidated net income 486,053 895,836 (46%) 43,647 136,514 436,113 (69%) (170,655) Non-controlling Interest Net Income 15 14 7% 14 7 8 (10%) 8 Controlling Interest Net Income 486,068 895,850 (46%) 43,661 136,521 436,121 (69%) (170,647) Operating EBITDA 1,824,128 3,340,732 (45%) 1,563,485 753,433 1,701,032 (56%) 726,575 Earnings per share 0.09 0.03 1 Refer to slides 22 and 23 for information on pro forma adjustments 18
Income Statement Information (Thousands of U.S. Dollars, except per share amounts) January—June Second Quarter INCOME STATEMENT 2017 2016 % var 2016 2017 2016 % var 2016 Pro Forma1 Actual Pro Forma1 Actual Net sales 219,549 270,630 (19%) 270,630 112,401 136,243 (17%) 136,243 Cost of sales (121,806) (141,306) (14%) (141,306) (66,066) (72,689) (9%) (72,689) Gross profit 97,743 129,324 (24%) 129,324 46,335 63,554 (27%) 63,554 Operating expenses (73,715) (71,566) 3% (109,384) (37,653) (34,164) 10% (54,941) Operating earnings before other 24,028 57,758 (58%) 19,940 8,682 29,390 (70%) 8,613 expenses, net Other income (expenses), net 435 (356) (222%) (1,458) 52 (530) (110%) (1,634) Operating earnings 24,463 57,402 (57%) 18,482 8,734 28,860 (70%) 6,979 Financial expenses (8,789) (14,279) (38%) (10,251) (3,811) (7,176) (47%) (9,889) Other financial income (2,957) (7,270) (59%) (7,270) (1,012) (3,035) (67%) (3,035) (expenses), net Net income before income taxes 12,717 35,853 (65%) 961 3,911 18,649 (79%) (5,945) Income tax (3,007) (16,790) (82%) (32) (1,185) (9,351) (87%) 2,305 Consolidated net income 9,710 19,063 (49%) 929 2,726 9,298 (71%) (3,640) Non-controlling Interest Net Income 0 0 0 0 0 0 Controlling Interest Net Income 9,710 19,063 (49%) 929 2,726 9,298 (71%) (3,640) Operating EBITDA 36,443 71,087 (49%) 33,269 15,050 36,268 (59%) 15,491 Earnings per share 0.00 0.00 0.00 0.00 1 Refer to slides 22 and 23 for information on pro forma adjustments 19
Debt Information Maturity Profile1 Revolving Facility2 BDO Debt 6,656 5,027 Avg. life of debt: 5.3 years Net Debt to EBITDA3: 2.2x 1,664 1,199 70 140 140 140 20174 2018 2019 2020 2021 2022 2023 2024 1 Millions of Philippine Pesos; U.S. dollar debt converted using end March 2017 exchange rate of PHP 50.47 2 Pertains to U.S. dollar-denominated revolving facility with CEMEX Asia B.V. 3 Last 12 months Consolidated EBITDA 4 Maturity amount pertains only to BDO Debt BDO Financial Covenants: Consolidated Total Debt to Consolidated EBITDA ratio not exceeding 4.00x Consolidated EBTIDA to Consolidated Interest Expense not less than 4.00x 20
Definitions 6M17 / 6M16 Results for the first six months of the years 2017 and 2016, respectively; in some cases, as indicated on a pro forma basis. PHP Philippine Pesos pp Percentage points Prices All references to pricing initiatives, price increases or decreases, refer to our prices for our products. Operating EBITDA Operating earnings before other expenses, net, plus depreciation and operating amortization. Free Cash Flow 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), Maintenance Capital Investments incurred for the purpose of ensuring the company’s operational continuity. These include capital expenditures 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, Strategic capital investments incurred with the purpose of increasing the company’s profitability. These include capital expenditures on expenditures projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs. Change in Working capital in Only include trade receivables, trade payables, receivables and payables from and to related parties, other current the Free cash flow receivables, inventories, other current assets, and other accounts payable and accrued expense. statements Net Debt Total debt minus cash and cash equivalents. Imports Imports by traders. 21
Presentation of Pro Forma Financial Information (For the purpose of the below clarification, the term “Company” refers to CEMEX Holdings Philippines, Inc., “CHP” refers to the Company and its subsidiaries, and “CEMEX” refers CEMEX, S.A.B. de C.V. and its subsidiaries excluding CHP.) CEMEX Holdings Philippines, Inc. was incorporated on September 17, 2015 for purposes of the initial equity offering concluded on July 18, 2016 (the “IPO”). For accounting purposes, the group reorganization by means of which the Company acquired its consolidated subsidiaries was effective January 1, 2016. Several strategies discussed in the CHP primary offer prospectus (“the Prospectus”) were implemented upon conclusion of the initial equity offering: a) the new royalty scheme was implemented in July 2016 with retroactive effects as of January 1, 2016, and b) the new reinsurance scheme was incorporated prospectively effective August 1, 2016. These strategies are already in full effect in 2017. Nevertheless and for the convenience of the reader, and in order to present a comprehensive comparative operating information for the six-month and the three-month periods ended June 30, 2017, CHP continued to use pro forma selected consolidated income statement information for the six-month and the three-month periods ended June 30, 2016, intended in all cases and to the extent possible, to present the operating performance of CHP on a like-to-like basis under a “normalized” expected ongoing operation; therefore, as if the new royalty scheme and insurance agreements would have been effective from the beginning of 2016. CHP Pro forma consolidated income statement for the six-month and the three-month periods ended June 30, 2016 appearing in this report represent combined historical selected income statement information of CHP subsidiaries, adjusted to reflect the 5% corporate service charges and royalties, and reinsurance agreements (on a like-to-like basis) for the six-month and the three-month periods ended June 30, 2016. (Continued in slide 23) 22
Presentation of Pro Forma Financial Information (Continued from slide 22) In addition: (1) beginning fiscal year of 2017, a change in accounting treatment of the effects from the new reinsurance agreements is adopted recognizing the same as a reduction in operating expenses instead of an increase of revenue (which was the accounting treatment utilized in 2016). This change in accounting treatment is presented in this report’s Pro Forma consolidated income statement information for the six-month and the three-month periods ended June 30, 2016 This difference in presentation does not have an effect on the reported Pro Forma operating income, reported Pro Forma Operating EBITDA or reported Pro Forma net income for the six-month and the three-month periods ended June 30, 2016. (2) the Pro Forma selected consolidated income statement information for the six-month and the three-month periods ended June 30, 2016 appearing in this report was prepared by (a) removing interest payments on short-term debt, and (b) annualizing long-term debt. 23
Contact Information Investor Relations Stock Information In the Philippines PSE: +632 849 3600 CHP chp.ir@cemex.com 24