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 October, 2018
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 66265, México
(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 October 26, 2018, announcing third quarter 2018 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). |
| 2. | Third quarter 2018 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). |
| 3. | Presentation regarding third quarter 2018 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: October 25, 2018 | By: | /s/ Rafael Garza Lozano | ||||
| Name: Rafael Garza Lozano | ||||||
| Title: Chief Comptroller | ||||||
3
EXHIBIT INDEX
| EXHIBIT NO. |
DESCRIPTION | |
| 1. | Press release issued by CEMEX Holdings Philippines in the Philippines dated October 26, 2018, announcing third quarter 2018 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 2. | Third quarter 2018 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 3. | Presentation regarding third quarter 2018 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). | |
4
Exhibit 1
| Media Relations |
Investor Relations | |
| Chito Maniago |
Pierre Co | |
| +632 849 3600 |
+632 849 3600 | |
| chito.maniago@cemex.com |
pierre.co@cemex.com |
CHP ACHIEVES RECORD CEMENT SALES VOLUMES IN THE THIRD QUARTER OF 2018
| • | Record cement sales volumes during the third quarter driven by strong demand |
| • | Net sales for 3Q 2018 up by 8 percent year-over-year |
MANILA, PHILIPPINES. OCTOBER 26, 2018 – CEMEX HOLDINGS PHILIPPINES, INC.
(“CHP”) (PSE: CHP), announced today that it achieved record quarterly cement sales volumes during the third quarter behind strong domestic demand. Cement sales volumes grew by 5% during the quarter and by 10% in the first nine months of this year compared with the same period in 2017.
CHP also reported an 8% increase in net sales during the quarter, reaching P6.0 billion. During the first nine months of the year, revenues were also up by 8%, amounting to P17.9 billion compared with P16.6 billion in the same period in 2017.
“Cement demand in the country remains strong and reinforces our commitment to be a partner in the development of infrastructure in the country. In line with this, we recently formalized the agreement with CBMI Construction Company of China for the construction of a new cement-production line in our Solid Cement Plant in Antipolo, Rizal which will increase CHP’s cement production capacity by 1.5 million tons,” CHP President and CEO Ignacio Mijares explained.
EBITDA reached P686 million during the third quarter and P2.4 billion during the first nine months of the year, a decline of 8% and 15%, respectively, compared with the same periods in 2017. Lower EBITDA during the quarter was mainly due to higher input costs and shutdown-related expenses.
CHP reported a consolidated net loss of P70 million during third quarter, compared with a net income of P202 million in the same period in 2017.
“Higher input-cost inflation continues to be a challenge for the Company. We are implementing several initiatives to improve our profitability and deliver value for our customers and shareholders. One initiative is the recent launch of CEMEX Go in the Philippines, a first-of-its-kind, end-to-end, digital commerce platform that provides a seamless experience for CHP’s customers in placing and tracking orders, invoicing and payments. CEMEX Go provides an effective, easy and enjoyable way for our customers to interact with us,” Mr. Mijares added.
CHP, a listed company at the Philippine Stock Exchange, 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,” all having a multi-decade history in the country.
1
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 may contain 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
2018 THIRD QUARTER RESULTS â–ª Stock Listing Information Philippine Stock Exchange Ticker: CHP â–ª Investor Relations + 632 849 3600 E-Mail: chp.ir@cemex.com
Operating and Financial Highlights January—September Third Quarter 2018 2017 % var 2018 2017 % var Net sales 17,905 16,561 8% 6,026 5,572 8% Gross profit 7,213 7,215 (0%) 2,256 2,323 (3%)as % of net sales 40.3% 43.6% (3pp) 37.4% 41.7% (4pp) Operating earnings before other expenses, net 1,324 1,671 (21%) 304 468 (35%)as % of net sales 7% 10% (3pp) 5% 8% (3pp) Controlling Interest Net Income (Loss) (605) 688 N/A (70) 202 N/A Operating EBITDA 2,410 2,627 (8%) 686 803 (15%)as % of net sales 14% 16% (2pp) 11% 14% (3pp) Free cash flow after maintenance capital expenditures 1,607 1,502 7% 171 675 (75%) Free cash flow 1,373 1,061 29% 122 470 (74%) Net debt1 12,753 13,430 (5%) 12,753 13,430 (5%) Total debt1 15,270 15,016 2% 15,270 15,016 2% Earnings per share2 (0.12) 0.13 N/A (0.01) 0.04 N/A In millions of Philippine Pesos, except percentages and earnings per share 1 U.S. dollar debt converted using end-of-period exchange rate. See Debt Information on page 4 and Exchange Rates on page 7 for more detail. 2 In Philippine Pesos Net sales increased by 8% year-over-year during the quarter resulting Sequentially, distribution expenses, as a percentage of sales, decreased from higher volumes and prices. The first nine months of the year also by 2 pp during the quarter, from 22% to 20%. reflected this same increase compared with the same period last year. Selling and administrative expenses, as a percentage of sales, declined Cost of sales, as a percentage of sales, increased to 60% during the first by 2 pp during the first nine months and by 1 pp during the third nine months of the year due to increased fuel and power costs, quarter, on a year-over-year basis. resulting from higher global fuel prices, depreciation of the Philippine Peso, and the impact of tax reform in the country. Operating EBITDA decreased by 15% during the quarter. Year-to-date, operating EBITDA decreased by 8% compared to the same period last Cost of sales, as a percentage of sales, was 4 pp higher in the third year. quarter on a year-over-year basis as annual maintenance shutdown expenses were mostly reflected during this period. In 2017, shutdown Operating EBITDA margin during the quarter was 11%, 3 pp lower than related expenses were booked mainly in the second quarter. in the same period last year. Expenses grew at a higher rate than revenues given annual maintenance shutdown expenses in the third Fuel costs accounted for 22% of cost of sales during the quarter, a quarter of this year which were not present same period last year. decrease of 2 pp year-over-year. Operating EBITDA margin for the first nine months of the year was 14%. Power costs accounted for 22% of cost of sales during the quarter, flat Controlling interest net income for the quarter was at a loss of PHP 70 versus the same period last year, as lower power requirements due to million due to lower operating EBITDA, higher financial expenses and mill maintenance mitigated higher grid rates. foreign exchange losses. For first nine months of the year, the company incurred a loss of PHP 605 million due to higher income tax expenses Operating expenses, as a percentage of sales, during the first nine recorded in the second quarter. months of the year remained at a similar level compared with those of last year. Total debt at the end of September 2018 stood at PHP 15,270 million, of which PHP 13,802 million pertained to long-term debt owed to BDO Distribution expenses, as a percentage of sales, increased by 1 pp year- Unibank, Inc. over-year during the first nine months of the year. Initiatives to increase operational efficiency mitigated higher fuel costs and other inputs.
Operating Results Domestic Gray Cement January—September Third Quarter Third Quarter 2018 2018 vs. 2017 2018 vs. 2017 vs. Second Quarter 2018 Volume 10% 5% 2% Price in PHP (1%) 4% (1%) Our domestic cement volumes increased by 5% year-over-year during the quarter, driven by sustained infrastructure activity and growth in the residential sector. We achieved our all-time highest quarterly sales volume during this period. In addition, our institutional cement sales volumes hit record levels in August and September. On a year-to-date basis, domestic cement volumes grew 10% versus the same period of the prior year. This performance reflects increased construction activity from both public and private sectors, and progress from our debottlenecking efforts. Our domestic cement prices were 4% higher during the quarter versus the same period last year. Prices for the month of September were 4% higher than in the month of December last year. Sequentially, domestic cement prices were 1% lower compared to previous quarter, reflecting a higher percentage of picked-up versus delivered cement, in line with our efforts to bring down distribution costs.
Operating EBITDA, Free Cash Flow and Debt Information Operating EBITDA and Free Cash Flow January—September Third Quarter 2018 2017 % var 2018 2017 % var Operating earnings before other expenses, net 1,324 1,671 (21%) 304 468 (35%) + Depreciation and operating amortization 1,087 956 382 335 Operating EBITDA 2,410 2,627 (8%) 686 803 (15%) - Net financial expenses 677 667 232 208—Maintenance capital expenditures 493 413 131 218—Change in working capital (778) (348) (30) (406)—Income taxes paid 420 424 177 118—Other cash items (net) (8) (31) 6 (9) Free cash flow after maintenance capital expenditures 1,607 1,502 7% 171 675 (75%) - Strategic capital expenditures 233 441 49 204 Free cash flow 1,373 1,061 29% 122 470 (74%) In millions of Philippine Pesos Debt Information Second Third Quarter Quarter Third Quarter 2018 2017 % var 2018 2018 2017 Total debt1 15,270 15,016 2% 15,300 Currency denomination Short term 4% 0% 3% U.S. dollar2 3% 0% Long term 96% 100% 97% Philippine peso 97% 100% Cash and cash equivalents 2,517 1,586 59% 2,464 Interest rate Net debt 12,753 13,430 (5%) 12,836 Fixed 46% 44% Variable 54% 56% In millions of Philippine Pesos, except percentages 1 U.S. dollar debt converted using end-of-period exchange rate. See Exchange Rates on page 7 for more detail. 2 Pertains to related party loans with CEMEX Asia B.V. 2018 Second Quarter Results
Financial Results Income Statement & Balance Sheet Information CEMEX Holdings Philippines, Inc. (Thousands of Philippine Pesos in nominal terms, except per share amounts) January—September Third Quarter INCOME STATEMENT 2018 2017 % var 2018 2017 % var Net sales 17,905,121 16,561,253 8% 6,025,788 5,571,912 8% Cost of sales (10,692,260) (9,346,142) (14%) (3,769,657) (3,249,257) (16%) Gross profit 7,212,861 7,215,111 (0%) 2,256,131 2,322,655 (3%) Selling and Administrative expenses (2,201,944) (2,301,036) 4% (718,163) (729,060) 1% Distribution expenses (3,687,345) (3,242,962) (14%) (1,233,884) (1,125,219) (10%) Operating earnings before other expenses, net 1,323,572 1,671,113 (21%) 304,084 468,376 (35%) Other income (expenses), net 8,238 31,100 (74%) (6,080) 9,320 N/A Operating earnings 1,331,810 1,702,213 (22%) 298,004 477,696 (38%) Financial expenses, net (676,545) (667,103) (1%) (231,882) (208,491) (11%) Foreign exchange loss, net (470,473) (157,208) (199%) (59,331) (27,881) (113%) Net income (loss) before income taxes 184,792 877,902 (79%) 6,791 241,324 (97%) Income tax expenses (789,517) (189,941) (316%) (76,676) (39,416) (95%) Consolidated net income (loss) (604,725) 687,961 N/A (69,885) 201,908 N/A Non-controlling interest net income (loss) 22 21 5% 5 6 (17%) Controlling Interest net income (loss) (604,703) 687,982 N/A (69,880) 201,914 N/A Operating EBITDA 2,410,383 2,627,458 (8%) 686,157 803,331 (15%) Earnings per share (0.12) 0.13 N/A (0.01) 0.04 N/A as of September 30 as of December 31 BALANCE SHEET 2018 2017 % Var 2017 % Var Total Assets 52,225,700 51,162,429 2% 51,751,676 1% Cash and Temporary Investments 2,517,344 1,586,345 59% 1,058,267 138% Trade Accounts Receivables 981,613 999,675 (2%) 833,259 18% Other Receivables 93,202 76,556 22% 101,002 (8%) Inventories 3,123,916 3,046,854 3% 3,258,252 (4%) Assets held for sale 22,653 0 90,629 (75%) Other Current Assets 973,857 756,107 29% 1,310,504 (26%) Current Assets 7,712,585 6,465,537 19% 6,651,913 16% Fixed Assets 15,269,140 15,690,808 (3%) 15,582,732 (2%) Investments in an associate and other investments 14,097 15,273 (8%) 15,407 (9%) Other assets and noncurrent accounts receivables 748,991 376,922 99% 716,700 5% Deferred income taxes—net 621,193 754,195 (18%) 925,230 (33%) Goodwill 27,859,694 27,859,694 0% 27,859,694 0% Other Assets 29,243,975 29,006,084 1% 29,517,031 (1%) Total Liabilities 23,033,400 21,721,917 6% 22,329,280 3% Current Liabilities 7,529,617 6,030,449 25% 6,873,552 10% Long-Term Liabilities 14,590,300 14,842,169 (2%) 14,674,110 (1%) Other Liabilities 913,483 849,299 8% 781,618 17% Consolidated Stockholders’ Equity 29,192,300 29,440,512 (1%) 29,422,396 (1%) Non-controlling Interest 200 225 (11%) 221 (10%) Stockholders’ Equity Attributable to Controlling Interest 29,192,100 29,440,287 (1%) 29,422,175 (1%) 2018 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—September Third Quarter INCOME STATEMENT 2018 2017 % var 2018 2017 % var Net sales 340,154 329,199 3% 112,568 109,651 3% Cost of sales (203,127) (185,779) (9%) (70,421) (63,943) (10%) Gross profit 137,027 143,420 (4%) 42,147 45,708 (8%) Selling and Administrative expenses (41,832) (45,740) 9% (13,416) (14,348) 6% Distribution expenses (70,051) (64,462) (9%) (23,050) (22,143) (4%) Operating earnings before other expenses, net 25,144 33,218 (24%) 5,681 9,217 (38%) Other income (expenses), net 157 618 (75%) (114) 183 N/A Operating earnings 25,301 33,836 (25%) 5,567 9,400 (41%) Financial expenses, net (12,853) (13,260) 3% (4,332) (4,103) (6%) Foreign exchange loss, net (8,938) (3,125) (186%) (1,108) (549) (102%) Net income (loss) before income taxes 3,510 17,451 (80%) 127 4,748 (97%) Income tax expenses (14,999) (3,776) (297%) (1,432) (776) (85%) Consolidated net income (loss) (11,489) 13,675 N/A (1,305) 3,972 N/A Non-controlling interest net income (loss) 0 0 0 0 Controlling Interest net income (loss) (11,489) 13,675 N/A (1,305) 3,972 N/A Operating EBITDA 45,791 52,228 (12%) 12,818 15,809 (19%) as of September 30 as of December 31 BALANCE SHEET 2018 2017 % Var 2017 % Var Total Assets 966,784 1,006,838 (4%) 1,036,485 (7%) Cash and Temporary Investments 46,600 31,218 49% 21,195 120% Trade Accounts Receivables 18,171 19,673 (8%) 16,689 9% Other Receivables 1,725 1,507 14% 2,023 (15%) Inventories 57,829 59,960 (4%) 65,256 (11%) Assets held for sale 419 0 1,815 (77%) Other Current Assets 18,029 14,880 21% 26,247 (31%) Current Assets 142,773 127,238 12% 133,225 7% Fixed Assets 282,657 308,783 (8%) 312,092 (9%) Investments in an associate and other investments 261 301 (13%) 309 (15%) Other assets and noncurrent accounts receivables 13,865 7,417 87% 14,354 (3%) Deferred income taxes—net 11,499 14,842 (23%) 18,531 (38%) Goodwill 515,729 548,257 (6%) 557,975 (8%) Other Assets 541,354 570,817 (5%) 591,168 (8%) Total Liabilities 426,387 427,471 (0%) 447,212 (5%) Current Liabilities 139,386 118,674 17% 137,664 1% Long-Term Liabilities 270,091 292,082 (8%) 293,894 (8%) Other Liabilities 16,910 16,715 1% 15,654 8% Consolidated Stockholders’ Equity 540,397 579,367 (7%) 589,273 (8%) Non-controlling Interest 4 4 0% 4 (10%) Stockholders’ Equity Attributable to Controlling Interest 540,393 579,363 (7%) 589,268 (8%) 2018 Second Quarter Results Page 6
Definitions of Terms and Disclosures Methodology for translation, consolidation, and presentation of Definition of terms results PHP refers to Philippine Pesos. CEMEX Holdings Philippines, Inc. (“CHP”) reports its consolidated financial statements under Philippine Financial Reporting Standards pp equals percentage points. (“PFRS”). When reference is made in 2018 and 2017 to consolidated Prices all references to pricing initiatives, price increases or decreases, financial statements, it means CHP financial information together with refer to our prices for our products. its subsidiaries. For the purpose of presenting figures in U.S. dollars, the consolidated Operating EBITDA equals operating earnings before other expenses, balance sheet as of September 30, 2018 has been converted at the end net, plus depreciation and operating amortization. of period exchange rate of 54.02 Philippine pesos per US dollar while the consolidated income statement for the nine-month period ended Free cash flow equals operating EBITDA minus net interest expense, September 30, 2018 has been converted at the January to September, maintenance and strategic capital expenditures, change in working 2018 average exchange rate of 52.64 Philippine pesos per US dollar. On capital, taxes paid, and other cash items (net other expenses less the other hand, the consolidated income statement for the three- proceeds from the disposal of obsolete and/or substantially depleted month period ended September 30, 2018 has been converted at the operating fixed assets that are no longer in operation). July to September, 2018 average exchange rate of 53.53 Philippine pesos per US dollar. 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. Exchange Rates January - September Third Quarter January - September 2018 2017 2018 2017 2018 2017 average average average average End of period End of period Philippine peso 52.64 50.31 53.53 50.82 54.02 50.82 Amounts provided in units of local currency per US dollar 2018 Second Quarter Results Page 7
Exhibit 3
3Q 2018 RESULTS October 26, 2018
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
Third Quarter 2018 Highlights Record cement sales volume All-time-highest cement sales to the institutional segment volume in a quarter (3Q18) (August and September) +10% +8% Growth in Domestic Cement Growth in Net Sales (9M18) Volume (9M18)
Domestic Cement Volumes and Prices 9M18 vs. 3Q18 vs. 3Q18 vs. 9M17 3Q17 2Q18 Domestic Volume 10% 5% 2% Cement Price (PHP) (1%) 4% (1%) Domestic cement volumes increased 5% year-over-year during the third quarter. • All-time-highest quarterly sales volume in 3Q18 • Demand mainly driven by sustained infrastructure activity and growth in the residential sector • Cement sales to institutional clients hit record levels in August and September On a year-to-date basis, domestic cement volumes grew 10% compared with the same period last year. Domestic cement prices were 4% higher during the third quarter versus the same period last year. • Prices for the month of September were 4% higher in local-currency than December 2017 levels Sequentially, domestic cement prices were 1% lower, reflecting a higher percentage of picked-up versus delivered cement.
Net Sales Net sales increased year-over-year by 8% both during the Net Sales1 third quarter and the first nine months of the year. +8% +8% 16,561 17,905 5,572 6,026 3Q17 3Q18 9M17 9M18
Private Sector Residential sector continued its growth in the third Approved Building Permits quarter of 2018. 60% Year-over-year growth based on floor area1 The sector’s performance should be sustained by 40% demand from the growing offshoring and outsourcing 20% (O&O) work force and sustained remittances. 0% -20% Non-residential construction activity remained positive -40% in the third quarter of 2018. 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Analysts reported record-high commercial space net Residential Non-residential take-up during the first half of 2018, driven by demand from offshoring and outsourcing (O&O) firms and startups requiring flexible working spaces. Additionally, Investment in Private Construction expansion of the manufacturing sector should support Year-over-year growth1 industrial growth for the rest of the year. 1Q18 2Q18 6M18 6.7% 7.9% 7.3%
Public Sector Disbursement on Infrastructure and Capital Outlays Infrastructure activity continued to accelerate in (in PHP billion)1 the third quarter of 2018 supported by 50% year-over-year growth in infrastructure and capital 2017 2018 +75% outlays for the first eight months of 2018. +28% The Department of Finance announced that 10 of +94% +71% 75 flagship projects of the “Build, Build, Build” +46% 85 +26% program are slated to start within the year. Strong +46% 72 66 68 growth for the sector is expected for the rest of +23% 63 58 2018. 51 52 48 46 48 43 Public Construction, grew by 21% year-over-year 40 35 35 34 during the second quarter, accounting for 40.5% of total construction investments. Jan Feb Mar Apr May Jun Jul Aug Investment in Public Construction Year-over-year growth2 % of Total Construction Investments2 1Q18 2Q18 6M18 1Q18 2Q18 6M18 24.9% 21.0% 22.1% 20.8% 40.5% 32.0% Source: 1 Department of Budget and Management; Department of Finance; 2 Philippine Statistics Authority
Cost of Sales Cost of sales, as a percentage of sales, Cost of Sales Fuel and Power increased to 60% during 9M18 due to (% of net sales) (% of cost of sales) increased fuel and power costs, as a result of higher global fuel prices, depreciation of the Fuel Philippine Peso, and impact of tax reform. Cost of sales, as a percentage of sales, was Power 4 pp* higher in 3Q18 year-over-year as annual maintenance shutdown expenses were mostly reflected during the quarter. In 2017, shutdown-related expenses were done 63% 24% 22% 21% 24% mainly in 2Q. 58% 56% 60% Fuel costs accounted for 22% of cost of sales during the quarter, a decrease of 2 22% 22% 21% 23% pp year-over-year. Power costs accounted for 22% of cost of sales during the quarter, flat vs. the 3Q17 3Q18 9M17 9M18 3Q17 3Q18 9M17 9M18 same period last year, as lower power requirements due to mill maintenance mitigated higher grid rates. *Difference due to rounding
Operating Expenses Distribution Selling and Administrative Distribution expenses, as a percentage of (% of net sales) (% of net sales) sales, increased by 1 pp year-over-year for the first nine months of the year. Initiatives to increase operational efficiency mitigated higher fuel costs and other inputs. Sequentially, distribution expenses, as a percentage of sales, decreased by 2 pp in 3Q18, from 22% to 20%. Selling and administrative expenses, as a percentage of sales, declined by 2 pp during 20% 20% 20% 21% the first nine months of the year and by 1 pp 13% 12% 14% 12% during the quarter, on a year-over-year basis. 3Q17 3Q18 9M17 9M18 3Q17 3Q18 9M17 9M18
Operating EBITDA and Operating EBITDA Margin Operating EBITDA Variation1 Third quarter operating EBITDA decreased 15% year-over-year. 14% 11% Operating EBITDA margin during the quarter was 11%, 3 pp lower than 3Q17. Expenses grew at a higher rate than revenues given annual maintenance shutdown expenses in the third quarter of this year which were not 16% 14% present same period last year. Year-to-date, operating EBITDA decreased 8% compared to the same period last year. Operating EBITDA margin for the first % Refers to operating EBITDA margin nine months of the year was 14%. 1 Millions of Philippine Pesos
Net Income Net income for the quarter was at a loss of PHP 70 million, due to lower Net Income1 operating EBITDA, higher financial expenses and foreign exchange losses. During the first nine months of the year, the company incurred a loss of PHP 605 million due to higher income tax expenses recorded in the 688 second quarter. 202 Third Quarter January—September in million pesos 2018 2017 % var 2018 2017 % var Operating earnings 298 478 (38%) 1,332 1,702 (22%) 605 Financial income (expense), net (232) (208) (11%) (677) (667) (1%) - - 70 Foreign exchange gain (loss), net (59) (28) (113%) (470) (157) (199%) Income (loss) before income tax 7 241 (97%) 185 878 (79%) Income tax (expense) benefit (77) (39) (95%) (790) (190) (316%) 3Q17 3Q18 9M17 9M18 Consolidated net income (loss) (70) 202 N/A (605) 688 N/A 1 Millions of Philippine Pesos
3Q 2018 FREE CASH FLOW & GUIDANCE
Free Cash Flow January—September Third Quarter Free cash flow during the first nine 2018 2017 2018 2017 months reached PHP 1.6 billion after % var % var maintenance CAPEX and PHP 1.3 Operating EBITDA 2,410 2,627 (8%) 686 803 (15%) billion after strategic CAPEX. —Net Financial Expenses 677 667 232 208 —Maintenance Capex 493 413 131 218 —Change in Working Capital (778) (348) (30) (406) —Income Taxes Paid 420 424 177 118 —Other Cash Items (net) (8) (31) 6 (9) Free Cash Flow after 1,607 1,502 7% 171 675 (75%) Maintenance Capex —Strategic Capex 233 441 49 204 Free Cash Flow 1,373 1,061 29% 122 470 (74%) Millions of Philippine Pesos
Solid Plant Capacity Expansion On Oct. 18, 2018, Solid Cement Corporation signed an agreement with CBMI Construction Co., Ltd of China, for the procurement, construction and installation of the new line. Expected total investment: US$ 235 million New line expected to start operations in the fourth quarter of 2020.
Updates and Developments • CEMEX Go, a digital end-to-end solution that will provide a seamless experience for order placement, tracking of shipments, and managing invoices and payments for CHP’s main products, was launched in the Philippines on Oct. 15, 2018. The initiative is aligned with CEMEX’s global digital transformation. • Net promoter score (NPS) allows us to measure how our customers experience our products and services
2018 Guidance Cement volumes 10-11% PHP 700 million Maintenance CAPEX PHP 3,000 million Solid Plant Expansion CAPEX Capital expenditures PHP 40 million Other Strategic CAPEX PHP 3,740 million Total CAPEX Working capital Reduction of approximately P1,200 – 1,400 million
Sustaining Growth Improve Customer Experience • CEMEX Go • Net Promoter Score Favorable Macroeconomic Capture growth Fundamentals Empowered to • Solid expansion serve and Growing • Debottlenecking deliver Cement Demand Operational Excellence • Productivity • Alternative Fuels
Q&A SESSION 3Q 2018 RESULTS
3Q 2018 APPENDIX
Debt Information Maturity Profile1 2 6,656 Related Party Loans BDO Debt 5,027 Total Debt: PHP 15,270 Avg. life of debt: 4.5 years Net Debt to EBITDA3: 4.2x 1,664 1,214 1,074 429 394 140 140 140 35 2018 2019 2020 2021 2022 2023 2024 1 Millions of Philippine Pesos 2 Pertains to loans with CEMEX Asia B.V. 3 Last 12 months Consolidated EBITDA
Definitions 6M18 / 6M17 Results for the first six months of the years 2018 and 2017, respectively 9M18 / 9M17 Results for the first nine months of the years 2018 and 2017, respectively 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.
Contact Information Investor Relations Stock Information In the Philippines PSE: +632 849 3600 CHP chp.ir@cemex.com