6-K

 

 

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, 2020

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, dated October  28, 2020, announcing third quarter 2020 results for CEMEX, S.A.B. de C.V. (NYSE: CX).

 

2.

Third quarter 2020 results for CEMEX, S.A.B. de C.V. (NYSE: CX).

 

3.

Presentation regarding third quarter 2020 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.
      (Registrant)
       
Date:   October 28, 2020     By:   /s/ Rafael Garza Lozano
        Name: Rafael Garza Lozano
        Title: Chief Comptroller

 

3


EXHIBIT INDEX

 

EXHIBIT

NO.

 

DESCRIPTION

1.

  Press release, dated October 28, 2020, announcing third quarter 2020 results for CEMEX, S.A.B. de C.V. (NYSE: CX).

2.

  Third quarter 2020 results for CEMEX, S.A.B. de C.V. (NYSE: CX).

3.

  Presentation regarding third quarter 2020 results for CEMEX, S.A.B. de C.V. (NYSE: CX).

 

4

Press release, dated October 28, 2020, announcing third quarter 2020 results

Exhibit 1

 

Media Relations

Jorge Pérez

+52 (81) 8888-4334

jorgeluis.perez@cemex.com

      

Investor Relations

Lucy Rodriguez

+1 (212) 317-6007

ir@cemex.com

 

LOGO

CEMEX ANNOUNCES HIGHEST QUARTERLY EBITDA,

EBITDA MARGIN AND FREE CASH FLOW SINCE 2016

MONTERREY, MEXICO, OCTOBER 28, 2020– CEMEX, S.A.B. de C.V. (“CEMEX”) (NYSE: CX), announced today strong results in third-quarter 2020 with all regions showing increasing profitability. EBITDA not only recovered from COVID-19 disruptions of the prior quarter but grew double-digit on a year over year basis. Net Sales increased 3% on a like to like basis to US$3.4 billion, while EBITDA for the quarter rose 15% to US$728 million. EBITDA margin increased by 1.8 percentage points due to higher prices, energy tailwinds, and cost efficiencies under Operation Resilience.

CEMEX’s Consolidated Third Quarter 2020 Financial and Operational Highlights

 

   

Net Sales on a like-to-like basis increased 3%, to US$3,436 million.

 

   

Operating Earnings before Other Expenses, net, increased 20% to US$453 million on a like-to-like basis.

 

   

Operating EBITDA on a like-to-like basis increased 15% to US$728 million, as compared to the same period in 2019.

 

   

Operating EBITDA margin increased by 1.8pp, from 19.4% in the third quarter of 2019 to 21.2% this quarter.

 

   

Free Cash Flow after Maintenance Capital Expenditures increased 58% to US$458 million.

 

   

Controlling Interest Net Income (loss) was a loss of US$1.54 billion, due to a non-cash impairment of goodwill and idle assets that CEMEX previously announced.

 

   

As a result of the strong quarterly performance, CEMEX delevered in the quarter. Net debt plus perpetual notes decreased by US$504 million versus the prior quarter.

“We are pleased with our performance in the third quarter in which all regions participated in earnings recovery. Indeed, during the quarter, we experienced EBITDA recovery from the second quarter decline, due to COVID-19, as well as strong year-over-year growth. Operation Resilience played a key role in this performance,” said Fernando A. González, CEO of CEMEX. “We continued to derisk the business with the reduction in our net leverage ratio and the extension of our bank maturities with the successful refinancing of the Facilities Agreement.”

 

1


Geographical Markets Third-Quarter 2020 Highlights

Net Sales in Mexico increased 14% on a like-to-like basis to US$723 million. Operating EBITDA, on a like-to-like basis, increased 16% to US$246 million in the quarter, versus the same period of the previous year.

CEMEX’s operations in the United States reported Net Sales of US$1.0 billion, an increase of 1% from the same period in 2019. Operating EBITDA increased by 7% to US$199 million versus the same quarter of 2019.

In our Europe, Middle East, Africa and Asia region, Net Sales increased by 2% on a like-to-like basis, compared with the same period of the previous year, reaching US$1.2 billion. Operating EBITDA was US$220 million for the quarter, 8% higher than the same period last year on a like-to-like basis.

CEMEX’s operations in our South, Central America and the Caribbean region, reported Net Sales of US$395 million, an increase of 1% on a like-to-like basis over the same period of 2019. Operating EBITDA increased by 31% on a like-to-like basis to US$109 million in the third quarter of 2020, in contrast to the same quarter of 2019.

CEMEX is a global building materials company that provides high-quality products and reliable services. CEMEX has a rich history of improving the wellbeing of those it serves through innovative building solutions, efficiency advancements, and efforts to promote a sustainable future. For more information, please visit: www.cemex.com

###

This press release contains forward-looking statements that 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, as well as CEMEX’s current plans based on such facts and circumstances. These statements necessarily involve risks and uncertainties that could cause actual results to differ materially from CEMEX’s expectations. CEMEX assumes no obligation to update or correct the information contained in this press release. The information contained in this press release is subject to change without notice, and CEMEX is not obligated to publicly update or revise any 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. 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.

 

2

Third quarter 2020 results for CEMEX, S.A.B. de C.V.

Exhibit 2

 

LOGO

Third Quarter Results 2020

 

LOGO

 

   Stock Listing Information    Investor Relations
   NYSE (ADS)    In the United States:
   Ticker: CX    + 1 877 7CX NYSE
   Mexican Stock Exchange    In Mexico:
   Ticker: CEMEXCPO    + 52 (81) 8888 4292
   Ratio of CEMEXCPO to CX = 10:1    E-Mail: ir@cemex.com


Operating and financial highlights   

LOGO

 

 

    

January—September

                Third Quarter        
     2020     2019     % var     l-t-l
% var
    2020     2019     % var     l-t-l
% var
 

Consolidated cement volume

     46,232       47,161       (2 %)        17,037       16,479       3  

Consolidated ready-mix volume

     34,525       37,681       (8 %)        12,330       13,058       (6 %)   

Consolidated aggregates volume

     97,711       103,847       (6 %)        35,447       35,574       (0 %)   

Net sales

     9,433       9,872       (4 %)      (2 %)      3,436       3,377       2     3

Gross profit

     3,074       3,269       (6 %)      (2 %)      1,176       1,157       2     5

as % of net sales

     32.6     33.1     (0.5pp       34.2     34.3     (0.1pp  

Operating earnings before other expenses, net

     992       1,051       (6 %)      (0 %)      453       394       15     20

as % of net sales

     10.5     10.6     (0.1pp       13.2     11.7     1.5pp    

Controlling interest net income (loss)

     (1,537     381       N/A         (1,535     187       N/A    

Operating EBITDA

     1,816       1,824       (0 %)      3     728       655       11     15

as % of net sales

     19.3     18.5     0.8pp         21.2     19.4     1.8pp    

Free cash flow after maintenance capital expenditures

     383       169       126       458       290       58  

Free cash flow

     237       6       3847       427       211       103  

Total debt plus perpetual notes

     13,756       11,330       21       13,756       11,330       21  

Earnings (loss) of continuing operations per ADS

     (0.96     0.13       N/A         (0.98     0.10       N/A    

Fully diluted earnings (loss) of continuing operations per ADS (1)

     (0.96     0.15       N/A         (0.98     0.11       N/A    

Average ADSs outstanding

     1,498       1,532       (2 %)        1,490       1,530       (3 %)   

Employees

     40,140       40,407       (1 %)        40,140       40,407       (1 %)   

This information does not include discontinued operations. Please see page 13 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 U.S. dollars, except volumes, percentages, employees, and per-ADS amounts. Average ADSs outstanding are presented in millions.

Please refer to page 13 for end-of quarter CPO-equivalent units outstanding.

 

(1) 

For the period of January-September 2020, the effect of the potential dilutive shares generates anti-dilution; therefore, there is no change between the reported basic and diluted gain per share.

 

Consolidated net sales in the third quarter of 2020 reached US$3.4 billion, representing an increase of 2%, or 3% on a like-to-like basis for ongoing operations and adjusting for foreign exchange fluctuations, compared with the third quarter of 2019. The increase was mainly due to higher volumes in Mexico and our Europe, Middle East, Africa and Asia region as well as higher prices of our products in local currency terms in most of our regions.    

Cost of sales, as a percentage of net sales, increased by 0.1pp during the third quarter of 2020 compared with the same period last year, from 65.7% to 65.8%. The increase was mainly driven by higher electricity, as well as purchased cement and clinker costs, partially offset by lower fuel costs.

Operating expenses, as a percentage of net sales decreased by 1.5pp during the third quarter of 2020 compared with the same period last year, from 22.6% to 21.1%, mainly in sales, distribution, and corporate expenses.

Operating EBITDA in the third quarter of 2020 reached US$728 million, which increased 11% or 15% on a like-to-like basis for the ongoing operations and for foreign exchange fluctuations. The increase was due to higher contributions in all our regions.

Operating EBITDA margin increased by 1.8pp from 19.4% in the third quarter of 2019 to 21.2% this quarter.

Gain (loss) on financial instruments for the quarter was a loss of US$10 million, resulting mainly from the interest rate swap hedge and the derivatives related to GCC shares.

Other expenses, net, for the quarter were US$1.6 billion, which includes mainly the $1.5 billion of impairment of goodwill and assets and severance payments.

Foreign exchange results for the quarter was a loss of US$28 million, mainly due to the fluctuation of the Colombian peso and the Euro versus the U.S. dollar.

Controlling interest net income (loss) was a loss of US$1.5 billion in the third quarter of 2020 versus an income of US$187 million in the same quarter of 2019. The loss primarily reflects the $1.5 billion of impairment of goodwill and assets, higher financial expenses, a negative variation in foreign exchange results and a negative variation in discontinued operations, partially offset by higher operating earnings before other expenses net, and lower income tax.

Net debt plus perpetual notes decreased by US$504 million during the quarter.

 

 

2020 Third Quarter Results    Page 2


Operating results   

LOGO

 

 

Mexico

 

           January—September                 Third Quarter        
     2020     2019     % var     l-t-l
% var
    2020     2019     % var     l-t-l
% var
 

Net sales

     1,976       2,175       (9 %)      2     723       716       1     14

Operating EBITDA

     662       740       (10 %)      1     246       240       3     16

Operating EBITDA margin

     33.5     34.0     (0.5pp       34.1     33.5     0.6pp    

In millions of U.S. dollars, except percentages.

 

     Domestic gray cement     Ready-mix     Aggregates  

Year-over-year percentage

variation

   January—September     Third Quarter     January—September     Third Quarter     January—September     Third Quarter  

Volume

     2     11     (20 %)      (13 %)      (14 %)      (5 %) 

Price (USD)

     (10 %)      (8 %)      (11 %)      (12 %)      (6 %)      (4 %) 

Price (local currency)

     1     3     (0 %)      (1 %)      5     8

In Mexico, our cement volumes increased by 11%, while ready mix and aggregates dropped by 13% and 5%, respectively, during the quarter. Bagged cement continued its growth path supported by government social programs, home improvements and higher remittances. Formal construction activity increased as private sector and government infrastructure projects accelerate.

During the quarter, our prices in local-currency terms remained flat on a sequential basis mainly due to a product mix effect.

United States

 

           January—September                 Third Quarter        
     2020     2019     % var     l-t-l
% var
    2020     2019     % var     l-t-l
% var
 

Net sales

     2,983       2,846       5     5     1,012       998       1     1

Operating EBITDA

     560       480       17     17     199       186       7     7

Operating EBITDA margin

     18.8     16.9     1.9pp         19.7     18.7     1.0pp    

In millions of U.S. dollars, except percentages.

 

     Domestic gray cement     Ready-mix     Aggregates  

Year-over-year percentage

variation

   January—September     Third Quarter     January—September     Third Quarter     January—September     Third Quarter  

Volume

     6     3     (0 %)      (4 %)      3     2

Price (USD)

     1     0     2     1     0     (3 %) 

Price (local currency)

     1     0     2     1     0     (3 %) 

The United States kept its strong momentum in the third quarter, driven primarily by a pickup in residential activity and growth in the infrastructure sector. Cement and aggregates volumes increased 3% and 2% respectively, while ready-mix decreased by 4%.

During the quarter, pricing for cement, ready-mix and aggregates was stable sequentially.

EBITDA margin expanded by one percentage point due to improved logistics, lower fuel costs and savings from “Operation Resilience”.

 

2020 Third Quarter Results    Page 3


Operating results   

LOGO

 

 

Europe, Middle East, Africa and Asia

 

           January—September                 Third Quarter        
     2020     2019     % var     l-t-l
% var
    2020     2019     % var     l-t-l
% var
 

Net sales

     3,236       3,323       (3 %)      (4 %)      1,238       1,150       8     2

Operating EBITDA

     471       483       (2 %)      (4 %)      220       193       14     8

Operating EBITDA margin

     14.5     14.5     0.0pp         17.7     16.8     0.9pp    

In millions of U.S. dollars, except percentages.

 

     Domestic gray cement            Ready-mix     Aggregates  

Year-over-year percentage

variation

   January—September     Third Quarter     January—September     Third Quarter     January—September     Third Quarter  

Volume

     (3 %)      1        (6 %)      (1 %)      (6 %)      2

Price (USD)

     (0 %)      4        2     7     2     8

Price (local currency) (*)

     (2 %)      (2 %)         0     1     1     2

In our EMEAA region, EBITDA grew 8% YoY driven by Europe, Israel, and the Philippines.

In Europe, our domestic gray cement volumes increased 2% while ready-mix decreased 4% and aggregates volumes remained flat during the quarter, on a year-over-year basis. Strong volume performance continued in Germany, Poland, and Czech Republic, while we saw a marked recovery in the UK, France, and Spain as economies opened.

Prices in Europe for our three core products in local currency terms, were up both sequentially and on a year-over-year basis.

In the Philippines, we experienced a sharp recovery of volumes in the quarter as the lockdown measures were lifted in late May. Our EBITDA margin in the Philippines went up 9 percentage points mainly due to cost containment measures and lower maintenance.

Israel continued with its robust performance, again beating its record EBITDA which was just set in second quarter.

In Egypt, despite government suspension of private residential construction permits, our volumes for the quarter were up YoY.

 

(*)

Calculated on a volume-weighted-average basis at constant foreign-exchange rates

 

2020 Third Quarter Results    Page 4


Operating results   

LOGO

 

 

South, Central America and the Caribbean

 

           January—September                 Third Quarter        
     2020     2019     % var     l-t-l
% var
    2020     2019     % var     l-t-l
% var
 

Net sales

     1,051       1,267       (17 %)      (12 %)      395       417       (5 %)      1

Operating EBITDA

     266       284       (7 %)      (1 %)      109       89       23     31

Operating EBITDA margin

     25.3     22.4     2.9pp         27.7     21.4     6.3pp    

In millions of U.S. dollars, except percentages.

 

     Domestic gray cement            Ready-mix     Aggregates  

Year-over-year percentage

variation

   January—September     Third Quarter     January—
September
    Third Quarter     January—September     Third Quarter  

Volume

     (13 %)      (1 %)         (37 %)      (26 %)      (39 %)      (28 %) 

Price (USD)

     (2 %)      (2 %)         (11 %)      (13 %)      (2 %)      (5 %) 

Price (local currency) (*)

     5     6        (2 %)      (5 %)      7     3

In our South, Central America and the Caribbean region, cement volumes almost recovered to levels of last year. EBITDA margin increased 6.3 percentage points as a result of our cost reduction initiatives, higher prices in local currency terms and tailwinds from lower fuel prices. Cement prices declined 2% on a sequential basis mainly due to geographic mix.

In Colombia, our quarterly cement volumes declined 6% reflecting the entrance of a new competitor into the market late last year. Industry volumes improved significantly almost reaching levels of the prior year. Construction activity was supported by the self-construction sector and 4G-highway projects. Our cement prices continued with favorable performance, as evidenced by the 8% and 2% year over year and sequential growth, respectively, in local-currency terms.

 

(*)

Calculated on a volume-weighted-average basis at constant foreign-exchange rates

 

2020 Third Quarter Results    Page 5


Operating results   

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Operating EBITDA and free cash flow

 

     January—September     Third Quarter  
     2020     2019     % var     2020     2019     % var  

Operating earnings before other expenses, net

     992       1,051       (6 %)      453       394       15

+ Depreciation and operating amortization

     824       774         276       261    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating EBITDA

     1,816       1,824       (0 %)      728       655       11

- Net financial expense

     542       522         187       169    

- Maintenance capital expenditures

     320       441         103       176    

- Change in working capital

     344       563         (136     (7  

- Taxes paid

     115       142         34       31    

- Other cash items (net)

     126       40         83       23    

- Free cash flow discontinued operations

     (14     (53       (1     (27  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow after maintenance capital expenditures

     383       169       126     458       290       58

- Strategic capital expenditures

     147       163         32       80    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

     237       6       3847     427       211       103
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

In millions of U.S. dollars, except percentages.

Due to higher EBITDA and proactive working capital management and lower maintenance capex, we generated US$458 million of free cash flow after maintenance capex and US$427 million of free cash flow during the third quarter.

Average working capital days on a YoY basis have improved from -6 in 3rd quarter 2019 to -12 days in 3rd quarter 2020.

Our leverage ratio was reduced by 0.30 times on a sequential basis due to a decrease in net debt and an improvement in the trailing twelve months EBITDA, placing us at a lower interest rate level within the margin grid for our Facilities Agreement debt

Information on debt and perpetual notes

 

     Third Quarter     Second
Quarter
        Third Quarter  
     2020     2019     % var     2020         2020     2019  

Total debt (1)

     13,310       10,889       22     13,196     Currency denomination    
            

 

 

   

 

 

 

Short-term

     22     10       6   U.S. dollar     71     68

Long-term

     78     90       94   Euro     21     23

Perpetual notes

     446       441       1     443     Mexican peso     1     1

Total debt plus perpetual notes

     13,756       11,330       21     13,638     Other     7     8
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Cash and cash equivalents

     3,453       299       1055     2,832        

Net debt plus perpetual notes

     10,303       11,031       (7 %)      10,807     Interest rate(3)    
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 
           Fixed     79     75
  

 

 

   

 

 

   

 

 

   

 

 

       

Consolidated funded debt (2)

     10,337       10,624         10,790     Variable     21     25
            

 

 

   

 

 

 

Consolidated leverage ratio (2)

     4.27       4.05         4.57        

Consolidated coverage ratio (2)

     3.69       4.03         3.69        
  

 

 

   

 

 

     

 

 

       

In millions of U.S. dollars, except percentages and ratios.

 

(1)

Includes leases, in accordance with International Financial Reporting Standards (IFRS).

(2)

Calculated in accordance with our contractual obligations under the 2017 Facilities Agreement, as amended and restated.

(3)

Includes the effect of interest-rate swap instruments related to bank loans to fix floating rates with a nominal amount of US$1,000 million.

 

2020 Third Quarter Results    Page 6


Operating results   

LOGO

 

 

Consolidated Income Statement & Balance Sheet

CEMEX, S.A.B. de C.V. and Subsidiaries

(Thousands of U.S. dollars, except per ADS amounts)

 

     January—September     Third Quarter  

INCOME STATEMENT

   2020     2019     % var     like-to-like
% var
    2020     2019     % var     like-to-like
% var
 

Net sales

     9,433,031       9,871,599       (4 %)      (2 %)      3,436,215       3,377,074       2     3

Cost of sales

     (6,359,200     (6,602,174     4       (2,260,030     (2,220,401     (2 %)   
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Gross profit

     3,073,831       3,269,424       (6 %)      (2 %)      1,176,185       1,156,672       2     5

Operating expenses

     (2,081,959     (2,218,738     6       (723,498     (762,643     5  
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Operating earnings before other expenses, net

     991,872       1,050,686       (6 %)      (0 %)      452,687       394,030       15     20

Other expenses, net

     (1,748,210     (131,615     (1228 %)        (1,635,688     (44,823     (3549 %)   
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Operating earnings

     (756,338     919,072       N/A         (1,183,001     349,207       N/A    

Financial expense

     (599,213     (525,443     (14 %)        (248,308     (166,695     (49 %)   

Other financial income (expense), net

     (19,594     (37,932     48       (50,924     (11,658     (337 %)   

Financial income

     12,601       15,938       (21 %)        3,681       6,280       (41 %)   

Results from financial instruments, net

     (16,322     1,405       N/A         (9,505     (4,537     (109 %)   

Foreign exchange results

     29,275       (10,331     N/A         (28,324     1,909       N/A    

Effects of net present value on assets and liabilities and others, net

     (45,148     (44,945     (0 %)        (16,776     (15,308     (10 %)   

Equity in gain (loss) of associates

     31,318       30,536       3       17,829       19,306       (8 %)   
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Income (loss) before income tax

     (1,343,827     386,232       N/A         (1,464,404     190,160       N/A    

Income tax

     (70,492     (151,165     53       19,352       (35,991     N/A    
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Profit (loss) of continuing operations

     (1,414,319     235,067       N/A         (1,445,052     154,169       N/A    

Discontinued operations

     (105,217     175,340       N/A         (80,092     38,216       N/A    
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Consolidated net income (loss)

     (1,519,535     410,407       N/A         (1,525,144     192,386       N/A    

Non-controlling interest net income (loss)

     17,419       29,647       (41 %)        10,274       5,014       105  
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Controlling interest net income (loss)

     (1,536,955     380,760       N/A         (1,535,418     187,372       N/A    
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

Operating EBITDA

     1,816,068       1,824,456       (0 %)      3     728,281       655,217       11     15

Earnings (loss) of continued operations per ADS

     (0.96     0.13       N/A         (0.98     0.10       N/A    

Earnings (loss) of discontinued operations per ADS

     (0.07     0.11       N/A         (0.05     0.02       N/A    
  

 

 

   

 

 

   

 

 

     

 

 

   

 

 

   

 

 

   

 

     As of September 30  

BALANCE SHEET

   2020      2019      % var  

Total assets

     29,233,041        28,508,655        3

Cash and cash equivalents

     3,453,181        299,078        1055

Trade receivables less allowance for doubtful accounts

     1,610,250        1,660,115        (3 %) 

Other accounts receivable

     447,674        295,426        52

Inventories, net

     934,195        1,016,551        (8 %) 

Assets held for sale

     147,311        189,467        (22 %) 

Other current assets

     135,592        122,956        10

Current assets

     6,728,202        3,583,593        88

Property, machinery and equipment, net

     10,723,930        11,717,024        (8 %) 

Other assets

     11,780,909        13,208,038        (11 %) 
  

 

 

    

 

 

    

 

 

 

Total liabilities

     20,423,582        17,450,077        17

Current liabilities

     7,376,556        5,182,077        42

Long-term liabilities

     9,360,557        8,769,667        7

Other liabilities

     3,686,468        3,498,333        5
  

 

 

    

 

 

    

 

 

 

Total stockholder’s equity

     8,809,459        11,058,578        (20 %) 

Non-controlling interest and perpetual instruments

     1,406,491        1,501,334        (6 %) 

Total controlling interest

     7,402,969        9,557,244        (23 %) 
  

 

 

    

 

 

    

 

 

 

 

2020 Third Quarter Results    Page 7


Operating results   

LOGO

 

Operating Summary per Country

 

In thousands of U.S. dollars

 

           January—September                 Third Quarter        

NET SALES

   2020     2019     % var     like-to-like
% var
    2020     2019     % var     like-to-like
% var
 

Mexico

     1,976,213       2,175,045       (9 %)      2     723,022       716,148       1     14

U.S.A.

     2,983,029       2,845,749       5     5     1,012,393       997,855       1     1

Europe, Middle East, Asia and Africa

     3,236,173       3,322,508       (3 %)      (4 %)      1,238,188       1,150,250       8     2

Europe

     2,212,885       2,272,634       (3 %)      (3 %)      868,932       785,489       11     4

Philippines

     303,925       351,872       (14 %)      (17 %)      113,438       113,792       (0 %)      (6 %) 

Middle East and Africa

     719,363       698,001       3     (1 %)      255,818       250,969       2     (1 %) 

South, Central America and the Caribbean

     1,050,882       1,267,455       (17 %)      (12 %)      395,270       417,156       (5 %)      1

Others and intercompany eliminations

     186,734       260,841       (28 %)      (28 %)      67,342       95,665       (30 %)      (30 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

     9,433,031       9,871,599       (4 %)      (2 %)      3,436,215       3,377,074       2     3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GROSS PROFIT

                                                

Mexico

     1,022,664       1,133,385       (10 %)      2     374,372       379,669       (1 %)      11

U.S.A.

     768,852       749,417       3     3     270,204       284,699       (5 %)      (5 %) 

Europe, Middle East, Asia and Africa

     844,918       902,853       (6 %)      (8 %)      352,127       332,662       6     0

Europe

     576,548       621,991       (7 %)      (8 %)      249,378       235,581       6     (1 %) 

Philippines

     129,006       145,155       (11 %)      (14 %)      52,815       46,898       13     6

Middle East and Africa

     139,363       135,708       3     (1 %)      49,935       50,183       (0 %)      (3 %) 

South, Central America and the Caribbean

     392,425       455,697       (14 %)      (8 %)      153,798       147,269       4     12

Others and intercompany eliminations

     44,973       28,072       60     60     25,683       12,373       108     108
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

     3,073,831       3,269,424       (6 %)      (2 %)      1,176,185       1,156,672       2     5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EARNINGS BEFORE
OTHER EXPENSES, NET

                                                

Mexico

     554,222       620,628       (11 %)      1     209,096       198,073       6     19

U.S.A.

     232,319       184,711       26     26     90,169       87,841       3     3

Europe, Middle East, Asia and Africa

     222,656       256,030       (13 %)      (15 %)      130,612       116,751       12     6

Europe

     118,251       150,459       (21 %)      (23 %)      82,261       78,823       4     (2 %) 

Philippines

     58,323       64,799       (10 %)      (12 %)      27,681       20,243       37     31

Middle East and Africa

     46,083       40,773       13     9     20,670       17,685       17     13

South, Central America and the Caribbean

     198,932       213,720       (7 %)      (2 %)      87,269       66,225       32     42

Others and intercompany eliminations

     (216,258     (224,402     4     (6 %)      (64,459     (74,861     14     6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

     991,872       1,050,686       (6 %)      (0 %)      452,687       394,030       15     20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

2020 Third Quarter Results    Page 8


Operating results   

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Operating Summary per Country

 

EBITDA in thousands of U.S. dollars. EBITDA margin as a percentage of net sales.

 

           January—September           Third Quarter  

OPERATING EBITDA

   2020     2019     % var     like-to-like
% var
    2020     2019     % var     like-to-like
% var
 

Mexico

     662,475       739,665       (10 %)      1     246,307       239,892       3     16

U.S.A.

     560,418       480,330       17     17     199,067       186,225       7     7

Europe, Middle East, Asia and Africa

     470,735       482,654       (2 %)      (4 %)      219,696       192,854       14     8

Europe

     292,755       316,689       (8 %)      (9 %)      145,550       134,346       8     2

Philippines

     93,035       91,990       1     (2 %)      39,532       29,442       34     28

Middle East and Africa

     84,945       73,976       15     11     34,614       29,065       19     16

South, Central America and the Caribbean

     265,622       284,487       (7 %)      (1 %)      109,358       89,245       23     31

Others and intercompany eliminations

     (143,183     (162,682     12     (1 %)      (46,146     (52,999     13     2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

     1,816,068       1,824,456       (0 %)      3     728,281       655,217       11     15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EBITDA MARGIN

                                                

Mexico

     33.5     34.0         34.1     33.5    

U.S.A.

     18.8     16.9         19.7     18.7    

Europe, Middle East, Asia and Africa

     14.5     14.5         17.7     16.8    

Europe

     13.2     13.9         16.8     17.1    

Philippines

     30.6     26.1         34.8     25.9    

Middle East and Africa

     11.8     10.6         13.5     11.6    

South, Central America and the Caribbean

     25.3     22.4         27.7     21.4    
  

 

 

   

 

 

       

 

 

   

 

 

     

TOTAL

     19.3     18.5         21.2     19.4    
  

 

 

   

 

 

       

 

 

   

 

 

     

 

2020 Third Quarter Results    Page 9


Operating results   

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Volume Summary

Consolidated volume summary

Cement and aggregates: Thousands of metric tons.

Ready-mix: Thousands of cubic meters.

 

     January—
September
                  Third Quarter         
     2020      2019      % var     2020      2019      % var  

Consolidated cement volume (1)

     46,232        47,161        (2 %)      17,037        16,479        3

Consolidated ready-mix volume

     34,525        37,681        (8 %)      12,330        13,058        (6 %) 

Consolidated aggregates volume (2)

     97,711        103,847        (6 %)      35,447        35,574        (0 %) 

Per-country volume summary

 

     January—
September
    Third Quarter     Third Quarter 2020 vs.  

DOMESTIC GRAY CEMENT VOLUME

   2020 vs. 2019     2020 vs. 2019     Second Quarter 2020  

Mexico

     2     11     18

U.S.A.

     6     3     (2 %) 

Europe, Middle East, Asia and Africa

     (3 %)      1     17

Europe

     1     2     8

Philippines

     (12 %)      (3 %)      38

Middle East and Africa

     (1 %)      1     21

South, Central America and the Caribbean

     (13 %)      (1 %)      41
  

 

 

   

 

 

   

 

 

 
READY-MIX VOLUME                   

Mexico

     (20 %)      (13 %)      58

U.S.A.

     (0 %)      (4 %)      (0 %) 

Europe, Middle East, Asia and Africa

     (6 %)      (1 %)      16

Europe

     (10 %)      (4 %)      16

Philippines

     N/A       N/A       N/A  

Middle East and Africa

     2     2     16

South, Central America and the Caribbean

     (37 %)      (26 %)      91
  

 

 

   

 

 

   

 

 

 

AGGREGATES VOLUME

                  

Mexico

     (14 %)      (5 %)      60

U.S.A.

     3     2     1

Europe, Middle East, Asia and Africa

     (6 %)      2     16

Europe

     (9 %)      0     18

Philippines

     N/A       N/A       N/A  

Middle East and Africa

     9     12     7

South, Central America and the Caribbean

     (39 %)      (28 %)      85
  

 

 

   

 

 

   

 

 

 

 

(1)

Consolidated cement volume includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker.

(2)

Consolidated aggregates volumes include aggregates from our marine business in UK.

 

2020 Third Quarter Results    Page 10


Operating results   

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Price Summary

Variation in U.S. dollars

 

     January—September     Third Quarter     Third Quarter 2020 vs.  

DOMESTIC GRAY CEMENT PRICE

   2020 vs. 2019     2020 vs. 2019     Second Quarter 2020  

Mexico

     (10 %)      (8 %)      4

U.S.A.

     1     0     0

Europe, Middle East, Asia and Africa (*)

     (0 %)      4     4

Europe (*)

     2     9     8

Philippines

     (2 %)      2     4

Middle East and Africa (*)

     (8 %)      (18 %)      (11 %) 

South, Central America and the Caribbean (*)

     (2 %)      (2 %)      (3 %) 
  

 

 

   

 

 

   

 

 

 
READY-MIX PRICE                   

Mexico

     (11 %)      (12 %)      4

U.S.A.

     2     1     0

Europe, Middle East, Asia and Africa (*)

     2     7     7

Europe (*)

     1     10     10

Philippines

     N/A       N/A       N/A  

Middle East and Africa (*)

     4     2     0

South, Central America and the Caribbean (*)

     (11 %)      (13 %)      (4 %) 
  

 

 

   

 

 

   

 

 

 
AGGREGATES PRICE                   

Mexico

     (6 %)      (4 %)      7

U.S.A.

     0     (3 %)      (1 %) 

Europe, Middle East, Asia and Africa (*)

     2     8     8

Europe (*)

     2     9     10

Philippines

     N/A       N/A       N/A  

Middle East and Africa (*)

     8     5     3

South, Central America and the Caribbean (*)

     (2 %)      (5 %)      2
  

 

 

   

 

 

   

 

 

 

 

(*)

Price variation in U.S. dollars calculated on a volume-weighted-average basis; price variation in local currency calculated on a volume-weighted-average basis at constant foreign-exchange rates

 

2020 Third Quarter Results    Page 11


Operating results   

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Variation in Local Currency

 

     January—September     Third Quarter     Third Quarter 2020 vs.  

DOMESTIC GRAY CEMENT PRICE

   2020 vs. 2019     2020 vs. 2019     Second Quarter 2020  

Mexico

     1     3     0

U.S.A.

     1     0     0

Europe, Middle East, Asia and Africa (*)

     (2 %)      (2 %)      (1 %) 

Europe (*)

     2     3     1

Philippines

     (5 %)      (3 %)      0

Middle East and Africa (*)

     (14 %)      (21 %)      (11 %) 

South, Central America and the Caribbean (*)

     5     6     (2 %) 
  

 

 

   

 

 

   

 

 

 
READY-MIX PRICE                   

Mexico

     (0 %)      (1 %)      (0 %) 

U.S.A.

     2     1     0

Europe, Middle East, Asia and Africa (*)

     0     1     1

Europe (*)

     1     3     3

Philippines

     N/A       N/A       N/A  

Middle East and Africa (*)

     1     (1 %)      (2 %) 

South, Central America and the Caribbean (*)

     (2 %)      (5 %)      (4 %) 
  

 

 

   

 

 

   

 

 

 
AGGREGATES PRICE                   

Mexico

     5     8     3

U.S.A.

     0     (3 %)      (1 %) 

Europe, Middle East, Asia and Africa (*)

     1     2     2

Europe (*)

     1     2     3

Philippines

     N/A       N/A       N/A  

Middle East and Africa (*)

     5     2     0

South, Central America and the Caribbean (*)

     7     3     2
  

 

 

   

 

 

   

 

 

 

 

(*)

Price variation in U.S. dollars calculated on a volume-weighted-average basis; price variation in local currency calculated on a volume-weighted-average basis at constant foreign-exchange rates

 

2020 Third Quarter Results    Page 12


Other information

 

  

LOGO

 

 

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.

 

    Third Quarter     Second Quarter  
    2020     2019     2020  
In millions of US dollars.   Notional
amount
    Fair
value
    Notional
amount
    Fair
value
    Notional
amount
    Fair
value
 

Exchange rate derivatives (1)

    1,486       37       1,249       (12     800       84  

Equity related derivatives (2)

    68       3       93       2       72       5  

Interest rate swaps (3)

    1,000       (45     1,121       (35     1,000       (59

Fuel derivatives (4)

    149       (15     113       (2     170       (14
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2,703       (20     2,576       (47     2,042       16  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Exchange rate derivatives are used to manage currency exposures that arise from the regular operations and from forecasted transactions.

(2)

Equity derivatives related with options on the Parent Company own shares and forwards, net of cash collateral, over the shares of Grupo Cementos Chihuahua, S.A.B. de C.V.

(3)

Interest-rate swap derivatives related to bank loans. As of September 30, 2019, included an interest-rate swap derivative related to long-term energy contracts.

(4)

Forward contracts negotiated to hedge the price of the fuel consumed in certain operations.

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 September 30, 2020, in connection with the fair market value recognition of its derivatives portfolio, CEMEX recognized increases in its assets and liabilities resulting in a net liability of US$20 million.

Equity-related information

One CEMEX ADS represents ten CEMEX CPOs. One CEMEX CPO represents two Series A shares and one Series B share. The following amounts are expressed in CPO-equivalent terms.

 

Beginning-of-quarter outstanding CPO-equivalents

     14,708,429,449  
  

 

 

 

End-of-quarter outstanding CPO-equivalents

     14,708,429,449  

For purposes of this report, outstanding CPO-equivalents equal the total number of Series A and B shares outstanding as if they were all held in CPO form less CPOs held in subsidiaries, which as of September 30, 2020 were 20,541,277.

Assets held for sale, discontinued operations and other disposal groups

Assets held for sale and discontinued operations

On August 3, 2020, through an affiliate in the United Kingdom, CEMEX closed the sale of certain assets to Breedon Group plc for approximately US$230 million, which include approximately US$30 million of debt. The assets included 49 ready-mix plants, 28 aggregate quarries, four depots, one cement terminal, 14 asphalt plants, four concrete products operations, as well as a portion of CEMEX’s paving solutions business in the United Kingdom. After completion of this divestiture, CEMEX maintains a significant footprint in key operating geographies in the United Kingdom related with the production and sale of cement, ready-mix, aggregates, asphalt and paving solutions, among others. For purposes of the Income Statements for the nine-month periods ended September 30, 2020 and 2019 the operations related to this segment from January 1 to August 3, 2020 and for the nine-month periods ended September 30, 2019, respectively, are presented net of tax in the single line item “Discontinued operations,” including in 2020 an allocation of goodwill of US$47 million.

On March 6, 2020, CEMEX concluded the sale of its U.S. affiliate Kosmos Cement Company (“Kosmos”), a partnership with a subsidiary of Buzzi Unicem S.p.A. in which CEMEX held a 75% interest, to Eagle Materials Inc. for US$665 million. The share of proceeds to CEMEX from this transaction was US$499 million before transactional and other costs and expenses. The assets divested consist of Kosmos’ cement plant in Louisville, Kentucky, as well as related assets which include seven distribution terminals and raw material reserves. CEMEX’s Income Statements for the nine-month periods ended September 30, 2020 and 2019 present the operations related to this segment from January 1 to March 6, 2020 and for the nine-month period ended September 30, 2019, respectively, net of income tax in the single line item “Discontinued operations.”

On June 28, 2019, CEMEX concluded with several counterparties the sale of its ready-mix and aggregates business in the central region of France for an aggregate price of €31.8 million (US$36.2 million). CEMEX’s operations of these disposed assets in France for the period from January 1 to June 28, 2019 are reported in the Income Statement, net of income tax, in the single line item “Discontinued operations.”

On May 31, 2019, CEMEX concluded the sale of its aggregates and ready-mix assets in the North and North-West regions of Germany to GP Günter Papenburg AG for €87 million (US$97 million). The assets divested in Germany consisted of four aggregates quarries and four ready-mix facilities in North Germany, and nine aggregates quarries and 14 ready-mix facilities in North-West Germany. CEMEX’s operations of these disposed assets for the period from January 1 to May 31, 2019 are reported in the Income Statement, net of income tax, in the single line item “Discontinued operations.”

 

 

2020 Third Quarter Results    Page 13


Other information

 

  

LOGO

 

 

On March 29, 2019, CEMEX closed the sale of assets in the Baltics and Nordics to the German building materials group Schwenk, for a price in euro equivalent of US$387 million. The Baltic assets divested consisted of one cement production plant in Broceni with a production capacity of approximately 1.7 million tons, four aggregates quarries, two cement quarries, six ready-mix plants, one marine terminal and one land distribution terminal in Latvia. The assets divested also included CEMEX’s 37.8% interest in Akmenes Cementas AB, owner of a cement production plant in Akmene in Lithuania with a production capacity of approximately 1.8 million tons, as well as the exports business to Estonia. The Nordic assets divested consisted of three import terminals in Finland, four import terminals in Norway and four import terminals in Sweden. CEMEX’s Income Statement for the six-month period ended June 30, 2019, include the operations of these disposed assets for the period from January 1 to March 29, 2019 net of income tax in the single line item “Discontinued operations,” including a gain on sale of US$66 million.

On March 29, 2019, CEMEX signed a binding agreement with Çimsa Çimento Sanayi Ve Ticaret A.Ş. to divest CEMEX’s white cement business, except for Mexico and the U.S., for a price of US$180 million, including its Buñol cement plant in Spain and its white cement customers list. CEMEX currently expects to close this transaction at the end of 2020 or early in 2021. As of September 30, 2020, the assets and liabilities associated with the white cement business were presented in the Statement of Financial Position within the line items of “assets and liabilities held for sale”, as correspond. Moreover, CEMEX’s operations of these assets in Spain for the nine-month periods ended September 30, 2020 and 2019 are reported in the Income Statements, net of income tax, in the single line item “Discontinued operations.”

The following table presents condensed combined information of the Income Statements of CEMEX’s discontinued operations previously mentioned in: a) the United Kingdom for the period from January 1 to August 3, 2020 and the nine-month period ended September 30, 2019; b) the United States related to Kosmos for the period from January 1 to March 6, 2020 and the nine-month period ended September 30, 2019; c) France for the period from January 1 to June 28, 2019; d) Germany for the period from January 1 to May 31, 2019; e) the Baltics and Nordics for the period from January 1 to March 29, 2019; and f) Spain for the nine-month periods ended September 30, 2020 and 2019:

 

INCOME STATEMENT    Jan-Sep     Third Quarter  

(Millions of U.S. dollars)

   2020     2019     2020     2019  

Sales

     177       461       41       128  

Cost of sales and operating

     (170     (430     (41     (111

Other income (expenses), net

     (8     1       (7     (0

Interest expense, net and others

     6       (1     0       (0
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

     5       31       (7     17  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income tax

     (77     0       (22     (0
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from discontinued operations

     (72     31       (29     17  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net gain on sale

     (33     144       (51     21  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from discontinued operations

     (105     175       (80     38  
  

 

 

   

 

 

   

 

 

   

 

 

 

Assets held for sale and related liabilities

As of September 30, 2020, the following table presents condensed combined information of the Statement of Financial Position for the assets held for sale in Spain, as mentioned above:

 

(Millions of U.S. dollars)

   3Q20  

Current assets

     0  

Non-current assets

     99  
  

 

 

 

Total assets of the disposal group

     99  

Current liabilities

     0  

Non-current liabilities

     0  
  

 

 

 

Total liabilities directly related to disposal group

     0  
  

 

 

 

Total net assets of disposal group

     99  
  

 

 

 

Impairment of property, plant and equipment and goodwill in 3Q20

During the third quarter of 2020, due to the lack of visibility and high uncertainty resulting from the negative economic effects of the COVID-19 Pandemic and considering the consolidation of impairment indicators in certain countries, we recognized a non-cash aggregate impairment charge of approximately US$1.5 billion which is comprised of approximately US$1.02 billion of impairment from goodwill related to our business in the U.S., as well as approximately US$480 million of impairment from idle assets in several countries, mainly cement assets in the United States, as well as in Europe, South, Central America and the Caribbean, among other non-material adjustments in CEMEX’s concrete ready-mix and aggregates businesses.

The impairment of goodwill in the U.S. resulted from the aforementioned lack of visibility and high uncertainty which made us change our cash-flows projections methodology in the U.S. from 7 to 5 years (remove 2 years) as well as reduce our long-term growth rate from 2.5% to 2%, which generated an excess of the net book value of our business in the U.S. against the discounted cash flow projections as of September 30, 2020. Despite of these changes in methodology, we are confident in our good results in the U.S. in the short-term.

Moreover, we recognized impairment charges of idle assets of US$480 million related to several assets, mainly cement assets and permits in the U.S. of US$263 million, as well as cement assets in Spain of US$148 million, in the UK of US$34 and in South, Central America and the Caribbean of US$15 million, among other non-material adjustments in CEMEX’s concrete ready-mix and aggregates businesses, that either have been closed for extended periods of time and/or will remain closed for the foreseeable future as there are no current plans to restart these operations and because of CEMEX’s ability to switch production to more efficient plants that would allow CEMEX to meet demand for its products.

These non-cash charges do not impact our liquidity, Operating EBITDA and cash taxes payable, nevertheless our total assets, net income and equity were affected in the quarter.

Employee recognition

CEMEX has decided that its executives that agreed to forgo part of their May, June and July 2020 monthly salaries as part of the then temporary measures to mitigate the effects of the COVID-19 pandemic, will be compensated before the end of the year as recognition of their effort and commitment to the company. The amount of this compensation is not material.

 

 

2020 Third Quarter Results    Page 14


Definitions of terms and disclosures

 

  

LOGO

 

 

Methodology for translation, consolidation, and presentation of results

Under IFRS, 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. Beginning on March 31, 2019 and for each subsequent period CEMEX reports its consolidated results in U.S. dollars.

Breakdown of regions and subregions

The South, Central America and the Caribbean region includes CEMEX’s operations in Argentina, Bahamas, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Guyana, Haiti, Jamaica, Trinidad & Tobago, Barbados, Nicaragua, Panama, Peru, and Puerto Rico, as well as trading operations in the Caribbean region.

The EMEAA region includes Europe, Middle East, Asia and Africa. Europe subregion includes operations in Spain, Croatia, the Czech Republic, France, Germany, Poland, and the United Kingdom. Middle East and Africa subregion include the United Arab Emirates, Egypt, and Israel.

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).

l-t-l (like to like) on a like-to-like basis adjusting for currency fluctuations and for investments/divestments when applicable.

Maintenance capital expenditures equal 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 equal 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.

Working capital equals operating accounts receivable (including other current assets received as payment in kind) plus historical inventories minus operating payables.

% var percentage variation

Earnings per ADS

Please refer to page 2 for the number of average ADSs outstanding used for the calculation of earnings per ADS.

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 because of share dividends, recapitalizations and potential diluted shares are considered as issued at the beginning of the period.

 

 

     January - September      Third Quarter      Third Quarter  
     2020      2019      2020      2019      2020      2019  
Exchange rates    Average      Average      Average      Average      End of period      End of period  

Mexican peso

     21.96        19.39        22.08        19.64        22.11        19.73  

Euro

     0.8858        0.8925        0.8458        0.9061        0.853        0.9174  

British pound

     0.7837        0.7881        0.7623        0.8191        0.7741        0.8134  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Amounts provided in units of local currency per U.S. dollar.

 

2020 Third Quarter Results    Page 15


Disclaimer

 

  

LOGO

 

 

This report contains, and the reports we will file in the future may contain, forward-looking statements within the meaning of the U.S. federal securities laws. We intend for these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements within the meaning of the U.S. federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may,” “assume,” “might,” “should,” “could,” “continue,” “would,” “can,” “consider,” “anticipate,” “estimate,” “expect,” “envision,” “plan,” “believe,” “foresee,” “predict,” “potential,” “target,” “strategy,” “intend” or other similar words. These forward-looking statements reflect, as of the date such forward-looking statements are made, or unless otherwise indicated, our current expectations and projections about future events based on our 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 our expectations. Some of the risks, uncertainties and other important factors that could cause results to differ, or that otherwise could have an impact on us or our consolidated entities, include, among other things: the cyclical activity of the construction sector; our exposure to other sectors that impact our and our clients’ businesses, such as, but not limited to, the energy sector; availability of raw materials and related fluctuating prices; competition in the markets in which we offer our products and services; general political, social, health, economic and business conditions in the markets in which we operate or that affect our operations and any significant economic, health, political or social developments in those markets, as well as any inherent risks to international operations; the regulatory environment, including environmental, tax, antitrust, and acquisition-related rules and regulations; our ability to satisfy our obligations under our material debt agreements, the indentures that govern our outstanding senior secured notes and our other debt instruments and financial obligations; the availability of short-term credit lines or working capital facilities, which can assist us in connection with market cycles; the impact of our below investment grade debt rating on our cost of capital; loss of reputation of our brands; our ability to consummate asset sales, fully integrate newly acquired businesses, achieve cost-savings from our cost-reduction initiatives, implement our global pricing initiatives for our products and generally meet our “A Stronger CEMEX” plan and “Operation Resilience” plan’s initiatives; the increasing reliance on information technology infrastructure for our sales invoicing, procurement, financial statements and other processes that can adversely affect our sales and operations in the event that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; changes in the economy that affect demand for consumer goods, consequently affecting demand for our products and services; the impact of pandemics, epidemics or outbreaks of infectious diseases and the response of governments and other third parties, including with respect to COVID-19, which have affected and may continue to adversely affect, among other matters, supply chains, international operations, availability of liquidity, investor confidence and consumer spending, as well as availability of, and demand for, our products and services; weather conditions, including but not limited to, excessive rain and snow, and disasters such as earthquakes and floods; trade barriers, including tariffs or import taxes and changes in existing trade policies or changes to, or withdrawals from, free trade agreements, including the USMCA, if it comes into effect, and NAFTA, while it is in effect, both of which Mexico is a party to; terrorist and organized criminal activities as well as geopolitical events; declarations of insolvency or bankruptcy, or becoming subject to similar proceedings; natural disasters and other unforeseen events (including global health hazards such as COVID-19); and other risks and uncertainties described in CEMEX’s public filings. Readers are urged to read this report and carefully consider the risks, uncertainties and other factors that affect our business. The information contained in this report is subject to change without notice, and we are not obligated to publicly update or revise forward-looking statements after the date hereof or to reflect the occurrence of anticipated or unanticipated events or circumstances. Readers should review future reports filed by CEMEX with the United States Securities and Exchange Commission. CEMEX’s “A Stronger CEMEX” plan and “Operation Resilience” plan is designed based on CEMEX’s current beliefs and expectations. Unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases, refer to CEMEX’s prices for CEMEX’s products. This report also includes statistical data regarding the production, distribution, marketing and sale of cement, ready-mix concrete, clinker and aggregates. We generated some of this data internally, and some was obtained from independent industry publications and reports that we believe to be reliable sources. We have not independently verified this data nor sought the consent of any organizations to refer to their reports in this report.

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

 

2020 Third Quarter Results    Page 16
Presentation regarding third quarter 2020 results for CEMEX, S.A.B. de C.V.

Slide 1

Third Quarter 2020 Results Isabel Zendal Emergency Hospital – Madrid, Spain Exhibit 3


Slide 2

This presentation contains, and the reports we will file in the future may contain, forward-looking statements within the meaning of the U.S. federal securities laws. We intend for these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements within the meaning of the U.S. federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as “may,” “assume,” “might,” “should,” “could,” “continue,” “would,” “can,” “consider,” “anticipate,” “estimate,” “expect,” “envision,” “plan,” “believe,” “foresee,” “predict,” “potential,” “target,” “strategy,” “intend” or other similar words. These forward-looking statements reflect, as of the date such forward-looking statements are made, or unless otherwise indicated, our current expectations and projections about future events based on our 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 our expectations. Some of the risks, uncertainties and other important factors that could cause results to differ, or that otherwise could have an impact on us or our consolidated entities, include, among other things: the cyclical activity of the construction sector; our exposure to other sectors that impact our and our clients’ businesses, such as, but not limited to, the energy sector; availability of raw materials and related fluctuating prices; competition in the markets in which we offer our products and services; general political, social, health, economic and business conditions in the markets in which we operate or that affect our operations and any significant economic, health, political or social developments in those markets, as well as any inherent risks to international operations; the regulatory environment, including environmental, tax, antitrust, and acquisition-related rules and regulations; our ability to satisfy our obligations under our material debt agreements, the indentures that govern our outstanding senior secured notes and our other debt instruments and financial obligations; the availability of short-term credit lines or working capital facilities, which can assist us in connection with market cycles; the impact of our below investment grade debt rating on our cost of capital; loss of reputation of our brands; our ability to consummate asset sales, fully integrate newly acquired businesses, achieve cost-savings from our cost-reduction initiatives, implement our global pricing initiatives for our products and generally meet our “A Stronger CEMEX” plan and “Operation Resilience” plan’s initiatives; the increasing reliance on information technology infrastructure for our sales invoicing, procurement, financial statements and other processes that can adversely affect our sales and operations in the event that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; changes in the economy that affect demand for consumer goods, consequently affecting demand for our products and services; the impact of pandemics, epidemics or outbreaks of infectious diseases and the response of governments and other third parties, including with respect to COVID-19, which have affected and may continue to adversely affect, among other matters, supply chains, international operations, availability of liquidity, investor confidence and consumer spending, as well as availability of, and demand for, our products and services; weather conditions, including but not limited to, excessive rain and snow, and disasters such as earthquakes and floods; trade barriers, including tariffs or import taxes and changes in existing trade policies or changes to, or withdrawals from, free trade agreements, including the USMCA, if it comes into effect, and NAFTA, while it is in effect, both of which Mexico is a party to; terrorist and organized criminal activities as well as geopolitical events; declarations of insolvency or bankruptcy, or becoming subject to similar proceedings; natural disasters and other unforeseen events (including global health hazards such as COVID-19); and other risks and uncertainties described in CEMEX’s public filings. Readers are urged to read this presentation and carefully consider the risks, uncertainties and other factors that affect our business. The information contained in this presentation is subject to change without notice, and we are not obligated to publicly update or revise forward-looking statements after the date hereof or to reflect the occurrence of anticipated or unanticipated events or circumstances. Readers should review future reports filed by CEMEX with the United States Securities and Exchange Commission. CEMEX’s “A Stronger CEMEX” plan and “Operation Resilience” plan is designed based on CEMEX’s current beliefs and expectations. Unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases, refer to CEMEX’s prices for CEMEX’s products. This presentation also includes statistical data regarding the production, distribution, marketing and sale of cement, ready-mix concrete, clinker and aggregates. We generated some of this data internally, and some was obtained from independent industry publications and reports that we believe to be reliable sources. We have not independently verified this data nor sought the consent of any organizations to refer to their reports in this presentation. 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  


Slide 3

Operational improvements lead to highest EBITDA, EBITDA margin and Free Cash Flow since 2016 Significant volume recovery in markets that experienced 2nd quarter lockdowns Bagged cement growth continues in Emerging Markets even after restrictions are lifted Mexico’s performance showing recovery from challenging conditions in 2019 Safety protocols, distribution and digital platforms continue to pay off Constructive pricing dynamics in most markets Energy tailwinds throughout portfolio Financial derisking continues Improved visibility of the business going into 2021 Key messages for 3rd Quarter 2020


Slide 4

Operation Resilience to create sustainable returns for our shareholders Operation Resilience lays the foundation for the future of CEMEX EBITDA growth through margin enhancement ≥ 20% target EBITDA margin by 2023 Optimize our portfolio for growth Strategic divestments and reinvestments Achieve investment grade capital structure ≤ 3.0x net leverage by 2023 Advance 2030 sustainability agenda 35% reduction in net CO2 emissions by 2030


Slide 5

With markets reopening, cement volumes deliver year-over-year growth On an average daily sales basis MEAA = Middle East, Africa and Asia Domestic gray cement MEAA US EUR MX SCAC 2020 CEMEX CEMEX LC pricing YoY 9M20 3Q20 Cement3 +1% +2% Aggregates +2% +1% Ready mix +3% +1% Cement volumes YoY % variation 1 2


Slide 6

Mexico Dominican Republic Nicaragua Guatemala Puerto Rico El Salvador Jamaica Bahamas Strong bagged cement performance powers Emerging Market volume growth Home improvements as families quarantine at home High level of remittances, allocating a portion for home renovations to increase quality of life and net worth preservation Government programs, particularly in Mexico, towards self-construction Strong distribution and supply chain capabilities to serve bagged cement demand Demand supported by: Double-digit bagged cement growth in 3Q20 YoY in:


Slide 7

Achieved highest quarterly EBITDA, EBITDA margin and Free Cash Flow since 2016 Net sales Operating EBITDA Operating EBITDA margin Free Cash Flow after maintenance capex +1.8pp +3% l-t-l +15% l-t-l Millions of U.S. dollars


Slide 8

All business levers contributing to EBITDA growth EBITDA variation Millions of U.S. dollars +15% +11%


Slide 9

“Operation Resilience” drives margin improvement Millions of U.S. dollars 9M20 savings under Operation Resilience 72 79 US$89 M savings realized in 3Q20, contributing to 2.6pp to EBITDA margin YTD savings of US$229 M, contributing to 2.4pp to EBITDA margin Primarily driven by SG&A and operational efficiencies On track to achieve US$280 M goal for 2020 under “Operation Resilience”


Slide 10

Superior customer experience enabled by digital technologies Umbrella brand that covers all our digital solutions for customers Launched in 2017, and continuously evolving to meet specific customer segment and product needs Available in almost all operations, with ~40k users Up to 90% of our recurring customers are using CEMEX Go 52% of our global sales are processed through CEMEX Go Allows our customers to work seamlessly in a low touch environment during COVID-19 CEMEX Go Developer Center offers direct connectivity to our customers to place and track orders, and access financial documents for all products and services Data for CEMEX Go and Construrama.com as of September 30, 2020 Drivers Track Order Online Store CRM Order Fulfillment Quarry Link Our digital platforms played an important role in the 3rd quarter record Net Promoter Score


Slide 11

Robust roadmap to address climate change targets Target 20301 Ambition 2050 35% Further contribution from 2030 cement efforts Carbon capture, usage and storage Admixtures, binders and additions in concrete Recycled aggregates Recarbonation of concrete during lifetime Reduction in CO2 emissions in cement Reduce clinker factor Usage of decarbonated raw materials Novel low-CO2 clinkers Increase usage of alternative fuels Increase thermal efficiency European region reaching 35% by end of 2020 Deliver net zero CO2 concrete 2 Reduced CO2 emissions to date by more than 22% vs. 1990 baseline In line with Paris Agreement – IEA 2 Degree Scenario and verified by Carbon Trust Net specific C02 emissions per ton of cementitious product. Reduction vs. 1990 baseline


Slide 12


Slide 13

United States: Improved logistics and other efficiencies propel EBITDA margin growth With more challenging prior year comps, cost efficiencies drive EBITDA growth Increase in cement volumes driven by pickup in residential activity and infrastructure strength Stable prices sequentially in three core products EBITDA margin expansion due primarily to improved logistics, lower fuel costs and savings from “Operation Resilience” Extension of the FAST Act for 1 year gives more visibility to states on transportation spending Millions of U.S. dollars


Slide 14

Mexico: Rebounding from challenging 2019 cement industry performance Double-digit increase in cement volumes points to recovery from 2019 slowdown Bagged cement momentum supported by government social programs, home improvement activity and higher remittances Growth in formal sector as private sector and government infrastructure projects accelerate Flat sequential prices in local-currency terms mainly due to product mix Higher volumes and prices, cost containment measures, product mix and tailwinds from lower fuel prices support EBITDA margin expansion Millions of U.S. dollars


Slide 15

EMEAA: EBITDA growth resulting from pricing and cost containment initiatives EBITDA growth due to pricing gains in Europe and cost containment initiatives Continued strong cement volume growth and pricing performance in central Europe Marked volume recovery in western Europe as economies opened Well positioned for phase IV of the European Union’s Emissions Trading System, with ample carbon allowances expected to last until 2030 Israel reports second consecutive quarter of record EBITDA Price (l-t-l) calculated on a volume-weighted average basis at constant foreign-exchange rates Millions of U.S. dollars EMEAA: Europe, Middle East, Africa and Asia region


Slide 16

Recovery in quarterly cement volumes to levels approaching 2019 Cement prices on a sequential basis declined 2% mainly due to geographic mix In Colombia, industry volumes recovered to pre-COVID-19 levels, supported mainly by self-construction and 4G highways projects EBITDA margin increased 6.3pp mainly due to cost reduction initiatives and higher prices in LC SCAC: Growth story reemerging after COVID-19 disruption Price (l-t-l) calculated on a volume-weighted average basis at constant foreign-exchange rates Millions of U.S. dollars SCAC: South, Central America and the Caribbean region


Slide 17

3Q20 Results


Slide 18

Strong Free Cash Flow generation with Net Income impacted by non-cash impairment charge Average working capital days Millions of U.S. dollars 3Q20 3Q19 Controlling Interest Net Income US$ M 3Q20 3Q19


Slide 19

Cash and cash-equivalents variation Millions of U.S. dollars 1) Includes redemption of the following senior secured notes during October: US$640 M of 6.0% due 2024, US$750 M of 6.125% due 2025 and EUR400 M of 4.625% due 2024 With improved visibility, cash deployed to paydown debt 1


Slide 20

Bank refinancing highlights our commitment to sustainability… Total commitments under the Facilities Agreement decreased from ~$4.1 B to ~$3.5 B Extension of maturities by ~93% of lenders 3-year extension of ~US$1.1 B of Term Loans from 2022 to 2025 1-year extension of ~US$1.1 B Revolver from 2022 to 2023 No relevant maturities through July 2023 Interest rate margin linked to 5 sustainability-linked metrics: CO2 emissions, power consumption from green energy, quarry rehabilitation, water management and clinker factor May result in adjustment of the interest rate margin of up to 5 basis points Redenominates ~US$313 M of previous US dollar exposure under Facilities Agreement to Mexican Peso and ~US$82 M to Euros Interest rate margin grid for Mexican Peso tranche is 25 to 50bps lower than rest of tranches


Slide 21

Average life of debt: 4.7 years …and creates runway with no material maturities until July 2023 Proforma1 total debt excluding perpetual notes as of September 30, 2020: US$10,908 million 134 371 449 1,231 1,432 2,377 Fixed Income Other bank debt 2017 Facilities Agreement Leases Millions of U.S. dollars 1) Giving proforma effect to the following transactions performed/executed in October: (i) Redemption of the following senior secured notes: US$640 M of 6.0% due 2024, US$750 M of 6.125% due 2025 and EUR400 M of 4.625% due 2024; and (ii) the extension of ~US$2.2 B of debt under the Facilities Agreement and including the payment of ~$530 M of Term Loans


Slide 22

While our leverage ratio declines Net Debt plus perpetuals variation Millions of U.S. dollars 1) Calculated in accordance with our contractual obligations under the 2017 Facilities Agreement, as amended and restated 4.57x 4.27x -0.30x Consolidated leverage ratio1


Slide 23

2020 Outlook


Slide 24

2020 guidance1 slightly improved for EBITDA 1 Reflects CEMEX’s current expectations 2 Including perpetual and convertible securities Energy cost per ton of cement produced (9%) to (7%) Operating EBITDA ~US$2.4 billion Capital expenditures US$750 to US$780 million Investment in working capital ~US$150 million Cash taxes ~US$200 million Cost of debt2 Increase of US$15 to US$20 million


Slide 25

Pleased to see recovery not only from lockdowns in 2nd quarter, but also from a challenging 2019 performance Expect COVID-19 resurgence in our markets but believe disruptions will be less than in 2019 Potential fiscal and monetary stimulus to benefit US and Europe going forward Strong residential growth and resilient infrastructure sectors to drive US business Acceleration in government spending and 2021 elections will continue to support cement in Mexico High capacity utilization in most markets should facilitate price increases to compensate for input cost inflation Continued contribution from Operation Resilience including our bolt-on investment strategy Continue to prioritize the health and safety of our employees and their families as well as our customers in all that we do What to expect


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Appendix


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Average life of debt: 4.1 years Debt maturity profile as of 3Q20 Total debt excluding perpetual notes as of September 30, 2020: US$13,310 million Fixed Income Other bank debt 2017 Facilities Agreement Leases Millions of U.S. dollars Revolving Credit Tranche


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Consolidated volumes and prices Price (l-t-l) calculated on a volume-weighted average basis at constant foreign-exchange rates


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Additional information on debt and perpetual notes Currency denomination Interest rate3 Millions of U.S. dollars 1 Includes convertible notes and leases, in accordance with International Financial Reporting Standard (IFRS) 2 Calculated in accordance with our contractual obligations under the 2017 Facilities Agreement, as amended and restated 3 Includes the effect of interest-rate swap instruments related to bank loans to fix floating rates with a nominal amount of US$1,000 million


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Additional information on debt Total debt1 by instrument Millions of U.S. dollars 1 Includes leases, in accordance with IFRS


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3Q20 volume and price summary: selected countries/region Price (LC) for Europe calculated on a volume-weighted-average basis at constant foreign-exchange rates


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9M20 volume and price summary: selected countries/region Price (LC) for Europe calculated on a volume-weighted-average basis at constant foreign-exchange rates


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Definitions 9M20 / 9M19 Results for the first nine months of the years 2020 and 2019, respectively SCAC South, Central America and the Caribbean EMEAA Europe, Middle East, Africa and Asia 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 l-t-l (like to like) On a like-to-like basis adjusting for currency fluctuations and for investments/divestments when applicable 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 Promoter Score (NPS) A core KPI that helps us to systematically measure our customer loyalty and satisfaction 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 Trinidad Cement Limited includes Barbados, Guyana, Jamaica and Trinidad and Tobago USD U.S. dollars % var Percentage variation


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