UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

 

Date of Report: April 29, 2011

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

(Exact name of Registrant as specified in its charter)

CEMEX PUBLICLY TRADED STOCK CORPORATION WITH VARIABLE CAPITAL

(Translation of Registrant’s name into English)

United Mexican States

(Jurisdiction of incorporation or organization)

Av. Ricardo Margáin Zozaya #325, Colonia Valle del Campestre

                  Garza García, Nuevo León, México 66265                  

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨            No  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

N/A

 

 

 

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Contents

 

1.		Press release, dated April 29, 2011, announcing first quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX).
2.		First quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX).
3.		Presentation regarding first quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX).

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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:		April 29, 2011				By:		/s/ Rafael Garza
								Name:    Rafael Garza
								Title:      Chief Comptroller

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EXHIBIT INDEX

 

EXHIBIT NO.		DESCRIPTION
1.		Press release, dated April 29, 2011, announcing first quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX).
2.		First quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX).
3.		Presentation regarding first quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX).

Exhibit 1

 

Media Relations Jorge Pérez (52-81) 8888-4334 mr@cemex.com		Investor Relations Eduardo Rendón (52-81) 8888-4256 ir@cemex.com		Analyst Relations Luis Garza (52-81) 8888-4136 ir@cemex.com

CEMEX REPORTS FIRST-QUARTER 2011 RESULTS

MONTERREY, MEXICO, APRIL 29, 2011– CEMEX, S.A.B. de C.V. (“CEMEX”) (NYSE: CX), announced today that consolidated net sales increased 11% in the first quarter of 2011 to U.S.$3.4 billion versus the comparable period in 2010. Operating EBITDA increased 1% in the first quarter of 2011 to U.S.$519 million versus the same period of 2010.

CEMEX’s Consolidated First-Quarter Financial and Operational Highlights

 

•

The increase in consolidated net sales was due to higher volumes mainly from our Mexican, European, and South/Central America and Caribbean operations.

 

•

The infrastructure and residential sectors were the main drivers of demand in most of our markets.

 

•

Free cash flow after maintenance capital expenditures for the quarter was negative U.S.$317 million, from a negative U.S.$171 million in the same quarter of 2010.

 

•

Operating income in the first quarter increased 16%, to U.S.$172 million, from the comparable period in 2010.

Fernando A. González, Executive Vice President of Finance and Administration, said: “Despite the still lingering effects of the economic downturn in a number of our key geographies, we are encouraged by the stabilization of important indicators in the construction materials business. Consolidated domestic gray cement and aggregates volumes showed growth for the first time since the first quarter of 2007. We are pleased with the trend we have seen in our quarterly sales because this is the seventh consecutive quarter of top-line recovery in our results. And, as a result of our financial strategy, we have eliminated our refinancing risk until December of 2013.”

Consolidated Corporate Results

During the quarter, controlling interest net income was a loss of U.S.$276 million, versus a loss of U.S.$342 million in the same period last year. This reflects higher operating income, higher exchange gain, and lower other expenses, which more than offset the higher financial expenses during the quarter.

Geographical Markets First Quarter Highlights

Net sales in our operations in Mexico increased 14% in the first quarter of 2011 to U.S.$842 million, compared with U.S.$742 million in the first quarter of 2010. Operating EBITDA increased 13% to U.S.$292 million versus the same period of last year.

 

1

---

CEMEX’s operations in the United States reported net sales of U.S.$507 million in the first quarter of 2011, down 8% from the same period in 2010. Operating EBITDA was a loss of U.S.$48 million in the quarter.

In Europe, net sales for the quarter increased 24% to U.S.$1.2 billion, compared with U.S.$947 million in the first quarter of 2010. Operating EBITDA was U.S.$50 million for the quarter.

CEMEX’s operations in South/Central America and the Caribbean reported net sales of U.S.$396 million during the first quarter of 2011, representing an increase of 8% over the same period of 2010. Operating EBITDA decreased 8% to U.S.$117 million in the first quarter of 2011, from U.S.$126 million in the first quarter of 2010.

First-quarter net sales in Africa and the Middle East were U.S.$248 million, down 6% from the same quarter of 2010. Operating EBITDA decreased 4% to U.S.$80 million for the quarter versus the comparable period in 2010.

Operations in Asia reported a 2% decrease in net sales for the quarter, to U.S.$122 million, versus the first quarter of 2010, and Operating EBITDA for the quarter was U.S.$21 million, down 36% from the same period in the previous year.

CEMEX is a global building materials company that provides high-quality products and reliable service to customers and communities in more than 50 countries throughout the world. CEMEX has a rich history of improving the well-being of those it serves through its efforts to pursue innovative industry solutions and efficiency advancements and to promote a sustainable future.

###

This press release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of CEMEX to be materially different from those expressed or implied in this release, including, among others, changes in general economic, political, governmental and business conditions globally and in the countries in which CEMEX does business, changes in interest rates, changes in inflation rates, changes in exchange rates, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. CEMEX assumes no obligation to update or correct the information contained in this press release.

EBITDA is defined as operating income plus depreciation and amortization. Free Cash Flow is defined as 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 net debt to EBITDA ratio is calculated by dividing net debt at the end of the quarter by EBITDA for the last twelve months. All of the above items are presented under generally accepted accounting principles in Mexico. 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. 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

Exhibit 2

 

Stock Listing Information

NYSE (ADS)

Ticker: CX

MEXICAN STOCK EXCHANGE

Ticker: CEMEXCPO

Ratio of CEMEXCPO TO CX = 10:1

Investor Relations

In the United States

1 877 7CX NYSE

In Mexico:

52 (81) 8888 4292

E-Mail:

ir@cemex.com

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OPERATING AND FINANCIAL HIGHLIGHTS

January – March

First quarter

l-t-l

l-t-l

2011

2010

% Var.

% Var.*

2011

2010

% Var.

% Var.*

Consolidated cement volume (thousand metric tons)

15,265

14,445

6%

15,265

14,445

6%

Consolidated ready-mix volume (thousand cubic meters)

12,281

10,757

14%

12,281

10,757

14%

Consolidated aggregates volume (thousand metric tons)

35,171

32,502

8%

35,171

32,502

8%

Net sales

3,384

3,043

11%

9%

3,384

3,043

11%

9%

Gross profit

963

820

17%

14%

963

820

17%

14%

Gross profit margin

28.5%

26.9%

1.5pp

28.5%

26.9%

1.5pp

Operating income

172

148

16%

11%

172

148

16%

11%

Operating Income margin

5.1%

4.9%

0.2pp

5.1%

4.9%

0.2pp

Consolidated net income (loss)

(279 )

(341 )

18%

(279 )

(341 )

18%

Controlling interest net income (loss)

(276 )

(342 )

19%

(276 )

(342 )

19%

Operating EBITDA

519

515

1%

(2%)

519

515

1%

(2%)

Operating EBITDA margin

15.3%

16.9%

(1.6pp )

15.3%

16.9%

(1.6pp )

Free cash flow after maintenance capital expenditures

(317 )

(171 )

(85%)

(317 )

(171 )

(85%)

Free cash flow

(329 )

(198 )

(66%)

(329 )

(198 )

(66%)

Net debt plus perpetual notes

17,575

17,991

(2%)

17,575

17,991

(2%)

Total debt

17,059

16,472

4%

17,059

16,472

4%

Total debt plus perpetual notes

18,231

19,458

(6%)

18,231

19,458

(6%)

Earnings (loss) per ADS

(0.27 )

(0.36 )

24%

(0.27 )

(0.36 )

24%

Fully diluted earnings per ADS

N/A

N/A

N/A

N/A

N/A

N/A

Average ADSs outstanding

1,016.1

998.1

2%

1,016.1

998.1

2%

Employees

46,200

46,870

(1%)

46,200

46,870

(1%)

In millions of US dollars, except ratios and per-ADS amounts. Average ADSs outstanding are presented in millions. Please refer to page 8 for end-of quarter CPO-equivalent units outstanding.

* Percentage variations adjusted for investments/divestments and currency fluctuations.

Consolidated net sales in the first quarter of 2011 reached US$3,384 million, representing an increase of 11% compared with the first quarter of 2010, or an increase of 9% on a like-to-like basis for the ongoing operations. The increase in consolidated net sales was due to higher volumes mainly from our Mexican, European, and South/Central America and Caribbean operations. The infrastructure and residential sectors were the main drivers of demand in most of our markets.

Cost of sales as a percentage of net sales decreased by 1.5 percentage points during the first quarter of 2011. The decrease in expenses as a percentage of net sales is mainly the result of improved economies of scale resulting from higher volumes. Selling, general and administrative (SG&A) expenses as a percentage of net sales increased 1.3 percentage points during the quarter compared with the same period last year, from 22.1% to 23.4%. SG&A expenses increased as a result of higher distribution expenses during the quarter.

Operating EBITDA increased 1% during the first quarter of 2011 compared with the same period last year, to US$519 million. The increase was due mainly to higher contributions from our Mexican and European operations and our cost-reduction initiatives, offsetting a decline in other regions. On a like-to-like basis for the ongoing operations, operating EBITDA decreased 2%. Operating EBITDA margin decreased 1.6 percentage points, from 16.9% in the first quarter of 2010 to 15.3% this quarter.

Other expenses, net, for the quarter were US$76 million, which included amortization of fees related to early redemption of debt and severance payments.

Exchange gain (loss), net, for the quarter was a gain of US$109 million, resulting mainly from the appreciation of the euro and Mexican peso against the US dollar.

Gain (loss) on financial instruments for the quarter was a loss of US$44 million, resulting mainly from our equity derivatives related to CEMEX shares.

Controlling interest net income (loss) was a loss of US$276 million in the first quarter of 2011 versus loss of US$342 million in the first quarter of 2010. This reflects higher operating income, higher exchange gain, and lower other expenses, which more than offset higher interest expense during the quarter.

Total debt plus perpetual notes increased US$502 million during the quarter.

---

 

OPERATING RESULTS

Mexico

 

January – March

 

First quarter

 

2011

 

% Var.

 

2010

 

l-t-l% Var.*

 

2011

 

% Var.

 

2010

 

l-t-l% Var.*

Net sales

842

742

14%

7%

842

742

14%

7%

Operating EBITDA

292

258

13%

7%

292

258

13%

7%

Operating EBITDA margin

34.6%

34.8%

(0.2pp )

34.6%

34.8%

(0.2pp )

In millions of US dollars, except percentages.

 

Domestic gray cement

 

Ready-mix

 

Aggregates

Year-over-year percentage variation

 

January – March

 

First Quarter

 

January – March

 

First Quarter

 

January – March

 

First Quarter

Volume

1%

1%

16%

16%

8%

8%

Price (USD)

11%

11%

12%

12%

18%

18%

Price (local currency)

5%

5%

6%

6%

12%

12%

Our Mexican operations’ domestic gray cement volumes increased 1% during the quarter versus the same period last year, while ready-mix volumes increased 16% over the same period. Construction activity for the quarter was driven mainly by the infrastructure sector supported by the initiation of new projects delayed from 2010. During the quarter, the residential and industrial-and-commercial sectors experienced a moderate increase.

United States

January – March

 

First quarter

 

2011

 

2010

 

% Var.

 

l-t-l% Var.*

 

2011

 

2010

 

% Var.

 

l-t-l% Var.*

Net sales

507

552

(8%)

(8%)

507

552

(8%)

(8%)

Operating EBITDA

(48 )

(23 )

(105%)

(105%)

(48 )

(23 )

(105%)

(105%)

Operating EBITDA margin

(9.5%)

(4.2%)

(5.3pp )

(9.5%)

(4.2%)

(5.3pp )

In millions of US dollars, except percentages.

Domestic gray cement

 

Ready-mix

 

Aggregates

Year-over-year percentage variation

 

January – March

 

First Quarter

 

January – March

 

First Quarter

 

January – March

 

First Quarter

Volume

(4%)

(4%)

(10%)

(10%)

(11%)

(11%)

Price (USD)

(3%)

(3%)

(0%)

(0%)

5%

5%

Price (local currency)

(3%)

(3%)

(0%)

(0%)

5%

5%

Domestic gray cement, ready-mix, and aggregates volumes for CEMEX’s operations in the United States decreased 4%, 10%, and 11%, respectively, during the first quarter of 2011 versus the same period last year. On a like-to-like basis for the ongoing operations, aggregates volumes decreased 6% during the quarter versus the comparable period last year. Demand for building materials continues to be affected by lower activity in the residential and industrial-and-commercial sectors. Infrastructure spending continued to show strength. Unfavorable weather conditions, especially in the Midwest, Georgia, and California, affected volumes for the quarter. In addition, volumes were down due to the restructuring of our business in Arizona.

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OPERATING RESULTS

Europe

 

January – March

 

First quarter

 

2011

 

2010

 

% Var.

 

l-t-l% Var.*

 

2011

 

2010

 

% Var.

 

l-t-l% Var.*

Net sales

1,171

947

24%

21%

1,171

947

24%

21%

Operating EBITDA

50

(1 )

N/A

N/A

50

(1 )

N/A

N/A

Operating EBITDA margin

4.2%

(0.1%)

N/A

4.2%

(0.1%)

N/A

In millions of US dollars, except percentages.

Domestic gray cement

 

Ready-mix

 

Aggregates

Year-over-year percentage variation

 

January – March

 

First Quarter

 

January – March

 

First Quarter

 

January – March

 

First Quarter

Volume

25%

25%

29%

29%

21%

21%

Price (USD)

(1%)

(1%)

3%

3%

4%

4%

Price (local currency)

(3%)

(3%)

0%

0%

2%

2%

In our European operations, volumes were positively affected by good weather conditions in most countries during the quarter in comparison with the same quarter a year ago, as well as pent-up demand resulting from poor weather conditions in December 2010, when adverse weather affected construction.

In CEMEX’s operations in Spain, our domestic gray cement and ready-mix volumes increased 5% and 16%, respectively, during the first quarter of 2011 compared with the same period last year. Despite the year-over-year volume improvement, construction activity continues to be affected by weak demand in all our regions and sectors in Spain. Performance from the residential sector continues to be impacted by high inventory levels and lack of financing. Activity from the infrastructure sector remains stagnant, reflecting reduced expenditures as well as cuts in the national funds.

Our United Kingdom operations’ domestic gray cement, ready-mix, and aggregates volumes increased 20%, 30%, and 16%, respectively, during the first quarter of 2011 versus the same period in 2010. Demand for building materials during the quarter was driven by the infrastructure and residential sectors.

In CEMEX’s operations in France, our domestic ready-mix and aggregates volumes increased 29% and 24%, respectively, during the first quarter of 2011 versus the comparable period of last year. The residential sector continues to drive activity for building materials for the quarter given favorable credit conditions as well as ongoing tax incentives. Performance from the infrastructure sector during the quarter was positive because new developments that were postponed from last year were initiated during the quarter. In addition, the industrial-and-commercial sector experienced an increase in the number of new project starts.

In Germany, our domestic gray cement volumes increased 60% during the first quarter versus the comparable period of 2010. Results for the quarter continue to be driven by the residential sector, supported by historically low mortgage rates, shrinking unemployment, and higher wages. Performance from the industrial-and-commercial sector was driven by an increase in building permits of non-residential buildings supported by the current economic upswing, and by higher capacity utilization. Activity from the infrastructure sector continued its downward trend given the lack of fiscal stimulus funds.

Domestic gray cement volumes for our operations in Poland increased 53% during the quarter versus the comparable period last year. Construction activity for the quarter was mainly driven by the infrastructure sector, as the government has initiated a series of programs for highways and the construction of express roads. The residential sector remained stable.

Our domestic gray cement volumes as a whole in the region increased 25% during the quarter versus the comparable period of 2010.

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OPERATING RESULTS

South/Central America and the Caribbean

 

January – March

 

First quarter

2011

2010

% Var.

l-t-l% Var.*

2011

2010

% Var.

l-t-l% Var.*

Net sales

396

367

8%

7%

396

367

8%

7%

Operating EBITDA

117

126

(8%)

(9%)

117

126

(8%)

(9%)

Operating EBITDA margin

29.4%

34.4%

(5.0pp )

29.4%

34.4%

(5.0pp )

In millions of US dollars, except percentages.

Domestic gray cement

Ready-mix

Aggregates

Year-over-year percentage variation

January – March

First Quarter

January – March

First Quarter

January – March

First Quarter

Volume

4%

4%

8%

8%

35%

35%

Price (USD)

3%

3%

4%

4%

(4%)

(4%)

Price (local currency)

1%

1%

2%

2%

(5%)

(5%)

CEMEX’s domestic gray cement volumes for our operations in Colombia decreased 2% during the first quarter of 2011 versus the comparable period of last year. Sales volumes for the quarter were affected by a strike from carriers during the month of February. In addition, adverse weather conditions during the quarter also had a negative effect on volumes. The main driver of demand for the quarter continues to be the residential sector, supported by low-and-middle income housing development. Activity from the infrastructure sector remains stable.

Our domestic gray cement volumes in the region as a whole increased 4% during the first quarter of 2011 versus the comparable period last year.

Africa and the Middle East

January – March

First quarter

2011

2010

% Var.

l-t-l% Var.*

2011

2010

% Var.

l-t-l% Var.*

Net sales

248

264

(6%)

(3%)

248

264

(6%)

(3%)

Operating EBITDA

80

83

(4%)

1%

80

83

(4%)

1%

Operating EBITDA margin

32.2%

31.7%

0.5pp

32.2%

31.7%

0.5pp

In millions of US dollars, except percentages.

Domestic gray cement

Ready mix

Aggregates

Year-over-year percentage variation

January – March

First Quarter

January – March

First Quarter

January – March

First Quarter

Volume

(7%)

(7%)

9%

9%

1%

1%

Price (USD)

(9%)

(9%)

2%

2%

8%

8%

Price (local currency)

(2%)

(2%) (1%) (1%) 4%

4%

Domestic gray cement volumes for our operations in Egypt decreased 6% during the first quarter of 2011 versus the comparable period of last year. Our sales volumes were affected by the political and social unrest occurring at the beginning of the year, which temporarily slowed Egypt’s economy and affected the overall business environment. The residential sector, mainly low and middle-income housing, continued to drive construction activity during the quarter. All other demand segments, however, were depressed.

Our domestic gray cement volumes in the region as a whole decreased 7% during the quarter versus the same period last year.

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OPERATING RESULTS

Asia

 

January – March

 

First quarter

 

2011

 

2010

 

% Var.

 

l-t-l% Var.*

 

2011

 

2010

 

% Var.

 

l-t-l% Var.*

Net sales

122

125

(2%)

(7%)

122

125

(2%)

(7%)

Operating EBITDA

21

33

(36%)

(38%)

21

33

(36%)

(38%)

Operating EBITDA margin

17.4%

26.5%

(9.1pp )

17.4%

26.5%

(9.1pp )

In millions of US dollars, except percentages.

 

Domestic gray cement

 

Ready-mix

 

Aggregates

Year-over-year percentage variation

 

January – March

 

First Quarter

 

January – March

 

First Quarter

 

January – March

 

First Quarter

Volume

(5%)

(5%)

2%

2%

5%

5%

Price (USD)

0%

0%

15%

15%

13%

13%

Price (local currency)

(4%)

(4%)

7%

7%

2%

2%

In the Philippines, our domestic gray cement volumes decreased 12% during the first quarter of 2011 versus the comparable period of last year. Results for the quarter were affected by delays in the release of annual government budget funds coupled with delays in the initiation of new infrastructure projects under the public-private partnerships. Growth in the construction activity from the residential sector stalled, whereas the industrial-and-commercial sector experienced a marginal increase. In addition, unfavorable weather conditions, especially in the central and southern regions of the country, affected volumes during the quarter.

Our domestic gray cement volumes in the region as a whole decreased 5% during the quarter versus the comparable period in 2010.

---

 

OPERATING EBITDA, FREE CASH FLOW AND DEBT RELATED INFORMATION

Operating EBITDA and Free Cash Flow (1)

 

January - March

 

First quarter

 

2011

 

2010

 

% Var.

 

2011

 

2010

 

% Var.

Operating income

172

148

16%

172

148

16%

+ Depreciation and operating amortization

346

367

346

367

Operating EBITDA

519

515

1%

519

515

1%

- Net financial expense

304

275

304

275

- Maintenance capital expenditures

23

28

23

28

- Change in working capital

433

328

433

328

- Taxes paid

67

50

67

50

- Other cash items (net)

8

6

8

6

Free cash flow after maintenance capital expenditures

(317 )

(171 )

(85%)

(317 )

(171 )

(85%)

- Expansion capital expenditures

13

27

13

27

Free cash flow

(329 )

(198 )

(66%)

(329 )

(198 )

(66%)

In millions of US dollars, except percentages.

The increase in debt during the quarter reflects the negative free cash flow generation as well as a negative foreign exchange conversion effect of US$294 million during the quarter, among other factors.

Information on debt and perpetual notes

 

First quarter

 

Fourth quarter

 

2011

 

2010

 

% Var.

 

2010

Total debt

17,059

16,472

4%

16,409

Short-term

0%

5%

3%

Long-term

100%

95%

97%

Perpetual notes

1,172

2,986

(61%)

1,320

Cash and cash equivalents

656

1,467

(55%)

676

Net debt plus perpetual notes

17,575

17,991

(2%)

17,053

Consolidated funded debt/EBITDA*

6.93

N/A

7.43

Interest coverage*

1.96

N/A

1.95

 

First quarter

 

2011

 

2010

Currency denomination

US dollar

73%

64%

Euro

23%

26%

Mexican peso

4%

10%

Other

0%

0%

Interest rate

Fixed

51%

31%

Variable

49%

69%

In millions of US dollars, except percentages.

* Starting in the second quarter of 2010, calculated in accordance with our contractual obligations under our Financing Agreement.

On January 11, 2011, CEMEX closed an offering of US$1,000 million aggregate principal amount of senior secured notes. The notes, which mature in 2018 and pay a coupon of 9.00% annually, were issued at a price of 99.364% of face value and will be callable commencing on the 4th anniversary of their issuance date.

On April 5, 2011, CEMEX closed an offering of US$800 million aggregate principal amount of senior secured notes. The notes, which mature in 2015 and pay interest quarterly at three-month U.S. Dollar LIBOR plus 500 basis points were issued at a price of 99.001% of face value. CEMEX used the proceeds from the offering to prepay indebtedness under its Financing Agreement.

During the first quarter of 2011, through various transactions including the exercise of call options and tender offers, CEMEX early amortized Certificados Bursátiles for a total aggregate amount of US$673 million. The original maturities of such Certificados Bursátiles were September 2011 until March 2012.

Additional Financing Activities: On March 15, CEMEX announced the closing of an offering of US$1.67 billion aggregate principal amount of two series of convertible subordinated notes, US$977 million in 3.25% notes which mature in 2016, and US$690 million in 3.75% notes which mature in 2018. The Notes will be convertible into American Depositary Shares, or ADSs, of CEMEX at an initial conversion price of approximately U.S.$11.28 per ADS, that represents an approximately 30% conversion premium over the last reported sale price of ADSs on March 9, 2011. The conversion rate and the conversion price will be subject to adjustment in certain events, such as distributions of dividends or stock splits. CEMEX is using the net proceeds from the offering of the notes to: (i) fund the purchase of capped call transactions, which are expected generally to reduce the potential cost to CEMEX upon future conversion of the notes, (ii) prepay indebtedness under CEMEX’s Financing Agreement, and (iii) repay long-term notes previously issued by CEMEX in the Mexican capital markets (Certificados Bursátiles). As a result of the prepayments made under the Financing Agreement, CEMEX will avoid an increase of 150 basis points in the agreement’s annual interest rate and has also made all required principal payments under the Financing Agreement until June 2013.

---

 

EQUITY-RELATED AND DERIVATIVE INSTRUMENTS INFORMATION

Equity-related information

One CEMEX ADS represents ten CEMEX CPOs. The following amounts are expressed in CPO terms.

Beginning-of-quarter CPO-equivalent units outstanding

10,005,132,936

CPOs issued due to recapitalization of retained earnings

400,872,044

Less increase (decrease) in the number of CPOs held in subsidiaries

666,725

Stock-based compensation

0

End-of-quarter CPO-equivalent units outstanding

10,405,338,255

Outstanding units equal total CPOs issued by CEMEX less CPOs held in subsidiaries.

CEMEX has outstanding mandatory convertible securities which upon conversion will increase the number of CPOs outstanding by approximately 172.5 million, subject to antidilution adjustments.

Employee long-term compensation plans

As of March 31, 2011, executives had outstanding options on a total of 94,681,156 CPOs, with a weighted-average strike price of approximately US$1.86 per CPO (equivalent to US$18.56 per ADS). Starting in 2005, CEMEX began offering executives a restricted stock-ownership program. As of March 31, 2011, our executives held 18,869,704 restricted CPOs, representing 0.2% of our total CPOs outstanding.

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.

First quarter

 

Fourth quarter

Notional amounts (1)

 

2011

 

2010

 

2010

Equity (2) 

3,142

1,651

1,644

Estimated aggregate fair market value (1) (3)

223

(41 )

(55 )

In millions of US dollars.

The estimated aggregate fair market value represents the approximate settlement result as of the valuation date, based upon quoted market prices and estimated settlement costs, which fluctuate over time. Fair market values and notional amounts do not represent amounts of cash currently exchanged between the parties; cash amounts will be determined upon termination of the contracts considering the notional amounts and quoted market prices as well as other derivative items as of the settlement date. Fair market values should not be viewed in isolation but rather in relation to the fair market values of the underlying hedge transactions and the overall reduction in CEMEX’s exposure to the risks being hedged.

Note: Under Mexican FRS, 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 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. As of March 31, 2011, in connection with the fair market value recognition of its derivatives portfolio, CEMEX had recognized increases in assets and liabilities resulting in a net asset of US$257 million, which according to our financial agreements, is presented net of the assets associated with the derivative instruments. The notional amounts of derivatives substantially match the amounts of underlying assets, liabilities, or equity transactions on which the derivatives are being entered into.

(1) Excludes an interest-rate swap related to our long-term energy contracts. As of March 31, 2011, the notional amount of this derivative was US$195 million, with a positive fair market value of approximately US$34 million.

(2) Includes a notional amount of US$360 million in connection with a guarantee given by CEMEX under a financial transaction of its employees’ pension fund trust. As of March 31, 2011, the fair value of such financial guarantee represents a liability of US$76 million net of a collateral deposit of US$90 million.

(3) Net of a cash collateral deposited under open positions. Cash collateral was US$193 million as of March 31, 2011.

---

 

OPERATING RESULTS

Consolidated Income Statement & Balance Sheet

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

(Thousands of US Dollars, except per ADS amounts)

 

January—March

 

First quarter

INCOME STATEMENT

 

2011

 

2010

 

% Var.

 

like-to-like % Var. *

 

2011

 

2010

 

% Var.

 

like-to-like % Var. *

Net Sales

3,384,113

3,042,648

11%

9%

3,384,113

3,042,648

11%

9%

Cost of Sales

(2,421,088 )

(2,222,758 )

(9%)

(2,421,088 )

(2,222,758 )

(9%)

Gross Profit

963,025

819,890

17%

14%

963,025

819,890

17%

14%

Selling, General and Administrative Expenses

(790,683 )

(671,493 )

(18%)

(790,683 )

(671,493 )

(18%)

Operating Income

172,342

148,397

16%

11%

172,342

148,397

16%

11%

Other Expenses, Net

(75,615 )

(87,818 )

14%

(75,615 )

(87,818 )

14%

Operating Income After Other Expenses, Net

96,728

60,579

60%

96,728

60,579

60%

Financial Expenses

(346,629 )

(314,651 )

(10%)

(346,629 )

(314,651 )

(10%)

Financial Income

10,298

6,398

61%

10,298

6,398

61%

Exchange Gain (loss), Net

109,035

56,859

92%

109,035

56,859

92%

Monetary Position Gain (loss)

2,314

(43 )

N/A

2,314

(43 )

N/A

Gain (loss) on Financial Instruments

(43,807 )

(40,878 )

(7%)

(43,807 )

(40,878 )

(7%)

Total Comprehensive Financing (cost) Income

(268,788 )

(292,315 )

8%

(268,788 )

(292,315 )

8%

Net Income Before Income Taxes

(172,061 )

(231,736 )

26%

(172,061 )

(231,736 )

26%

Income Tax

(88,327 )

(86,135 )

(3%)

(88,327 )

(86,135 )

(3%)

Net Income Before Participation of Uncons. Subs.

(260,388 )

(317,870 )

18%

(260,388 )

(317,870 )

18%

Participation in Unconsolidated Subsidiaries

(18,148 )

(23,428 )

23%

(18,148 )

(23,428 )

23%

Consolidated Net Income (loss)

(278,536 )

(341,299 )

18%

(278,536 )

(341,299 )

18%

Non-controlling interest Net Income (loss)

(2,368 )

702

N/A

(2,368 )

702

N/A

CONTROLLING INTEREST NET INCOME (LOSS)

(276,168 )

(342,001 )

19%

(276,168 )

(342,001 )

19%

Operating EBITDA

518,526

515,010

1%

(2%)

518,526

515,010

1%

(2%)

Earnings (loss) per ADS

(0.27 )

(0.36 )

24%

(0.27 )

(0.36 )

24%

 

As of March 31

BALANCE SHEET

 

2011

 

2010

 

% Var.

Total Assets

42,549,894

44,996,807

(5%)

Cash and Temporary Investments

656,004

1,467,372

(55%)

Trade Accounts Receivables

1,299,956

1,115,955

16%

Other Receivables

1,086,570

799,949

36%

Inventories

1,413,647

1,401,185

1%

Other Current Assets

267,356

288,830

(7%)

Current Assets

4,723,533

5,073,291

(7%)

Fixed Assets

18,980,911

19,370,745

(2%)

Other Assets

18,845,449

20,552,771

(8%)

Total Liabilities

25,158,933

25,615,673

(2%)

Current Liabilities

4,091,379

4,060,268

1%

Long-Term Liabilities

16,989,808

15,697,184

8%

Other Liabilities

4,077,746

5,858,222

(30%)

Consolidated Stockholders’ Equity

17,390,961

19,381,133

(10%)

Non-controlling Interest and Perpetual Instruments

1,438,796

3,268,352

(56%)

Stockholders’ Equity Attributable to Controlling Interest

15,952,165

16,112,781

(1%)

---

 

OPERATING RESULTS

Consolidated Income Statement & Balance Sheet

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

(Thousands of Mexican Pesos in nominal terms)

 

January—March

 

First quarter

INCOME STATEMENT

 

2011

 

2010

 

% Var.

 

2011

 

2010

 

% Var.

Net Sales

40,744,726

38,793,763

5%

40,744,726

38,793,763

5%

Cost of Sales

(29,149,901 )

(28,340,166 )

(3%)

(29,149,901 )

(28,340,166 )

(3%)

Gross Profit

11,594,825

10,453,597

11%

11,594,825

10,453,597

11%

Selling, General and Administrative Expenses

(9,519,826 )

(8,561,539 )

(11%)

(9,519,826 )

(8,561,539 )

(11%)

Operating Income

2,074,999

1,892,059

10%

2,074,999

1,892,059

10%

Other Expenses, Net

(910,400 )

(1,119,676 )

19%

(910,400 )

(1,119,676 )

19%

Operating Income After Other Expenses, Net

1,164,599

772,383

51%

1,164,599

772,383

51%

Financial Expenses

(4,173,408 )

(4,011,804 )

(4%)

(4,173,408 )

(4,011,804 )

(4%)

Financial Income

123,987

81,571

52%

123,987

81,571

52%

Exchange Gain (loss), Net

1,312,784

724,956

81%

1,312,784

724,956

81%

Monetary Position Gain (loss)

27,864

(545 )

N/A

27,864

(545 )

N/A

Gain (loss) on Financial Instruments

(527,439 )

(521,191 )

(1%)

(527,439 )

(521,191 )

(1%)

Total Comprehensive Financing (cost) Income

(3,236,211 )

(3,727,012 )

13%

(3,236,211 )

(3,727,012 )

13%

Net Income Before Income Taxes

(2,071,612 )

(2,954,630 )

30%

(2,071,612 )

(2,954,630 )

30%

Income Tax

(1,063,454 )

(1,098,218 )

3%

(1,063,454 )

(1,098,218 )

3%

Net Income Before Participation of Uncons. Subs.

(3,135,067 )

(4,052,847 )

23%

(3,135,067 )

(4,052,847 )

23%

Participation in Unconsolidated Subsidiaries

(218,505 )

(298,713 )

27%

(218,505 )

(298,713 )

27%

Consolidated Net Income (loss)

(3,353,571 )

(4,351,561 )

23%

(3,353,571 )

(4,351,561 )

23%

Non-controlling interest Net Income (loss)

(28,511 )

8,954

N/A

(28,511 )

8,954

N/A

CONTROLLING INTEREST NET INCOME (LOSS)

(3,325,060 )

(4,360,516 )

24%

(3,325,060 )

(4,360,516 )

24%

Operating EBITDA

6,243,048

6,566,383

(5%)

6,243,048

6,566,383

(5%)

Earnings (loss) per ADS

(3.27 )

(4.40 )

26%

(3.27 )

(4.40 )

26%

 

As of March 31

BALANCE SHEET

 

2011

 

2010

 

% Var.

Total Assets

506,343,737

556,160,532

(9%)

Cash and Temporary Investments

7,806,445

18,136,715

(57%)

Trade Accounts Receivables

15,469,476

13,793,209

12%

Other Receivables

12,930,181

9,887,367

31%

Inventories

16,822,405

17,318,652

(3%)

Other Current Assets

3,181,541

3,569,936

(11%)

Current Assets

56,210,048

62,705,879

(10%)

Fixed Assets

225,872,841

239,422,407

(6%)

Other Assets

224,260,849

254,032,246

(12%)

Total Liabilities

299,391,303

316,609,723

(5%)

Current Liabilities

48,687,413

50,184,912

(3%)

Long-Term Liabilities

202,178,710

194,017,191

4%

Other Liabilities

48,525,180

72,407,620

(33%)

Consolidated Stockholders’ Equity

206,952,434

239,550,808

(14%)

Non-controlling Interest and Perpetual Instruments

17,121,667

40,396,830

(58%)

Stockholders’ Equity Attributable to Controlling Interest

189,830,768

199,153,978

(5%)

---

 

OPERATING RESULTS

Operating Summary per Country

In thousands of US dollars

 

January—March

 

First quarter

NET SALES

 

2011

 

2010

 

% Var.

 

like-to-like % Var. *

 

2011

 

2010

 

% Var.

 

like-to-like % Var. *

Mexico

842,205

741,544

14%

7%

842,205

741,544

14%

7%

U.S.A.

506,580

551,785

(8%)

(8%)

506,580

551,785

(8%)

(8%)

Europe

1,170,577

946,968

24%

21%

1,170,577

946,968

24%

21%

South / Central America and Caribbean

396,449

367,371

8%

7%

396,449

367,371

8%

7%

Africa and Middle East

248,390

263,609

(6%)

(3%)

248,390

263,609

(6%)

(3%)

Asia

121,746

124,545

(2%)

(7%)

121,746

124,545

(2%)

(7%)

Others and intercompany eliminations

98,168

46,826

110%

110%

98,168

46,826

110%

110%

TOTAL

3,384,113

3,042,648

11%

9%

3,384,113

3,042,648

11%

9%

GROSS PROFIT

Mexico

423,103

363,343

16%

10%

423,103

363,343

16%

10%

U.S.A.

(51,535 )

(27,871 )

(85%)

(85%)

(51,535 )

(27,871 )

(85%)

(85%)

Europe

253,131

137,911

84%

80%

253,131

137,911

84%

80%

South / Central America and Caribbean

160,581

158,292

1%

(0%)

160,581

158,292

1%

(0%)

Africa and Middle East

88,951

93,403

(5%)

0%

88,951

93,403

(5%)

0%

Asia

35,189

44,430

(21%)

(24%)

35,189

44,430

(21%)

(24%)

Others and intercompany eliminations

53,605

50,383

6%

6%

53,605

50,383

6%

6%

TOTAL

963,025

819,890

17%

14%

963,025

819,890

17%

14%

OPERATING INCOME

Mexico

256,031

220,998

16%

9%

256,031

220,998

16%

9%

U.S.A.

(191,038 )

(180,746 )

(6%)

(6%)

(191,038 )

(180,746 )

(6%)

(6%)

Europe

(30,902 )

(82,016 )

62%

63%

(30,902 )

(82,016 )

62%

63%

South / Central America and Caribbean

94,692

104,736

(10%)

(11%)

94,692

104,736

(10%)

(11%)

Africa and Middle East

68,935

70,717

(3%)

4%

68,935

70,717

(3%)

4%

Asia

15,588

27,777

(44%)

(45%)

15,588

27,777

(44%)

(45%)

Others and intercompany eliminations

(40,964 )

(13,069 )

(213%)

(192%)

(40,964 )

(13,070 )

(213%)

(192%)

TOTAL

172,342

148,397

16%

11%

172,342

148,397

16%

11%

---

 

OPERATING RESULTS

Operating Summary per Country

 

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

 

January—March

 

First quarter

OPERATING EBITDA

 

2011

 

2010

 

% Var.

 

like-to-like % Var. *

 

2011

 

2010

 

% Var.

 

like-to-like % Var. *

Mexico

291,801

257,964

13%

7%

291,801

257,964

13%

7%

U.S.A.

(47,935 )

(23,378 )

(105%)

(105%)

(47,935 )

(23,378 )

(105%)

(105%)

Europe

49,713

(885 )

N/A

N/A

49,713

(885 )

N/A

N/A

South / Central America and Caribbean

116,714

126,265

(8%)

(9%)

116,714

126,265

(8%)

(9%)

Africa and Middle East

79,870

83,439

(4%)

1%

79,870

83,439

(4%)

1%

Asia

21,148

32,986

(36%)

(38%)

21,148

32,986

(36%)

(38%)

Others and intercompany eliminations

7,215

38,620

(81%)

(74%)

7,215

38,620

(81%)

(74%)

TOTAL

518,526

515,010

1%

(2%)

518,526

515,010

1%

(2%)

OPERATING EBITDA MARGIN

Mexico

34.6%

34.8%

34.6%

34.8%

U.S.A.

(9.5%)

(4.2%)

(9.5%)

(4.2%)

Europe

4.2%

(0.1%)

4.2%

(0.1%)

South / Central America and Caribbean

29.4%

34.4%

29.4%

34.4%

Africa and Middle East

32.2%

31.7%

32.2%

31.7%

Asia

17.4%

26.5%

17.4%

26.5%

CONSOLIDATED MARGIN

15.3%

16.9%

15.3%

16.9%

---

 

OPERATING RESULTS

Volume Summary

Consolidated volume summary

Cement and aggregates: Thousands of metric tons.

Ready-mix: Thousands of cubic meters.

 

January—March

 

First quarter

 

2011

 

2010

 

% Var.

 

2011

 

2010

 

% Var.

Consolidated cement volume *

15,265

14,445

6%

15,265

14,445

6%

Consolidated ready-mix volume

12,281

10,757

14%

12,281

10,757

14%

Consolidated aggregates volume

35,171

32,502

8%

35,171

32,502

8%

Per-country volume summary

DOMESTIC GRAY CEMENT VOLUME

 

January - March 2011 Vs. 2010

 

First quarter 2011 Vs. 2010

 

First quarter 2011 Vs. Fourth quarter 2010

Mexico

1%

1%

(5%)

U.S.A.

(4%)

(4%)

(13%)

Europe

25%

25%

(6%)

South / Central America and Caribbean

4%

4%

7%

Africa and Middle East

(7%)

(7%)

(1%)

Asia

(5%)

(5%)

12%

READY-MIX VOLUME

Mexico

16%

16%

(14%)

U.S.A.

(10%)

(10%)

(5%)

Europe

29%

29%

1%

South / Central America and Caribbean

8%

8%

2%

Africa and Middle East

9%

9%

(7%)

Asia

2%

2%

(27%)

AGGREGATES VOLUME

Mexico

8%

8%

(27%)

U.S.A.

(11%)

(11%)

(9%)

Europe

21%

21%

(5%)

South / Central America and Caribbean

35%

35%

43%

Africa and Middle East

1%

1%

(8%)

Asia

5%

5%

(14%)

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

---

 

OPERATING RESULTS

Price Summary

Variation in US Dollars

DOMESTIC GRAY CEMENT PRICE

 

January - March 2011 Vs. 2010

 

First quarter 2011 Vs. 2010

 

First quarter 2011 Vs. Fourth quarter 2010

Mexico

11%

11%

7%

U.S.A.

(3%)

(3%)

1%

Europe (*)

(1%)

(1%)

7%

South / Central America and Caribbean (*)

3%

3%

3%

Africa and Middle East (*)

(9%)

(9%)

(3%)

Asia (*)

0%

0%

(1%)

READY-MIX PRICE

Mexico

12%

12%

5%

U.S.A.

(0%)

(0%)

0%

Europe (*)

3%

3%

8%

South / Central America and Caribbean (*)

4%

4%

1%

Africa and Middle East (*)

2%

2%

1%

Asia (*)

15%

15%

8%

AGGREGATES PRICE

Mexico

18%

18%

13%

U.S.A.

5%

5%

2%

Europe (*)

4%

4%

12%

South / Central America and Caribbean (*)

(4%)

(4%)

8%

Africa and Middle East (*)

8%

8%

7%

Asia (*)

13%

13%

8%

(*)

Volume weighted-average price.

---

 

OPERATING RESULTS

Price Summary

Variation in Local Currency

DOMESTIC GRAY CEMENT PRICE

 

January - March 2011 Vs. 2010

 

First quarter 2011 Vs. 2010

 

First quarter 2011 Vs. Fourth quarter 2010

Mexico

5%

5%

4%

U.S.A.

(3%)

(3%)

1%

Europe (*)

(3%)

(3%)

3%

South / Central America and Caribbean (*)

1%

1%

2%

Africa and Middle East (*)

(2%)

(2%)

(1%)

Asia (*)

(4%)

(4%)

(1%)

READY-MIX PRICE

Mexico

6%

6%

2%

U.S.A.

(0%)

(0%)

0%

Europe (*)

0%

0%

5%

South / Central America and Caribbean (*)

2%

2%

1%

Africa and Middle East (*)

(1%)

(1%)

1%

Asia (*)

7%

7%

6%

AGGREGATES PRICE

Mexico

12%

12%

9%

U.S.A.

5%

5%

2%

Europe (*)

2%

2%

9%

South / Central America and Caribbean (*)

(5%)

(5%)

8%

Africa and Middle East (*)

4%

4%

6%

Asia (*)

2%

2%

6%

(*)

Volume weighted-average price.

---

 

OTHER ACTIVITIES

CEMEX announces private agreement to exchange a portion of its outstanding perpetual debentures for new 9.25% US Dollar notes due 2020

On February 25, 2011, CEMEX announced that it entered into a private agreement with an institutional investor providing for the investor to exchange €119,350,000.00 (equivalent to US$162,423,415.00 at an exchange rate of €1.3609 per US$1.00) aggregate principal amount of 6.277% Fixed-to- Floating Rate Callable Perpetual Debentures issued by C-10 EUR Capital (SPV) Limited and held by the investor (including accrued interest thereon) for US$125,331,000.00 aggregate principal amount of new 9.25% US Dollar-Denominated Senior Secured Notes due 2020, to be issued by CEMEX España, S.A., acting through its Luxembourg branch, and guaranteed by CEMEX, CEMEX México, S.A. de C.V., and New Sunward Holding B.V.

CEMEX announces subscription issue price of new CPOs

On March 31, 2011, CEMEX announced that as a result of the application of retained earnings for a capital increase approved by CEMEX’s shareholders at the general ordinary shareholders meeting held on February 24, 2011, CEMEX shareholders will receive new shares as follows:

1 new CEMEX CPO per 25 CEMEX CPOs held, or, if applicable, 3 new shares per 75 shares currently outstanding.

1 new CEMEX American Depositary Share (“ADS”) per 25 ADSs held.

No cash will be distributed by CEMEX, not even for fractions from which no shares are issued.

The delivery of the new CPOs or shares is being made starting on March 30, 2011. Only holders of record of CEMEX CPOs or ADSs as of March 29, 2011 (the record date) received new shares as a result of the increase in the capital stock. The new ADSs to be issued were distributed on or about March 31, 2011. As a result, the conversion rate of CEMEX’s optional convertible subordinated notes due 2015, 2016, and 2018, as well as CEMEX’s mandatory convertible obligations due 2019, will be adjusted accordingly. The price is MXN10.5185 per new CEMEX CPO. The shares were issued at an approximate price of MXN3.5062 per share, of which MXN0.00277661 will go to our capital stock and the remaining amount as premium, and will be deemed fully paid by a capitalization of retained earnings. CEMEX shareholders will not be required to pay any consideration in connection with the issuance of the shares.

Extraordinary Shareholder Meeting

On February 24, 2011, CEMEX held an Extraordinary Shareholders’ Meeting in which our shareholders approved an increase in the variable portion of our capital stock of up to 6 billion shares (equivalent to 2 billion CPOs or 200 million ADSs). Pursuant to the resolution approved by our shareholders, the subscription and payment of the new shares represented by CPOs may occur through a public offer of CPOs and/or issuance of convertible bonds and, until then, these shares will be kept in the company’s Treasury. With the issuance on March 15, 2011 of approximately US$1.67 Billion in convertible subordinated notes due in 2016 and 2018, substantially all the new shares approved at CEMEX’s Extraordinary Shareholders Meeting have been reserved to satisfy conversion of the notes. Consequently, CEMEX does not expect to undertake any additional equity capital rising in the near future.

CEMEX announces senior level organizational changes

On April 11, 2011, CEMEX announced changes to its senior level organization, effective April 12, 2011.

CEMEX’s operations, now organized in six regions, will be led by the following executives, all of whom have served previously in various senior level operating positions within the company:

Juan Romero, President of CEMEX Mexico, who will also oversee Global Technology;

Karl Watson, Jr., President of CEMEX USA;

Jaime Elizondo, President of CEMEX South America and The Caribbean, who will also oversee Global Procurement;

Ignacio Madridejos, President of CEMEX Northern Europe, who will also oversee Global Energy and Sustainability;

Jaime Muguiro, President of CEMEX Mediterranean;

Joaquin Estrada, President of CEMEX Asia, who will also oversee Global Trading.

Additionally, CEMEX has appointed the following executives to lead the company’s corporate staff functions:

Fernando A. Gonzalez, Executive Vice President of Finance and Administration, who will also directly assume the role of Chief Financial Officer;

Juan Pablo San Agustin, Executive Vice President for Strategic Planning and Business Development; and

Luis Hernandez, Executive Vice President for Organization and Human Resources.

These nine executives will report directly to CEMEX’s Chairman and CEO, Lorenzo H. Zambrano, and, with him, comprise the company’s ten member Executive Committee.

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OTHER INFORMATION

Mexican Tax Reform 2010

In November 2009, the Mexican Congress approved amendments to the income tax law that became effective beginning January 1, 2010. The new law included changes to the tax consolidation regime that will require CEMEX, among other things, to determine income taxes as if the tax consolidation provisions in Mexico did not exist from 1999 and onward. These changes also required the payment of taxes on dividends between entities of the tax consolidation group (specifically, dividends paid from profits that were not taxed in the past), certain special items in the tax consolidation, as well as tax loss carryforwards generated by entities within the consolidated tax group that should had been recovered by such individual entities over the succeeding 10 years. This new law increased the statutory income tax rate from 28% to 30% for the years 2010 to 2012, 29% for 2013, and decreasing to 28% for 2014 and future years. Pursuant to the new tax law, the Parent Company was required to pay in 2010 (at the new 30% tax rate) 25% of the tax that result from eliminating the tax consolidation effects from 1999 to 2004. The remaining 75% is required to be paid as follows: 25% in 2011, 20% in 2012, 15% in 2013, and 15% in 2014. In connection with the consolidation effects originated after 2004, these should be considered during the sixth fiscal year following their origination and will be payable over the succeeding five years in the same proportions (25%, 25%, 20%, 15%, and 15%). Applicable taxes payable as a result of the changes to the tax consolidation regime will be increased by inflation as required by the Mexican income tax law. As of December 31, 2009, based on Interpretation 18, the Parent Company recognized the nominal value of estimated taxes payable in connection with the aforementioned amendments in the law for approximately US$799 million. This amount was recognized by the Parent Company as a tax payable on its balance sheet against “Other non-current assets” for approximately US$628 million, in connection with the net liability recognized before the new tax law and that the Parent Company expects to realize in connection with the payment of this tax liability; and approximately US$171 million against “Retained earnings” for the portion, according to the new law, related to: a) the difference between the sum of the equity of the controlled entities for tax purposes and the equity for tax purposes of the consolidated entity; b) dividends from the controlled entities for tax purposes to CEMEX, S.A.B. de C.V.; and c) other transactions between the companies included in the tax consolidation that represented the transfer of resources within such group. In December 2010, pursuant to additional rules, the tax authorities eliminated certain aspects in the law in connection with the taxable amount for the difference between the sum of the equity of the controlled entities for tax purposes and the equity for tax purposes of the consolidated entity. As a result, the Parent Company reduced its estimated tax payable by approximately US$235 million against a credit to “Retained earnings.” In 2010, changes in the Parent Company’s tax payable associated to the tax consolidation in Mexico are as follows (US$ Millions):

2010

Balance at the beginning of the period

$ 799

Income tax received from subsidiaries

$ 202

Restatement for the period

$ 28

Payments during the period

($26 )

Deduction associated with additional tax rules

($235 )

Other

$ 47

Balance at the end of the period

$ 815

As of December 31, 2010, the balance of tax loss carryforwards that have not been considered in the tax consolidation is approximately US$463 million. As of December 31, 2010, the estimated payment schedule of taxes payable resulting from changes in the tax consolidation regime in Mexico was as follows (US$ Millions):

2010

2011

$ 40

2012

$ 54

2013

$ 54

2014

$ 156

2015

$ 165

2016 and thereafter

$ 346

$ 815

Effects of the nationalization of CEMEX Venezuela on our financial statements

Our consolidated balance sheets as of March 31, 2011 presented elsewhere in this quarterly report, include within “Other Assets” our net investment in our confiscated Venezuelan assets as of the same dates. Our net investment in our Venezuelan assets as of March 31, 2011 is as follows:

Millions of pesos March 31, 2011

Net total assets MXN5,690

Accounting effects related to the exercise of Ready Mix USA’s put option

In relation to CEMEX’s joint ventures with Ready Mix USA, a) CEMEX Southeast, LLC, the joint venture owned at 50.01% by CEMEX; and b) Ready Mix USA LLC, the joint venture owned at 50.01% by Ready Mix USA, on September 30, 2010, Ready Mix USA exercised its put option. As a result, upon closing of the transaction, which will take place upon performance of the obligations by both parties under the put option agreement, and that is expected in September 2011, CEMEX will acquire its venture partner’s interests in the two joint ventures. The purchase price for CEMEX’s partner’s interests including a non-compete agreement will be approximately US$355 million. Ready Mix USA will continue to manage the joint venture in which it has a majority interest (Ready Mix USA LLC) until the closing of the transaction. As of March 31, 2011, CEMEX has not recognized a liability, as the fair value of the net assets exceeds the estimated purchase price. Had the purchase price exceeded the fair value of the net assets to be acquired, a loss would have been recognized. As of March 31, 2011, Ready Mix USA, LLC had approximately US$22.8 million (unaudited) in net debt (debt less cash and cash equivalents), which will be consolidated upon closing of the transaction.

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OTHER INFORMATION

Migration of CEMEX to International Financial Reporting Standards in 2012

Based on requirements issued in 2009 by the Mexican National Banking and Securities Commission or Comisión Nacional Bancaria y de Valores, all entities that trade their securities in the Mexican Stock Exchange must adopt the International Financial Reporting Standards (“IFRS”) for the preparation of their consolidated financial statements no later than January 1, 2012. CEMEX began the planning of its IFRS migration process during the last quarter of 2009. In summary, the status of CEMEX’s IFRS migration process as of March 31, 2011, was as follows:

Stage 1. Communication to the organization and IFRS training

These activities were undertaken and finalized between November 2009 and June 2010. Jointly with its external consultant for the IFRS migration project, CEMEX designed and implemented specific IFRS training programs for the team involved directly in the generation of financial information, the corporate support team, and the personnel in the Business Units. These training programs consisted of: a) obligatory self training based on a specialized Intranet; b) training based in webcasts oriented to a wide-range of personnel, by means of which, experts covered a variety of significant topics for CEMEX; and c) face-to-face training sessions for key personnel directly involved in the determination and quantification of the main differences between IFRS and Mexican FRS.

Stage 2. Evaluation of accounting and business impacts

CEMEX concluded the documentation phase of this stage in November 2010. CEMEX elected to prepare its initial balance sheet under IFRS as of January 1, 2010, in order to report three years of operations under IFRS at the 2012 year end. Based on IFRS 1, “IFRS First Time Adoption,” for purposes of the initial balance sheet, external appraisers are currently finalizing the valuation of CEMEX’s main fixed assets at fair value. As allowed by IFRS 1, CEMEX elected not to revisit the accounting treatment of business acquisitions made before January 1, 2010. CEMEX expects to conclude its initial balance sheet under IFRS at the end of the second quarter 2011, and to complete the adaptation of its transactional systems for the ongoing generation of information under IFRS during the third quarter 2011.

Stage 3. Parallel financial information generation under IFRS

During the third quarter of 2011, CEMEX will begin [to prepare] its financial statements under IFRS for the years 2010 and 2011. Although CEMEX has not yet finished the calculation of its initial IFRS balance sheet amounts, as a result of the revaluation of its main fixed assets to fair value as of the migration date, CEMEX anticipates changes in the non cash depreciation and depletion amounts in its IFRS financial statements for the years 2010 and each year thereafter, as compared to those previously reported under Mexican FRS. In connection with certain assets and liabilities, CEMEX expects that its programs for the sale of accounts receivable (“securitization programs”) under IFRS will not qualify for derecognition of the trade receivable; consequently, any resources obtained under these programs would be recognized against a liability. Regardless of the accounting treatment, the proceeds obtained through CEMEX’s securitization programs do not represent debt for purposes of the calculation of the leverage ratio under the Financing Agreement.

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DEFINITIONS OF TERMS AND DISCLOSURES

Methodology for translation, consolidation, and presentation of results

Under MFRS, beginning January 1, 2008, CEMEX translates the financial statements of those foreign subsidiaries operating in low-inflation environments 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, while for foreign subsidiaries operating in high-inflation environments, CEMEX uses the exchange rates at the reporting date for the balance sheet and income statement. CEMEX reports its consolidated results in Mexican pesos.

For the reader’s convenience, beginning June 30, 2008, US dollar amounts for the consolidated entity are calculated by converting the nominal Mexican peso amounts at the end of each quarter using the average MXN/US$ exchange rate for each quarter. The exchange rates used to convert results for first quarter 2011 and first quarter 2010 are 12.04 and 12.75 Mexican pesos per US dollar, respectively.

Per-country/region figures are presented in US dollars for the reader’s convenience. Figures presented in US dollars for Mexico as of March 31, 2011, and March 31, 2010, can be converted into their original local currency amount by multiplying the US-dollar figure by the corresponding average exchange rates for 2011 and 2010, provided below.

Breakdown of regions

The South/Central America and Caribbean region includes CEMEX’s operations in Argentina, Colombia, Costa Rica, the Dominican Republic, Guatemala, Jamaica, Nicaragua, Panama, and Puerto Rico, as well as trading operations in the Caribbean region.

Europe includes operations in Austria, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Latvia, Norway, Poland, Spain, Sweden, and the United Kingdom.

Africa and Middle East includes operations in Egypt, Israel, and the United Arab Emirates.

The Asia region includes operations in Bangladesh, Malaysia, the Philippines, Taiwan, and Thailand.

Disclosure on cement volumes

As of the second quarter 2010, we changed our reporting base for our cement volumes from total domestic cement including gray and white cement, mortar and clinker to domestic gray cement, except where indicated.

Definition of terms

Expansion capital expenditures consist of expansion spending on our cement, ready-mix, and other businesses in existing markets.

Free cash flow equals 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 and coupon payments on our perpetual notes).

Maintenance capital expenditures consist of maintenance spending on our cement, ready-mix, and other businesses in existing markets.

Net debt equals total debt minus cash and cash equivalents, and does not include our obligations in respect of our perpetual notes and loans, which are treated as equity obligations under Mexican financial reporting standards.

Operating EBITDA equals operating income plus depreciation and operating amortization.

pp equals percentage points

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

Earnings per ADS

The number of average ADSs outstanding used for the calculation of earnings per ADS was 1,016.1 million for first quarter 2011 and 998.1 million for first quarter 2010.

According to the Mexican NIF B-14 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. The shares issued as a result of share dividends and recapitalizations should be considered as issued at the beginning of the period.

Exchange rates

 

January—March

 

First quarter

 

2011 Average

 

2010 Average

 

2011 Average

 

2010 Average

Mexican peso

12.04

12.75

12.04

12.75

Euro

0.7227

0.7313

0.7227

0.7313

British pound

0.6248

0.6446

0.6248

0.6446

Amounts provided in units of local currency per US dollar.

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