===============================================================================
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: January 30, 2006
CEMEX, S.A. de C.V.
-------------------
(Exact name of Registrant as specified in its charter)
CEMEX Corp.
-----------
(Translation of Registrant's name into English)
United Mexican States
---------------------
(Jurisdiction of incorporation or organization)
Av. Ricardo Margain Zozaya #325, Colonia
Valle del Campestre
Garza Garcia, Nuevo Leon, Mexico 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
- ---
===============================================================================
===============================================================================
Contents
1. Press release, dated January 27, 2006, announcing CEMEX's results for
the fourth quarter of 2005 (attached hereto as exhibit 1).
2. CEMEX's 2005 fourth quarter earnings report (attached hereto as
exhibit 2).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
CEMEX, S.A. de C.V. has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CEMEX, S.A. de C.V.
-----------------------------
(Registrant)
Date: January 27, 2006 By: /s/ Rafael Garza
----------------------- -------------------------
Name: Rafael Garza
Title: Chief Comptroller
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
1. Press release, dated January 27, 2006,
announcing CEMEX's results for the fourth
quarter of 2005.
2. CEMEX's 2005 fourth quarter earnings report.
Exhibit 1
Media Relations Investor Relations Analyst Relations
Jorge Perez Abraham Rodriguez Ricardo Sales
(52 81) 8888-4334 (52 81) 8888-4262 (212) 317-6008
[CEMEX GRAPHIC OMITTED]
100 YEARS BUILDING THE FUTURE(tm)
CEMEX REPORTS FOURTH QUARTER
AND YEAR-END 2005 RESULTS
o Fourth Quarter 2005 Net Sales Increase 98%
o EBITDA Up 40% for the Full Year
MONTERREY, MEXICO, January 27, 2006 - CEMEX, S.A. de C.V. (NYSE: CX) announced
today that consolidated net sales for the fourth quarter of 2005 grew 98% to
US$3.96 billion compared to the same quarter of 2004, mainly as a result of the
acquisition of RMC. Majority net income for the year ended December 31, 2005
increased 62% compared to 2004.
CEMEX Consolidated Fourth-Quarter and Full-Year Financial and Operational
Highlights
o Sales increased in the majority of CEMEX's markets due to higher cement,
ready-mix and aggregates volumes. Robust activity in infrastructure and
residential sectors continue to be the primary drivers of cement and
ready-mix sales in most markets.
o Operating income in the fourth quarter increased 22% to US$507 million,
over the comparable period in 2004 and increased 34% for the full-year
2005 versus 2004 reaching US$2.5 billion.
o Free cash flow for the quarter was US$325 million, up 63% from US$200
million in the same quarter of 2004. For the full-year 2005, free cash
flow increased 36% to $2.0 billion, from $1.5 billion in 2004.
o EBITDA (operating income plus depreciation and amortization) increased 55%
during the fourth quarter of 2005 compared to the same quarter in 2004,
reaching US$901 million, and grew 40% to US$3.6 billion for the full-year
2005, primarily due to the acquisition of RMC.
o CEMEX's consolidated cement volume increased 27% to 20.7 million metric
tons during the fourth quarter of 2005 versus 16.3 million metric tons in
the fourth quarter of 2004. Consolidated ready-mix volume grew 210% to
18.6 million cubic meters also in the fourth quarter. The company's
consolidated aggregates volume reached 42.3 million metric tons in the
fourth quarter of 2005, an increase of 293% over the fourth quarter of
2004. For the full year 2005, CEMEX's consolidated cement volume increased
23% to 80.6 million metric tons and consolidated ready-mix volumes were up
191% reaching 69.5 million of cubic meters. Consolidated aggregates volume
for the full-year 2005 was 160 million metric tons, 257% higher than in
2004.
Hector Medina, Executive Vice President of Planning and Finance, said: "We are
very pleased with our results for the year. We achieved important financial
goals for the year, driving significant increases in sales and earnings growth,
and we strengthened our position in our key operational and regional markets,
enhancing our growth platform. The integration of RMC progressed smoothly and
ahead of schedule and we were able to realize additional synergies from the
transaction. Looking ahead into 2006, we are very well positioned to continue
to build on our record of sustained revenue growth, while maintaining strong
profitability, free cash flow expansion and a low cost of capital."
Consolidated Corporate Results
- ------------------------------
During the fourth quarter of 2005, majority net income decreased 27%, from
US$334 million in the fourth quarter of 2004 to US$244 million. For the
full-year 2005, majority net income increased 62%, reaching US$2.1 billion.
Cost of goods sold and selling, general, and administrative expenses (SG&A)
increased 128% and 91%, respectively, during the fourth quarter of 2005 versus
the comparable quarter in 2004, due primarily to the acquisition of RMC.
In the fourth quarter, free cash flow of US$325 million plus US$200 million in
proceeds from the termination of equity forwards in September were used to
reduce net debt by US$235 million, US$145 million, for a new prepaid equity
forward to cover some outstanding stock options and the balance to fund several
investments and for liability management initiatives.
During the fourth quarter, CEMEX reduced net debt by US$235 million and by
US$1.77 billion since the end of the first quarter 2005. The net-debt-to-EBITDA
ratio improved in the fourth quarter to 2.4 times from 2.6 times at the end of
the third quarter 2005. Interest coverage reached 6.8 times during the quarter,
unchanged from the fourth quarter of 2004, and up from 6.5 times at the end of
the third quarter 2005.
Major Markets Fourth-Quarter Highlights
- ---------------------------------------
Net sales in CEMEX's Mexican operations increased 13% during the fourth quarter
to US$817 million, from US$721 million in the same quarter of 2004. EBITDA grew
13% US$319 million from fourth quarter 2004 to fourth quarter 2005. Cement
volumes in Mexico increased 5% during the quarter versus the fourth quarter of
2004, while ready-mix and aggregates volumes increased 15% and 12%,
respectively, over the same period in 2004. Cement demand during the year was
driven largely by government infrastructure spending, fueled in part by oil
revenue surplus and residential construction supported by increased credit
availability from commercial banks and other sources.
CEMEX's operations in the United States reported net sales of US$1.0 billion in
the fourth quarter of 2005, up 107% from the same period in 2004. EBITDA
increased 109% to US$270 million also compared to the fourth quarter of 2004.
U.S. cement volumes increased 8% in the fourth quarter 2005 versus the same
period a year ago, and 6% for the full year 2005. On a like-to-like basis for
the ongoing operations, cement volumes increased 11% for the quarter and 8% for
the full year versus the comparable periods in 2004.
In Spain, net sales for the quarter were US$370 million, up 10% over the fourth
quarter of 2004, while EBITDA increased 7% to US$107 million. Spanish domestic
cement and ready-mix volume increased 2% and 61%, respectively, during the
fourth quarter 2005, compared to the same period in 2004. Infrastructure
spending and residential construction continued to drive demand for cement and
ready-mix, with housing starts up 5% for the first ten months of the year.
Growth in the residential sector continues to be strong, but is beginning to
moderate.
Net sales and EBITDA of CEMEX's operations in the United Kingdom were US$416
million and US$27 million, respectively, for the fourth quarter. Cement sales
volume in the UK decreased 4% for the fourth quarter and ready-mix volumes
decreased 3% for the quarter versus the same period in 2004.
Other European Markets
- ----------------------
During the fourth quarter of 2005, net sales in the Rest of Europe region were
US$749 million and EBITDA was US$88 million.
South/Central America and the Caribbean
- ---------------------------------------
CEMEX operations in South/Central America and the Caribbean reported net sales
of US$327 million during the fourth quarter of 2005, representing an increase
of 12% over the same period of 2004. EBITDA decreased 10% for the quarter to
US$93 million.
Africa and Middle East
- ----------------------
Fourth-quarter net sales in Africa and the Middle East were US$145, up 213%
from the same quarter of 2004. EBITDA increased 97% to US$37 million for the
quarter, versus the comparable period in 2004.
Asia
- ----
Operations in Asia reported an increase in net sales of 63% over the fourth
quarter of 2004, to US$78 million, while EBITDA was US$14 million, up 13% from
the same period in the previous year.
CEMEX is a growing global building solutions company that provides high quality
products and reliable service to customers and communities in more than 50
countries throughout the world. Commemorating its 100th anniversary in 2006,
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. For more information, visit www.CEMEX.com.
###
Exhibit 2
[CEMEX GRAPHIC OMITTED]
100 YEARS BUILDING THE FUTURE(TM)
Stock Listing Information
Fourth quarter (1) January - December (1)
NYSE (ADR) ------------------------- ---------------------------
Ticker: CX 2005 2004 % Var. 2005 2004 % Var.
MEXICAN STOCK EXCHANGE ---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Ticker: CEMEX.CPO Net sales 3,963 2,002 98% 15,321 8,149 88%
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Ratio of CEMEX.CPO to Gross profit 1,363 863 58% 6,050 3,563 70%
CX = 10:1 ---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Operating income 507 414 22% 2,487 1,852 34%
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Majority net income 244 334 (27%) 2,112 1,307 62%
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
EBITDA 901 582 55% 3,557 2,538 40%
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Free cash flow 325 200 63% 2,013 1,478 36%
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Net debt 8,665 5,588 55%
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Net debt/EBITDA 2.4 2.2
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Interest coverage 6.8 6.8
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Earnings per ADR 0.69 0.99 (30%) 6.10 3.93 55%
---------------------------- -------- ------- --------- --- --------- ------- -------- --------
Average ADRs outstanding 352.4 339.2 4% 346.0 332.9 4%
---------------------------- -------- ------- --------- --- --------- ---------- ----- --------
In millions of U.S. dollars, except ratios and per-ADR amounts. Average ADRs outstanding are
presented in millions of ADRs.
Consolidated net sales grew to US$3,963 million, representing an increase of 98% over those
of fourth quarter 2004, mainly as a result of the RMC acquisition. Sales increased in most
of our markets due to higher cement, ready-mix, and aggregates volumes and a better pricing
environment. The infrastructure and residential sectors continue to be the main drivers of
cement and ready-mix demand in most of our markets.
Cost of goods sold and selling, general, and administrative expenses (SG&A) increased 128%
and 91%, respectively, versus the fourth quarter of last year due mainly to the acquisition
of RMC. We have mitigated higher energy and electricity costs with our energy program. The
aggregate cost of energy and electricity per ton of cement produced for our portfolio
increased 12% in 2005 versus 2004.
EBITDA was US$901 million, an increase of 55% over that of fourth quarter 2004, despite
worse-than-expected negative impact from seasonality in Europe and several unexpected
end-of-year adjustments due to first-time consolidation of RMC. EBITDA margin decreased from
29.1% in fourth quarter 2004 to 22.7% in fourth quarter 2005. The margin was positively
affected by higher average volumes and better pricing conditions in most markets -
compensating for higher energy costs - but also reflects the change in the product mix as a
result of the RMC acquisition.
The increase in the depreciation and amortization expense in the fourth versus the previous
quarters was due mainly to the one-time adjustment resulting from the incremental value of
property, plant and equipment, and intangible assets other than goodwill, resulting from the
fair-value allocation of the purchase price paid in the acquisition of RMC.
Gain (loss) on financial instruments for the quarter was a gain of US$19 million, resulting
mainly from our cross-currency and interest-rate swaps.
Other expenses, net increased 47% to US$281 million. This includes the one-time impact of
the change in the pension fund plans from defined benefit to defined contribution and
liability management expenses.
Majority net income for the quarter decreased 27%, from US$334 million in fourth quarter
Investor Relations 2004 to US$244 million, and increased 62% for the full year, reaching US$2,112 million. The
decrease in majority net income for the quarter comes mainly from the increased depreciation
In the United States and amortization expense as well as higher other expenses, net, both explained above.
1 877 7CX NYSE
Net debt at the end of the fourth quarter was US$8,665 million, representing reductions of
In Mexico US$235 million during the quarter and US$1,770 million since the end of the first quarter
52 (81) 8888 4292 2005. The net-debt-to-EBITDA ratio improved to 2.4 times from 2.6 times at the end of third
quarter 2005. Interest coverage reached 6.8 times during the quarter, the same ratio as in
E-Mail the same quarter last year, and is up from 6.5 times in third quarter 2005.
ir@cemex.com
(1) Results for fourth quarter 2004 do not include the effect of the RMC acquisition.
www.cemex.com
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 1
US dollar translation methodology, and other important disclosures.
EBITDA and Free Cash Flow((1))
_______________________________________________________________________________________________________________________
Fourth quarter January - December
----------------------- ------------------------------
2005 2004 % Var. 2005 2004 % Var.
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
Operating income 507 414 22% 2,487 1,852 34%
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
+ Depreciation and operating amortization 394 168 1,070 686
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
EBITDA 901 582 55% 3,557 2,538 40%
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
- - Net financial expense 114 92 487 349
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
- - Capital expenditures 312 192 785 434
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
- - Change in working capital 2 18 9 86
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
- - Taxes paid 147 71 256 139
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
- - Other cash items (net) (0) 9 7 52
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
Free cash flow 325 200 63% 2,013 1,478 36%
- ----------------------------------------------------- ------- -------- ------------- --- -------- ---------- ---------
In millions of U.S. dollars.
Results for fourth quarter and full-year 2004 do not include the effect of the RMC acquisition.
During the quarter, free cash flow of US$325 million plus US$200 million in
proceeds from the termination of our equity forwards in September were used
primarily to reduce net debt by US$235 million, US$145 million for a prepaid
equity forward to cover some of the outstanding stock options, and the balance
was used to fund several investments and for liability management initiatives.
Debt-Related Information
___________________________________________________________________________________________________________________________
Fourth quarter Third quarter Fourth quarter
------------------------ --------------- ----------------
2005 2004 % Var. 2005 2005 2004
- --------------------------------------------------------------------------------------------------------------------------
Total debt (2) 9,478 5,931 60% 9,596 Currency denomination
- --------------------------------------------------------------------------------------------------------------------------
Short-term 13% 18% 13% U.S. dollar 72% 56%
- --------------------------------------------------------------------------------------------------------------------------
Long-term 87% 82% 87% Euro 21% 14%
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 601 342 76% 512 British pound 2% 14%
- --------------------------------------------------------------------------------------------------------------------------
Fair value of cross-currency swaps(2) 212 N/A 184 Yen 5% 15%
- --------------------------------------------------------------------------------------------------------------------------
Net debt (2) 8,665 5,588 55% 8,900 Other 0% 1%
- --------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Interest expense 123 98 26% 141 Interest rate
- --------------------------------------------------------------------------------------------------------------------------
Interest coverage 6.8 6.8 6.5 Fixed 53% 62%
- --------------------------------------------------------------------------------------------------------------------------
Net debt/EBITDA 2.4 2.2 2.6 Variable 47% 38%
- --------------------------------------------------------------------------------------------------------------------------
In millions of U.S. dollars, except ratios.
- ---------------
(1) EBITDA and free cash flow (calculated as set forth above) are presented
herein because CEMEX believes that they are widely accepted as financial
indicators of its ability to internally fund capital expenditures and to
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. EBITDA is reconciled above to
operating income, which CEMEX considers to be the most comparable measure
as determined under generally accepted accounting principles in Mexico
(Mexican GAAP). Free cash flow is reconciled to EBITDA. CEMEX is not
required to prepare a statement of cash flows under Mexican accounting
principles and, as such, does not have such Mexican-GAAP cash-flow
measures to present as comparable to EBITDA or free cash flow.
(2) During 2004, the Mexican Institute of Public Accountants issued Bulletin
C-10, "Derivative Financial Instruments and Hedging Activities", which
became effective beginning January 1, 2005. Bulletin C-10 details and
supplements issues related to the accounting of derivative financial
instruments. Among other aspects, Bulletin C-10 precludes the presentation
of two financial instruments as If they were a single instrument
(synthetic presentation). For this reason, beginning this year, CEMEX
recognizes the assets and liabilities resulting from the fair value of
cross-currency swaps ("CCS") separately from the financial debt, and such
debt is presented in the currencies originally negotiated. Starting in
2001, CEMEX has effectively changed the original profile of interest rates
and currencies of financial debt associated to CCS, and accordingly, until
December 31, 2004, financial debt subject to these instruments was
presented in the currencies negotiated in the CCS, through the recognition
within debt of a portion of the assets or liabilities resulting from the
fair value of such CCS. This reclassification has no impact on
stockholders' equity or net income. For presentation purposes in the table
above, net debt includes the fair value of CCS associated with debt.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 2
US dollar translation methodology, and other important disclosures.
Equity-Related Information
_______________________________________________________________________________
One CEMEX ADR represents ten CEMEX CPOs. The following amounts are expressed in
CPO terms and reflect the two-for-one stock split effective July 1, 2005.
Beginning-of-quarter CPO-equivalent units outstanding 3,522,892,653
- ------------------------------------------------------------------------------
Exercise of stock options not hedged 326,815
Less increase (decrease) in the number of CPOs held in
subsidiaries (757,890)
End-of-quarter CPO-equivalent units outstanding 3,523,977,358
- ------------------------------------------------------------------------------
Outstanding units equal total shares issued by CEMEX less shares held in
subsidiaries.
Employee long-term compensation plans (1) (2)
As of December 31, 2005, executives had outstanding options on a total of
60,057,395 CPOs, with a weighted-average strike price of US$3.24 per CPO
(equivalent to US$32.42 per ADR). Starting in 2005, CEMEX began offering
executives a stock-ownership program. The plan's goal is to move CEMEX's
long-term incentives from stock options to programs based on restricted stock.
As of December 31, 2005, our executives held 101,832,693 restricted CPOs,
representing 2.9% of our total CPOs outstanding.
Derivative Instruments
_______________________________________________________________________________
CEMEX periodically utilizes derivative financial instruments such as
interest-rate and currency swaps, currency forwards and options, and equity
derivatives in order to execute its corporate financing strategy and to hedge
other obligations as they arise. 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.
Fourth quarter (3) Third quarter
-------------------- --------------
Notional amounts 2005 2004 2005
- -------------------------------------------------------------------------------
Equity (not prepaid) (1) 0 1,157 0
Foreign-exchange 5,427 6,016 4,106
Interest-rate 2,884 2,118 3,487
- -------------------------------------------------------------------------------
Estimated aggregate fair market value 433 97 304
- -------------------------------------------------------------------------------
In millions of U.S. 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: Mexican GAAP ("Bulletin C-2") requires companies to recognize all
derivative financial instruments in the balance sheet as assets or liabilities,
at their estimated fair market value, with changes in such fair market values
recorded on the income statement. The exceptions to the general rule until
December 31, 2004, as they pertained to CEMEX, occurred when transactions were
entered into for cash-flow hedging purposes. In such cases, changes in the fair
market value of the related derivative instruments were recognized temporarily
in equity and were reclassified into earnings as the inverse effects of the
underlying hedged items flowed through the income statement. Beginning in 2005,
new Bulletin C-10, "Derivative Financial Instruments and Hedging Activities",
establishes the framework for hedge accounting and overrides Bulletin C-2 in
this respect; however, in respect to cash-flow hedges, the new rules are the
same as those applied by CEMEX since 2001. CEMEX has recognized increases in
assets and liabilities, which resulted in a net asset of US$433 million,
arising from the fair market value recognition of its derivatives portfolio as
of December 31, 2005. 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) Until September 27, 2005, the date of pricing of our non-dilutive equity
offering and the liquidation of the equity forward contracts that hedged
our executive stock-option programs, CEMEX accrued a liability
representing the intrinsic value of the stock options. Resulting from the
elimination of the economic hedge and given that the potential future
appreciation of the stock options is currently not hedged through equity
forwards, CEMEX has decided, for purposes of determining its obligations
under the stock-option programs, to move from intrinsic value to fair
value.
(2) As of December 31, 2005, CEMEX had recognized a net liability related to
our stock-option programs of approximately US$102 million. This liability
includes the fair value of the options for US$250 million, net of an
investment in a derivative financial instrument of approximately US$148
million that guarantees us the receipt of cash equivalent to the
appreciation of our CPO market price over 25 million CPOs, in order to
meet our obligations under our executive stock-option programs. As of
December 31, 2005, approximately US$97 million of our net liability
corresponds to the time value of the stock options.
(3) Notional amounts and fair market values at the end of fourth quarter 2004
do not include the effect of the RMC acquisition.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 3
US dollar translation methodology, and other important disclosures.
Other Activities
_______________________________________________________________________________
United States and Mexico agree to resolve antidumping order on Mexican cement
On January 19, 2006, officials from the Mexican and U.S. governments reached an
agreement in principle that will bring an end to the longstanding dispute over
U.S. imports of Mexican cement. Under the agreement, U.S. restrictions will
first be eased during a three-year transition and eliminated completely in
early 2009.
Following a three-year transition period, the U.S. antidumping order will be
revoked, allowing cement from Mexico to enter the United States without duties
or other limits on volumes. During the transition, 3 million tons of Mexican
cement will be allowed into the United States annually - an increase from
current levels - and quantities will be permitted to increase as the market
grows during the second and third years of the transition, subject to a 4.5%
annual cap. Quota allocations will be specified on a regional basis. The
transitional tariff will be lowered to US$3/ton (from approximately US$26/ton).
As a result of the settlement, unliquidated historical duties associated with
the antidumping order will be shared by the U.S. and Mexican cement industries.
CEMEX will receive approximately US$100 million in cash from this settlement
and will also eliminate approximately US$65 million in liabilities, both of
which will positively impact the income statement.
CEMEX and Lafarge terminate joint ventures in Spain and Portugal
On December 22, 2005, CEMEX announced the termination of its 50/50 ventures
with Lafarge in Readymix Asland S.A. (RMA) in Spain and Betecna Betao Pronto
S.A. (BETECNA) in Portugal after receiving regulatory approval from the
relevant competition authorities. CEMEX's and Lafarge's intent to end their
participation in the ventures was originally announced on November 3, 2005.
According to the terms of the agreement, in addition to receiving approximately
(euro)50 million in cash in January 2006, CEMEX also receives 29 concrete
plants and 5 aggregates quarries from RMA in Spain. The addition of one other
aggregates quarry, which would bring the total to 6, remains subject to local
regulatory approval.
As a result of the termination of the joint ventures, Lafarge holds 100% of the
shares of both RMA and BETECNA.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 4
US dollar translation methodology, and other important disclosures.
Operating Results
________________________________________________________________________________
Mexico
Our Mexican operations' cement volumes increased 5% during the quarter versus
fourth quarter 2004, while ready-mix volumes increased 15% over the same
period. For the full year, cement volumes increased 1% versus the same period
in 2004, while ready-mix volumes increased 15% over the same period. Cement
prices were 9% higher in U.S.-dollar terms during the quarter versus the same
period a year ago and increased 6% for the full year versus 2004. Ready-mix
prices, in U.S.-dollar terms, were 5% higher during full-year 2005 versus 2004.
The main drivers of cement demand during the year were government
infrastructure spending - which was fueled in part by oil revenue surplus - and
residential construction, which was supported by increased credit availability
from commercial banks and non-commercial sources such as INFONAVIT. Cement
demand from the self-construction sector remains weak, despite increased
disposable income, primarily because the formal sector has attracted customers
as a result of the increased availability of financing.
United States
In CEMEX's U.S. operations, cement volumes increased 8% in fourth quarter 2005
versus the same period a year ago. For the full year 2005, cement volumes
increased 6%. On a like-to-like basis for the ongoing operations, cement
volumes increased 11% for the quarter and 8% for the full year versus the
comparable periods of 2004. Ready-mix volumes increased 181% during the quarter
and 177% for the full year due to the consolidation of the RMC operations. On a
like-to-like basis for the ongoing operations, ready-mix volumes increased 6%
for both the quarter and the year versus the same periods in 2004. Aggregates
volume, on a like-to-like basis for the ongoing operations, increased 10% and
12% for the fourth quarter and full year, respectively, over the comparable
periods last year.
On a year-over-year basis, cement prices increased 18%, while ready-mix prices
increased 25%, and aggregates prices increased 21% during the full year versus
2004.
Construction spending for the first eleven months of 2005 is up 9% versus the
comparable period last year. All sectors showed a positive trend during the
year. Public spending increased 8% for the first eleven months of 2005, with
spending on streets and highways increasing 11% during the same period.
Construction spending in the industrial-and-commercial sector grew 7% for the
first eleven months of 2005, while spending in the residential sector grew 11%
in the same period.
Spain
Domestic cement volume increased 2% during fourth quarter 2005 over the same
quarter in 2004, while ready-mix volume increased 61%. For the full year 2005,
cement and ready-mix volumes increased 4% and 57%, respectively, versus the
comparable periods in 2004. The main drivers of cement and ready-mix demand
continue to be infrastructure spending and residential construction, with
housing starts up 5% for the first ten months of the year. The residential
sector continues strong, but is moderating its growth rate. Prices in
U.S.-dollar terms for domestic cement decreased 3% and increased 6% for the
fourth quarter and full year, respectively, versus the comparable periods in
2004.
United Kingdom
Cement sales volumes in the United Kingdom decreased 4% for the fourth quarter
and 2% for the full-year 2005 versus the comparable periods in 2004. Ready-mix
volumes decreased 3% and 1% for the quarter and full year, respectively, versus
the same periods in 2004. Cement and ready-mix prices increased 7% and 3%,
respectively, in U.S.-dollar terms during 2005 versus 2004, offsetting higher
fuel and electricity costs.
The UK economy grew at a slower pace than originally forecast at the beginning
of 2005, which in turn has reduced cement and ready-mix consumption. The
repair, maintenance, and improvement (RMI) sector, together with infrastructure
and other public investments, exhibited subdued activity in 2005, and reduced
their consumption during the year. The positive contributors during the year
were private residential which, although weakening during the year, still made
a positive contribution; a positive industrial sector; and a neutral commercial
sector.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 5
US dollar translation methodology, and other important disclosures.
Operating Results
_______________________________________________________________________________
Rest of Europe
In France, ready-mix volumes increased 6% in the fourth quarter and 6% during
the full-year 2005 year versus the same periods of 2004. Aggregates volumes
increased 5% and 1% in the fourth quarter and for the full year 2005,
respectively, versus the comparable periods in 2004. Prices of ready-mix in
U.S.-dollar terms increased 3% during the full year versus 2004. Low interest
rates and tax incentives have increased the demand for house construction.
In Germany, private and public consumption is still weak, and unemployment
remains high. The public-works sector declined in 2005 due to high public debt
and limited investments. The market for new residential buildings also dropped
in 2005, mainly because of the speculative housing boom in 2004 driven by
government housing subsidies. The nonresidential sector increased slightly
during the year mainly as a result of activity in retail and store buildings.
Cement sales volumes for the quarter declined 8% versus the comparable period
of 2004. We are partially offsetting the decline in domestic volumes by
increasing our exports from Germany - up 26% in full-year 2005. Ready-mix
volumes declined 12% during in 2005 versus 2004. Cement prices in Germany
increased 23% in U.S.-dollar terms for the full year versus the same period in
2004.
South/Central America and Caribbean
Domestic cement volumes in the region increased 23% in the quarter and 19%
during the full year versus the same periods of 2004. The Venezuelan economy
continues to recover, and with it construction spending. The main sectors
contributing to increased cement demand are the infrastructure - fueled by
increased oil revenues - and residential (both self-construction and
government-sponsored housing) sectors. For the quarter, cement volumes in
Venezuela increased 35% versus fourth quarter 2004.
In Colombia, cement volumes grew 25% and 33% during the quarter and full year,
respectively, driven mainly by demand in the self-construction sector, which
was fueled by stable employment and increased real wages. Public-works spending
also showed growth during the year.
Africa and Middle East
Domestic cement volumes for our operations in Egypt increased 23% during the
year as construction activity remains high. The main drivers are the demand for
housing and infrastructure as well as oil revenues, which are driving public
and private investments. Tourism infrastructure has started to increase as
well. Overall, the region's domestic cement volumes during the quarter
increased 33% versus the same period in 2004, while average prices in
U.S.-dollar terms increased 19%.
Asia
In aggregate, our cement volumes in the region decreased 3% during the quarter
and increased 2% during the full year 2005 versus the same periods of last
year. Cement demand in the Philippines declined during the year as a result of
political uncertainty translating into a negative construction environment. In
Thailand, cement volume enjoyed a mid-single-digit increase during the year
driven mainly by housing activity. We saw positive results in Bangladesh during
the year as a result of different efficiency initiatives. Average cement prices
for our operations in the region increased 10% in U.S.-dollar terms during the
full-year 2005 versus 2004.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 6
US dollar translation methodology, and other important disclosures.
CONSOLIDATED INCOME STATEMENT & BALANCE SHEET
Includes the results of RMC beginning March 1, 2005. Results for 2004 do not include RMC
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of U.S. Dollars, except per ADR amounts)
January - December Fourth quarter
INCOME STATEMENT 2005 2004 % Var. 2005 2004 % Var.
====================================================================================================================================
Net Sales 15,320,958 8,149,360 88% 3,962,557 2,002,081 98%
Cost of Sales (9,271,197) (4,586,349) 102% (2,599,091) (1,138,727) 128%
- ------------------------------------------------------------------------------------------------------------------------------------
Gross Profit 6,049,761 3,563,011 70% 1,363,465 863,353 58%
Selling, General and Administrative Expenses (3,563,102) (1,711,334) 108% (856,684) (449,020) 91%
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Income 2,486,659 1,851,677 34% 506,781 414,334 22%
Financial Expenses (526,168) (372,230) 41% (123,274) (98,027) 26%
Financial Income 39,262 23,421 68% 8,992 6,500 38%
Exchange Gain (Loss), Net (78,816) (23,565) 234% 19,477 37,836 (49%)
Monetary Position Gain (Loss) 418,831 385,868 9% 110,467 101,957 8%
Gain (Loss) on Financial Instruments 386,201 119,844 222% 18,717 121,470 (85%)
Total Comprehensive Financing (Cost) Income 239,310 133,339 79% 34,379 169,738 (80%)
Other Expenses, Net (317,494) (483,861) (34%) (281,432) (192,032) 47%
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income Before Income Taxes 2,408,475 1,501,155 60% 259,729 392,039 (34%)
Income Tax (330,260) (183,451) 80% (59,520) (51,949) 15%
Employees' Statutory Profit Sharing 1,063 (29,637) N/A 9,251 (21,846) N/A
Total Income Tax & Profit Sharing (329,197) (213,088) 54% (50,269) (73,795) (32%)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income Before Participation
of Uncons. Subs. and Ext. Items 2,079,278 1,288,067 61% 209,460 318,244 (34%)
Participation in Unconsolidated Subsidiaries 87,352 40,061 118% 43,965 13,793 219%
Consolidated Net Income 2,166,630 1,328,128 63% 253,425 332,037 (24%)
Net Income Attributable to Min. Interest 55,041 20,932 163% 9,508 (2,347) N/A
MAJORITY INTEREST NET INCOME 2,111,588 1,307,196 62% 243,916 334,384 (27%)
====================================================================================================================================
EBITDA 3,557,099 2,538,260 40% 900,913 581,752 55%
Earnings per ADR 6.10 3.93 55% 0.69 0.99 (30%)
====================================================================================================================================
As of December 31
BALANCE SHEET 2005 2004 % Var.
====================================================================================================================================
Total Assets 26,763,438 17,380,871 54%
Cash and Temporary Investments 601,452 342,327 76%
Trade Accounts Receivables 1,592,667 427,986 272%
Other Receivables 775,526 454,613 71%
Inventories 1,037,183 632,569 64%
Other Current Assets 159,817 94,145 70%
Current Assets 4,166,645 1,951,640 113%
Fixed Assets 15,541,789 9,613,453 62%
Other Assets 7,055,004 5,815,778 21%
- -------------------------------------------------------------------------------------------
Total Liabilities 16,409,631 9,161,228 79%
Current Liabilities 4,113,662 2,412,362 71%
Long-Term Liabilities 8,286,839 4,886,847 70%
Other Liabilities 4,009,130 1,862,019 115%
- -------------------------------------------------------------------------------------------
Consolidated Stockholders' Equity 10,353,808 8,219,644 26%
Stockholders' Equity Attributable to 528,544 388,930 36%
Minority Interest
Stockholders' Equity Attributable to 9,825,264 7,830,714 25%
Majority Interest
====================================================================================================================================
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 7
and other important disclosures.
CONSOLIDATED INCOME STATEMENT & BALANCE SHEET
Includes the results of RMC beginning March 1, 2005. Results for 2004 do not include RMC
CEMEX S.A. de C.V. AND SUBSIDIARIES
(Thousands of Mexican Pesos in real terms as of December 31, 2005
except per ADR amounts)
January - December Fourth quarter
INCOME STATEMENT 2005 2004 % Var. 2005 2004 % Var.
==================================================================================================================================
Net Sales 162,708,569 87,061,732 87% 42,082,351 21,388,750 97%
Cost of Sales (98,460,108) (48,997,162) 101% (27,602,350) (12,165,320) 127%
- ----------------------------------------------------------------------------------------------------------------------------------
Gross Profit 64,248,461 38,064,570 69% 14,480,001 9,223,430 57%
Selling, General and Administrative Expenses (37,840,146) (18,282,627) 107% (9,097,988) (4,796,992) 90%
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income 26,408,315 19,781,942 33% 5,382,013 4,426,438 22%
Financial Expenses (5,587,902) (3,976,627) 41% (1,309,169) (1,047,246) 25%
Financial Income 416,966 250,213 67% 95,495 69,447 38%
Exchange Gain (Loss), Net (837,022) (251,748) 232% 206,850 404,214 (49%)
Monetary Position Gain (Loss) 4,447,980 4,122,324 8% 1,173,163 1,089,235 8%
Gain (Loss) on Financial Instruments 4,101,453 1,280,329 220% 198,771 1,297,700 (85%)
Total Comprehensive Financing (Cost) Income 2,541,475 1,424,491 78% 365,110 1,813,351 (80%)
Other Expenses, Net (3,371,787) (5,169,209) (35%) (2,988,805) (2,051,533) 46%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Income Taxes 25,578,002 16,037,224 59% 2,758,318 4,188,256 (34%)
Income Tax (3,507,362) (1,959,852) 79% (632,098) (554,988) 14%
Employees' Statutory Profit Sharing 11,289 (316,621) N/A 98,245 (233,383) N/A
Total Income Tax & Profit Sharing (3,496,074) (2,276,474) 54% (533,853) (788,371) (32%)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income Before Participation
of Uncons. Subs. and Ext. Items 22,081,929 13,760,751 60% 2,224,465 3,399,884 (35%)
Participation in Unconsolidated Subsidiaries 927,677 427,984 117% 466,908 147,351 217%
Consolidated Net Income 23,009,605 14,188,735 62% 2,691,373 3,547,235 (24%)
Net Income Attributable to Min. Interest 584,540 223,624 161% 100,980 (25,073) N/A
MAJORITY INTEREST NET INCOME 22,425,066 13,965,111 61% 2,590,393 3,572,308 (27%)
==================================================================================================================================
EBITDA 37,776,391 27,116,891 39% 9,567,692 6,215,003 54%
Earnings per ADR 64.82 43.74 48% 7.35 10.98 (33%)
==================================================================================================================================
As of December 31
BALANCE SHEET 2005 2004 % Var.
==================================================================================================================================
Total Assets 284,227,716 185,684,365 53%
Cash and Temporary Investments 6,387,425 3,657,166 75%
Trade Accounts Receivables 16,914,120 4,572,289 270%
Other Receivables 8,236,090 4,856,748 70%
Inventories 11,014,882 6,757,894 63%
Other Current Assets 1,697,258 1,005,779 69%
Current Assets 44,249,774 20,849,876 112%
Fixed Assets 165,053,799 102,703,018 61%
Other Assets 74,924,143 62,131,472 21%
- -------------------------------------------------------------------------------------------
Total Liabilities 174,270,280 97,871,776 78%
Current Liabilities 43,687,092 25,771,889 70%
Long-Term Liabilities 88,006,226 52,207,453 69%
Other Liabilities 42,576,962 19,892,434 114%
- -------------------------------------------------------------------------------------------
Consolidated Stockholders' Equity 109,957,436 87,812,590 25%
Stockholders' Equity Attributable to 5,613,142 4,155,040 35%
Minority Interest
Stockholders' Equity Attributable to 104,344,294 83,657,550 25%
Majority Interest
==================================================================================================================================
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 8
and other important disclosures.
OPERATING SUMMARY PER COUNTRY
Includes the results of RMC beginning March 1, 2005. Results for 2004 do not include RMC
In thousands of U.S. dollars
January - December Fourth quarter
--------------------------- --------------------------
NET SALES 2005 2004 % Var. 2005 2004 % Var.
==================================================================================================================================
Mexico 3,176,301 2,920,055 9% 817,247 720,645 13%
U.S.A. 4,040,181 1,959,174 106% 503,260 107%
Spain 1,486,216 1,358,543 9% 370,196 336,071 10%
United Kingdom 1,526,993 N/A N/A 416,012 N/A
Rest of Europe 2,673,293 N/A N/A 749,485 N/A
South / Central America and Caribbean 1,315,849 1,246,945 6% 326,588 290,781 12%
Africa and Middle East 534,572 190,734 180% 145,433 46,503 213%
- ----------------------------------------------------------------------------------------------------------------------------------
Asia 297,077 194,813 52% 77,603 47,559 63%
- ----------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 270,476 279,096 (3%) 17,001 57,262 (70%)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 15,320,958 8,149,360 88% 3,962,557 2,002,081 98%
==================================================================================================================================
GROSS PROFIT
==================================================================================================================================
Mexico 1,722,226 1,657,077 4% 434,622 399,685 9%
U.S.A. 1,543,589 658,869 134% 396,977 180,107 120%
Spain 542,057 503,246 8% 128,336 127,821 0%
United Kingdom 472,106 N/A N/A 101,336 N/A N/A
Rest of Europe 943,385 N/A N/A 150,973 N/A N/A
South / Central America and Caribbean 443,920 552,495 (20%) 102,093 118,326 (14%)
Africa and Middle East 192,762 99,651 93% 42,497 23,931 78%
Asia 99,918 83,253 20% 25,264 20,466 23%
- ----------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations 89,797 8,420 967% (18,632) (6,982) 167%
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 6,049,761 3,563,01 70% 1,363,465 863,353 58%
==================================================================================================================================
OPERATING INCOME
==================================================================================================================================
Mexico 1,124,185 1,105,934 2% 282,335 242,583 16%
U.S.A. 741,086 302,707 145% 151,990 87,350 74%
Spain 358,828 331,522 8% 86,947 78,953 10%
United Kingdom 52,000 N/A N/A (18,968) N/A N/A
Rest of Europe 188,320 N/A N/A (841) N/A N/A
South / Central America and Caribbean 251,142 378,430 (34%) 60,430 72,734 (17%)
Africa and Middle East 112,310 57,613 95% 31,837 12,123 163%
Asia 39,038 29,479 32% 8,744 6,950 26%
- ----------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (380,250) (354,009) 7% (95,694) (86,359) 11%
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 2,486,659 1,851,677 24% 506,781 414,334 22%
==================================================================================================================================
Due to the standardization effort currently underway in the RMC operations,
some expenses have been reclassified between cost of sales and SG&A during the
quarter and the full year. This reclassification is being done only in the new
operations, and has no effect on operating income or EBITDA.
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 9
and other important disclosures.
OPERATING SUMMARY PER COUNTRY
Includes the results of RMC beginning March 1, 2005. Results for 2004 do not include RMC
EBITDA in thousands of US dollars. EBITDA margin as a percentage of net sales
January - December Fourth quarter
-------------------------- ------------------------
EBITDA 2005 2004 % Var. 2005 2004 % Var.
===================================================================================================================================
Mexico 1,279,948 1,263,745 1% 319,396 281,814 13%
U.S.A. 1,015,088 462,189 120% 270,376 129,653 109%
Spain 437,730 417,973 5% 107,300 100,396 7%
United Kingdom 147,371 N/A N/A 27,229 N/A N/A
Rest of Europe 352,168 N/A N/A 87,855 N/A N/A
South / Central America and Caribbean 381,663 496,836 (23%) 93,040 102,816 (10%)
Africa and Middle East 148,324 87,147 70% 37,296 18,886 97%
Asia 60,042 54,937 9% 13,799 12,241 13%
- -----------------------------------------------------------------------------------------------------------------------------------
Others and intercompany eliminations (265,234) (244,567) 8% (55,377) (64,056) (14%)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL 3,557,099 2,538,260 40% 900,913 581,752 55%
===================================================================================================================================
EBITDA MARGIN
===================================================================================================================================
Mexico 40.3% 43.3% 39.1% 39.1%
U.S.A. 25.1% 23.6% 25.9% 25.8%
Spain 29.5% 30.8% 29.0% 29.9%
United Kingdom 9.7% N/A 6.5% N/A
Rest of Europe 13.2% N/A 11.7% N/A
South / Central America and Caribbean 29.0% 39.8% 28.5% 35.4%
Africa and Middle East 27.7% 45.7% 25.6% 40.6%
Asia 20.2% 28.2% 17.8% 25.7%
- -----------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED MARGIN 23.2% 31.1% 22.7% 29.1%
===================================================================================================================================
Due to the standardization effort currently underway in the RMC operations,
some expenses have been reclassified between cost of sales and SG&A during the
quarter and the full year. This reclassification is being done only in the new
operations, and has no effect on operating income or EBITDA.
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 10
and other important disclosures.
VOLUME SUMMARY
Includes the results of RMC beginning March 1, 2005. Results for 2004 do not include RMC
CONSOLIDATED VOLUME SUMMARY
Cement and aggregates: Thousands of metric tons
Ready-mix: Thousands of cubic meters
January - December Fourth quarter
-------------------------- ------------------------
2005 2004 % Var. 2005 2004 % Var.
- ----------------------------------------------------------------------------------------------------------------------------------
Consolidated cement volume 80,568 65,758 23% 20,699 16,266 27%
Consolidated ready-mix volume 69,520 23,893 191% 18,588 5,993 210%
Consolidated aggregates volume 160,067 44,832 257% 42,271 10,743 293%
==================================================================================================================================
Per-country volume summary (1)
January - December Fourth quarter Fourth quarter 2005 Vs.
---------------------
DOMESTIC CEMENT VOLUME 2005 Vs. 2004 2005 Vs. 2004 Third quarter 2005
==================================================================================================================================
Mexico 1% 5% 4%
U.S.A. 6% 8% (9%)
Spain 4% 2% 0%
United Kingdom N/A N/A (10%)
Rest of Europe N/A N/A (20%)
South / Central America and Caribbean 19% 23% 5%
Africa and Middle East 23% 33% (14%)
Asia 2% (3%) (6%)
==================================================================================================================================
READY-MIX VOLUME
==================================================================================================================================
Mexico 15% 15% 4%
U.S.A. 177% 181% (18%)
Spain 57% 61% (3%)
United Kingdom N/A N/A (9%)
Rest of Europe N/A N/A (9%)
South / Central America and Caribbean 31% 55% (4%)
Africa and Middle East N/A N/A N/A
Asia N/A N/A N/A
==================================================================================================================================
AGGREGATES VOLUME
==================================================================================================================================
Mexico 4% 12% 12%
U.S.A. 112% 121% (12%)
Spain 70% 78% (10%)
United Kingdom N/A N/A (10%)
Rest of Europe N/A N/A (13%)
South / Central America and Caribbean 22% 22% (13%)
Africa and Middle East N/A N/A N/A
Asia N/A N/A N/A
==================================================================================================================================
1) Includes only the month of March in first quarter 2005 for RMC operations.
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 11
and other important disclosures.
PRICE SUMMARY
Includes the results of RMC beginning March 1, 2005. Results for 2004 do not include RMC
Variation in US Dollars (1)
January - December Fourth quarter Fourth quarter 2005 Vs.
---------------------- -------------------
DOMESTIC CEMENT PRICE 2005 Vs. 2004 2005 Vs. 2004 Third quarter 2005
==================================================================================================================================
Mexico 6% 9% (0%)
U.S.A. 18% 17% 2%
Spain 6% (3%) (2%)
United Kingdom N/A N/A (2%)
Rest of Europe (2) N/A N/A 1%
South / Central America and Caribbean (2) (11%) (13%) (3%)
Africa and Middle East (2) 21% 19% 2%
Asia (2) 10% 6% (0%)
==================================================================================================================================
READY-MIX PRICE
==================================================================================================================================
Mexico 5% 5% 1%
U.S.A. 25% 21% 5%
Spain 4% (6%) 0%
United Kingdom N/A N/A (2%)
Rest of Europe (2) N/A N/A (0%)
South / Central America and Caribbean (2) 4% (0%) 0%
Africa and Middle East (2) N/A N/A N/A
Asia (2) N/A N/A N/A
==================================================================================================================================
AGGREGATES PRICE
==================================================================================================================================
Mexico (5%) (12%) 5%
U.S.A. 21% 25% 8%
Spain 16% (0%) (9%)
United Kingdom N/A N/A (2%)
Rest of Europe (2) N/A N/A 2%
South / Central America and Caribbean (2) 7% 9% 11%
Africa and Middle East (2) N/A N/A N/A
Asia (2) N/A N/A N/A
==================================================================================================================================
1) Includes only the month of March in first quarter 2005 for RMC operations.
2) Volume weighted-average price.
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 12
and other important disclosures.
PRICE SUMMARY
Includes the results of RMC beginning March 1, 2005. Results for 2004 do not include RMC
Variation in Local Currency (1)
January - December Fourth quarter Fourth quarter 2005 Vs.
--------------------- ---------------------
DOMESTIC CEMENT PRICE 2005 Vs. 2004 2005 Vs. 2004 Third quarter 2005
==================================================================================================================================
Mexico (2) (2%) (1%) (2%)
U.S.A. 18% 17% 2%
Spain 6% 7% (0%)
United Kingdom N/A N/A (0%)
==================================================================================================================================
READY-MIX PRICE
==================================================================================================================================
Mexico (2) (3%) (4%) (1%)
U.S.A. 25% 21% 5%
Spain 5% 5% 2%
United Kingdom N/A N/A (0%)
==================================================================================================================================
AGGREGATES PRICE
==================================================================================================================================
Mexico (2) (13%) (19%) 3%
U.S.A. 21% 25% 8%
Spain 17% 10% (7%)
United Kingdom N/A N/A (0%)
==================================================================================================================================
1) Includes only the month of March in first quarter 2005 for RMC operations.
2) In constant Mexican pesos as of December 31, 2005
Please refer to the end of this report for definition of terms, U.S. dollar translation methodology Page 13
and other important disclosures.
Definition of Terms and Disclosures
_______________________________________________________________________________
Methodology for consolidation and presentation of results
CEMEX consolidates its results in Mexican pesos under Mexican generally
accepted accounting principles (GAAP). For the reader's convenience, U.S.
dollar amounts for the consolidated entity are calculated by converting the
constant Mexican peso amounts at the end of each quarter using the period-end
MXN/USD exchange rate for each quarter. The exchange rates used to convert
results for fourth quarter 2005, third quarter 2005, and fourth quarter 2004
are 10.62, 10.76, and 11.14 Mexican pesos per U.S. dollar, respectively.
CEMEX's weighted-average inflation factor between December 31, 2004, and
December 31, 2005, was -4.1%.
Per-country/region figures are presented in U.S. dollars for the reader's
convenience. In the consolidation process, each country's figures (except those
of CEMEX Mexico) are converted to U.S. dollars and then to Mexican pesos under
Mexican GAAP. Figures presented in U.S. dollars for Mexico, Spain, and the
United Kingdom as of December 31, 2005, and December 31, 2004, can be converted
into their original local currency amount by multiplying the U.S.-dollar figure
by the corresponding exchange rate provided below.
To convert December 31, 2004, U.S.-dollar figures for Mexico to constant
Mexican pesos as of December 31, 2005, it is necessary to first convert the
December 31, 2004, U.S.-dollar figure to Mexican pesos using the exchange rate
provided below, and then multiply the resulting amount by 1.0320, the
inflation-rate factor between December 31, 2004, and December 31, 2005.
December 31
-----------------------------
Exchange rate 2005 2004
- --------------------------------------------------------
Mexican peso 10.62 11.14
Euro 0.84 0.74
British pound 0.58 0.52
- ---------------------------------------------------------
Amounts provided in units of local currency per U.S. dollar.
Breakdown of regions
The South/Central America and Caribbean region includes CEMEX's operations in
Argentina, Colombia, Costa Rica, the Dominican Republic, Jamaica, Nicaragua,
Panama, Puerto Rico, and Venezuela, as well as our trading operations in the
Caribbean region.
Rest of Europe includes operations in Austria, Croatia, Czech Republic,
Denmark, Finland, France, Germany, Hungary, Ireland, Latvia, Norway, Poland,
Portugal, and Sweden.
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.
Definition of terms
EBITDA equals operating income plus depreciation and operating amortization.
Free cash flow equals EBITDA minus net interest expense, 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).
Capital expenditures consist of maintenance and expansion spending on our
cement, ready-mix, and other core businesses in existing markets.
Working capital equals operating accounts receivable (including other current
assets received as payment in kind) plus historical inventories minus operating
payables.
Net debt equals total debt minus the fair value of cross-currency swaps
associated with debt minus cash and cash equivalents (please refer to footnote
2 on the second page of this report for further details).
Interest coverage is calculated by dividing EBITDA for the last twelve months
by interest expense for the last twelve months.
Net debt/EBITDA is calculated by dividing net debt at the end of the quarter by
EBITDA for the last twelve months. This ratio includes CEMEX's EBITDA for the
last twelve months plus the estimated EBITDA of RMC for the last twelve months
(please refer to footnote 2 on the second page of this report for further
details).
Earnings per ADR
The number of average ADRs outstanding used for the calculation of earnings per
ADR was 352.4 million for the fourth quarter 2005 and 346.0 million for the
full-year 2005, 339.2 million for fourth quarter 2004 and 332.9 million for the
full-year 2004.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 14
US dollar translation methodology, and other important disclosures.
Definition of Terms and Disclosures
_______________________________________________________________________________
Effect of the purchase of RMC on our financial statements
The acquisition of RMC was concluded on March 1, 2005. The processes to
allocate the purchase price paid for RMC's shares of approximately US$4.2
billion, including other direct purchase costs and the proceeds from the sale
of some assets, to the fair values of the assets acquired and liabilities
assumed, began during March 2005 concurrent with the assumption of control by
CEMEX and was undertaken through the year. As of December 31, 2005, CEMEX is
close to complete the overall process in terms of determining the fair values
of the net assets of RMC, including acquired intangible assets. Therefore, as
of December 31, 2005, the difference between the purchase price paid and the
fair values of RMC's net assets as of March 1, 2005, which represented a
goodwill of approximately US$1.2 billion, is a reasonable estimate of the final
amount that would prevail after completion of the allocation process during the
first quarter of 2006. At this stage, our only pending issue is to conclude if
any portion of goodwill should be further allocated to other intangible assets.
As most of the fair value adjustments were determined during the fourth quarter
of 2005, the increase in the depreciation and amortization expense in the
fourth quarter versus the previous quarters was mainly due to the incremental
value of Property, Plant and Equipment and Intangible Assets, others than
goodwill, resulting from the fair value allocation of the purchase price paid
in the acquisition of RMC.
- -------------------------------------------------------------------------------
Please refer to the end of this report for definitions of terms, Page 15
US dollar translation methodology, and other important disclosures.