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: October 26, 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
Contents
| 1. | Press release, dated October 26, 2011, announcing third quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX). |
| 2. | Third quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX). |
| 3. | Presentation regarding third quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, CEMEX, S.A.B. de C.V. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
CEMEX, S.A.B. de C.V. | ||||||
| (Registrant) | ||||||
| Date: October 26, 2011 | By: | /s/ Rafael Garza | ||||
| Name: Rafael Garza | ||||||
| Title: Chief Comptroller | ||||||
EXHIBIT INDEX
| EXHIBIT NO. |
DESCRIPTION | |
| 1. |
Press release, dated October 26, 2011, announcing third quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 2. |
Third quarter 2011 results for CEMEX, S.A.B. de C.V. (NYSE:CX). | |
| 3. |
Presentation regarding third 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 THIRD-QUARTER 2011 RESULTS
MONTERREY, MEXICO, OCTOBER 26, 2011– CEMEX, S.A.B. de C.V. (“CEMEX”) (NYSE: CX), announced today that consolidated net sales increased by 5% during the third quarter of 2011 to approximately U.S.$3.9 billion versus the comparable period in 2010. Operating EBITDA increased by 1% during the third quarter of 2011 to U.S.$658 million versus the same period in 2010.
CEMEX’s Consolidated Third-Quarter 2011 Financial and Operational Highlights
| • | The increase in consolidated net sales was due to higher sales mainly from our operations in Northern Europe, South/Central America and the Caribbean, and the United States. |
| • | 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 U.S.$263 million, compared with U.S.$250 million in the same quarter of 2010. |
| • | Operating income in the third quarter increased by 7%, to U.S.$305 million, from the comparable period in 2010. |
Fernando A. González, Executive Vice President of Finance and Administration, said: “This is the fourth consecutive quarter of top-line growth in our results. We also saw stable consolidated pricing on a quarter-on-quarter basis in local-currency terms. We are particularly pleased with the quarterly performance of our operations in the Northern Europe and the South, Central American and Caribbean regions.
We have raised U.S.$80 million in asset sales during the first nine months of this year and expect to raise an additional U.S.$100 to U.S.$200 million during the fourth quarter. We estimate total proceeds from asset sales will reach U.S.$1 billion by the end of 2012.
We also continue to be confident in our ability to meet all of our financial obligations. We have also prepaid all of maturities under our Financial Agreement until December 2013 and proactively bolstered our liquidity needs.”
Consolidated Corporate Results
During the third quarter of 2011, the controlling interest net loss was primarily driven by material adverse changes in the currency and equity markets. Of the U.S.$732 million year-over-year difference in controlling interest net loss, about 70% is non cash. In addition, about 85% of this difference is explained by two lines in the income statement:
1
| • | A foreign exchange loss, which during the quarter was U.S.$217 million and due mainly to the depreciation of the Euro and the Mexican peso versus the U.S. dollar. Most of these losses are non-cash and are related primarily to intercompany operations; and |
| • | A loss on financial instruments of U.S.$339 million during the quarter, related mainly to equity derivatives on CEMEX shares, and half of which is also non cash. |
Geographical Markets Third Quarter 2011 Highlights
Net sales in our operations in Mexico decreased 1% in the third quarter of 2011 to U.S.$856 million, compared with U.S.$868 million in the third quarter of 2010. Operating EBITDA of U.S.$285 million was flat versus the same period of last year.
CEMEX’s operations in the United States reported net sales of U.S.$713 million in the third quarter of 2011, up 4% from the same period in 2010. Operating EBITDA was a loss of U.S.$10 million in the quarter.
In Northern Europe, net sales for the third quarter of 2011 increased 9% to U.S.$1.30 billion, compared with U.S.$1.19 billion in the third quarter of 2010. Operating EBITDA was U.S.$170 million for the quarter, 13% higher than the same period last year.
Third-quarter net sales in the Mediterranean region were U.S.$424 million, 5% lower compared with U.S.$448 million during the third quarter of 2010. Operating EBITDA decreased 28% to U.S.$104 million for the quarter versus the comparable period in 2010.
CEMEX’s operations in South/Central America and the Caribbean reported net sales of U.S.$453 million during the third quarter of 2011, representing an increase of 24% over the same period of 2010. Operating EBITDA increased 33% to U.S.$144 million in the third quarter of 2011, from U.S.$108 million in the third quarter of 2010.
Operations in Asia reported a 5% increase in net sales for the third quarter of 2011, to U.S.$130 million, versus the third quarter of 2010, and operating EBITDA for the quarter was U.S.$20 million, down 32% from the same period last 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
2
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.
3
Exhibit 2
2011
THIRD QUARTER RESULTS
?? 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
OPERATING AND FINANCIAL HIGHLIGHTS
January – September Third quarter
2011 2010 % Var. 2011 2010 % Var.
% Var.* % Var.*
Consolidated cement volume
(thousand metric tons) 50,483 49,543 2% 17,454 17,170 2%
Consolidated ready?mix volume
(thousand cubic meters) 40,949 37,997 8% 14,513 13,710 6%
Consolidated aggregates volume 120,979 119,764 1% 43,216 44,172 (2%)
(thousand metric tons)
Net sales 11,437 10,577 8% 3% 3,967 3,765 5% 1%
Gross profit 3,303 3,047 8% 2% 1,186 1,097 8% 4%
Gross profit margin 28.9% 28.8% 0.1pp 29.9% 29.1% 0.8pp
Operating income 737 728 1% (4%) 305 284 7% 6%
Operating Income margin 6.4% 6.9% (0.5pp) 7.7% 7.6% 0.1pp
Consolidated net income (loss) (1,418) (728) (95%) (823) (86) (853%)
Controlling interest net income (1,416) (737) (92%) (822) (89) (821%)
(loss)
Operating EBITDA 1,794 1,829 (2%) (6%) 658 649 1% (1%)
Operating EBITDA margin 15.7% 17.3% (1.6pp) 16.6% 17.2% (0.6pp)
Free cash flow after (23) 268 N/A 263 250 5%
maintenance capital expenditures
Free cash flow (102) 191 N/A 231 228 1%
Net debt plus perpetual notes 17,719 17,265 3% 17,719 17,265 3%
Total debt 17,294 16,775 3% 17,294 16,775 3%
Total debt plus perpetual notes 18,455 18,103 2% 18,455 18,103 2%
Earnings (loss) per ADS (1.36) (0.74) (84%) (0.79) (0.09) (782%)
Fully diluted earnings per ADS N/A N/A N/A N/A N/A N/A
Average ADSs outstanding 1,041.5 988.9 5% 1,042.9 999.7 4%
Employees 44,870 46,881 (4%) 44,870 46,881 (4%)
In millions of US dollars, except percentages, employees, and per-ADS amounts. Average ADSs outstanding are presented in millions. Please refer to page 8 for end-of quarter CPO-equivalent units outstanding.
| * |
Like-to-like (“l-t-l”) percentage variations adjusted for investments/divestments and currency fluctuations. |
Consolidated net sales in the third quarter of 2011 increased to US$3,967 million, representing an increase of 5% compared with the third quarter of 2010, or an increase of 1% on a like-to-like basis for the ongoing operations. The increase in consolidated net sales was due to higher sales in our Northern European, South/Central America and Caribbean, and US 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 0.8 percentage points during the third quarter of 2011 compared to the same period last year. The decrease in cost of sales as a percentage of net sales was mainly the result of higher prices in our Mexican, Northern European, and South/Central America and Caribbean regions which offset the increase in fuel and raw materials costs.
Selling, general and administrative (SG&A) expenses as a percentage of net sales increased 0.6 percentage points during the third quarter of 2011 compared with the same period last year, from 21.6% to 22.2%. The increase in SG&A expenses during the quarter was the result of higher distribution expenses, which were partially offset by our cost reduction initiatives.
Operating EBITDA increased 1% to US$658 million during the third quarter of 2011 compared with the same period last year. The increase was due mainly to higher contributions from our South/Central America and Caribbean, and Northern European operations, and our cost reduction initiatives. On a like-to-like basis for the ongoing operations, operating EBITDA decreased 1% in the third quarter of 2011 compared with the same period last year.
Operating EBITDA margin decreased 0.6 percentage points, from 17.2% in the third quarter of 2010 to 16.6% this quarter, reflecting a change in product and geographic mix, as well as input cost inflation in excess of price increases in our cement business.
Other expenses, net, for the quarter were US$93 million, which included mainly severance payments related to our transformation process and provisions for legal settlements.
Exchange gain (loss), net, for the quarter was a loss of US$217 million, resulting mainly from the depreciation of the euro and Mexican peso against the US dollar.
Gain (loss) on financial instruments for the quarter was a loss of US$339 million, resulting mainly from our equity derivatives related to CEMEX shares.
Controlling interest net income (loss) was a loss of US$822 million in the third quarter of 2011, versus a loss of US$89 million in the third quarter of 2010. This year’s loss reflects higher foreign exchange loss and higher loss in our financial instruments, which were partially offset by higher operating income.
Total debt plus perpetual notes increased US$27 million during the quarter.
2011 Third Quarter Results
Page 2
OPERATING RESULTS
Mexico
January – September Third quarter
ltl % ltl %
2011 2010 % Var. 2011 2010 % Var.
Var.* Var.*
Net sales 2,661 2,534 5% (0%) 856 868 (1%) (3%)
Operating EBITDA 885 866 2% (3%) 285 286 (0%) (2%)
Operating EBITDA margin 33.2% 34.2% (1.0pp) 33.3% 33.0% 0.3pp
In millions of US dollars, except percentages.
Domestic gray cement Ready mix Aggregates
Year over year percentage January – January January
Third Quarter Third Quarter Third Quarter
variation September September September
Volume 1% (1%) 13% 10% 3% (0%)
Price (USD) 9% 5% 11% 7% 19% 15%
Price (local currency) 3% 3% 5% 5% 13% 13%
CEMEX’s domestic gray cement volumes in Mexico decreased 1% during the third quarter of 2011 versus the same period last year, while ready-mix volumes increased 10% over the same period. For the first nine months of the year, domestic gray cement volumes increased 1% while ready-mix volumes increased 13% versus the comparable period a year ago. Demand for building materials during the quarter was driven by the decline in volumes from the residential sector, mainly from low and middle-income housing. Performance from the self-construction sector remained flat. The infrastructure and industrial-and-commercial sectors continued with their positive trend. The industrial-and-commercial sector has been supported by construction demand from the manufacturing sector.
United States
January – September Third quarter
l t l % l t l %
2011 2010 % Var. 2011 2010 % Var.
Var.* Var.*
Net sales 1,839 1,919 (4%) (9%) 713 683 4% (4%)
Operating EBITDA (80) (9) (811%) (2,081%) (10) (2) (405%) N/A
Operating EBITDA margin (4.4%) (0.5%) (3.9pp) (1.4%) (0.3%) (1.1pp)
In millions of US dollars, except percentages.
Domestic gray cement Ready mix Aggregates
Year over year percentage January – January January
Third Quarter Third Quarter Third Quarter
variation September September September
Volume (4%) 2% (5%) 9% (11%) (10%)
Price (USD) (1%) 0% 2% 4% 9% 12%
Price (local currency) (1%) 0% 2% 4% 9% 12%
Domestic gray cement and ready-mix volumes for CEMEX’s operations in the United States increased 2% and 9%, respectively, while aggregates volumes decreased 10% during the third quarter of 2011 versus the same period of 2010. For the first nine months of the year, domestic gray cement, ready-mix, and aggregates volumes decreased 4%, 5%, and 11% respectively, versus the comparable period last year. The consolidation of the Ready Mix USA joint venture as of September resulted in higher ready-mix and aggregates volumes. On a like-to-like basis for the ongoing operations, ready-mix and aggregates volumes decreased 3% and 8%, respectively, during the quarter and decreased 10% and 7%, respectively, for the first nine months of the year versus the comparable period last year. The increase in cement sales volumes for the quarter reflects a
slightly better performance during the period in some markets. Construction activity in the residential sector remains relatively stagnant due to excess inventory, tight credit conditions, weak job creation, and low confidence in the economic outlook. Continued weakness in state fiscal conditions and uncertainty over federal funding affected the infrastructure sector. Activity from the industrial-and-commercial sector continues to improve.
2011 Third Quarter Results
Page 3
OPERATING RESULTS
Northern Europe
January – September Third quarter
l t l % l t l %
2011 2010 % Var. 2011 2010 % Var.
Var.* Var.*
Net sales 3,633 3,065 19% 10% 1,302 1,190 9% 3%
Operating EBITDA 333 221 50% 40% 170 151 13% 7%
Operating EBITDA margin 9.2% 7.2% 2.0pp 13.1% 12.7% 0.4pp
In millions of US dollars, except percentages.
Domestic gray cement Ready mix Aggregates
Year over year percentage January – January January
Third Quarter Third Quarter Third Quarter
variation September September September
Volume 12% 2% 12% 3% 6% (1%)
Price (USD) 9% 7% 10% 8% 10% 9%
Price (local currency) 1% 2% 2% 2% 3% 4%
CEMEX’s domestic gray cement, ready-mix, and aggregates volumes in the United Kingdom operations decreased 4%, 1%, and 4%, respectively, during the third quarter of 2011 versus the same period in 2010. For the first nine months of the year our domestic gray cement, ready-mix, and aggregates volumes increased 5%, 12%, and 4%, respectively, versus the comparable period in the previous year. The main driver of construction activity during the quarter continued to be the infrastructure sector, although we have perceived a slowdown given public sector spending cuts. The residential market has showed little sign of improvement, as market conditions remain difficult. In addition, the industrial-and-commercial sector was adversely affected by subdued economic activity.
In CEMEX’s operations in France, ready-mix and aggregates volumes increased 1% and 3%, respectively, during the third quarter of 2011 versus the same period in 2010. For the first nine months of the year, ready-mix and aggregates volumes increased 12% and 10%, respectively, versus the same period last year. Demand for building materials continued to be driven by the residential sector, supported by the economic stimulus plan measures, such as social housing, tax advantages and zero-rate loans. Sales volumes from the infrastructure sector remained stable, driven mainly by private investments, which offset the drop in public investments. Increase in permits from the industrial-and-commercial sector had a positive effect on volumes for the quarter.
In Germany, our domestic gray cement volumes increased 4% during the third quarter of 2011 and 14% during the first nine months of the year versus the same periods last year. Sales volumes during the quarter were supported by acceleration in residential building permits due to historically low mortgage rates, stable construction prices, shrinking unemployment, and higher wages. Performance from the industrial-and-commercial sector benefited from the ongoing strength in the manufacturing sector as well as rising capacity utilization. Activity from the infrastructure sector had a slight decrease due to cuts in the national budget.
CEMEX’s domestic gray cement volumes in Poland increased 3% during the third quarter of 2011 and 16% during the first nine months of the year versus the comparable periods of last year. Investment in the infrastructure sector was supported by the EU structural funds for infrastructure spending. Spending in construction of highways and express roads by the government continued. Construction permits from the industrial-and-commercial sector continued with its positive trend backed by favorable economic activity. The overall housing market in Poland continues to be stable. In addition, demand for building materials was affected by unfavorable weather conditions during the month of July. Our domestic gray cement volumes in the Northern Europe region increased 2% during the third quarter of 2011 and 12% for the first nine months of the year versus the same periods in 2010.
2011 Third Quarter Results
Page 4
OPERATING RESULTS
Mediterranean
January – September Third quarter
l t l % l t l %
2011 2010 % Var. 2011 2010 % Var.
Var.* Var.*
Net sales 1,337 1,371 (2%) (5%) 424 448 (5%) (7%)
Operating EBITDA 345 409 (16%) (16%) 104 145 (28%) (29%)
Operating EBITDA margin 25.8% 29.9% (4.1pp) 24.6% 32.4% (7.8pp)
In millions of US dollars, except percentages.
Domestic gray cement Ready mix Aggregates
Year over year percentage January – January January
Third Quarter Third Quarter Third Quarter
variation September September September
Volume (7%) (14%) 4% (1%) (5%) (7%)
Price (USD) (3%) (4%) 5% 7% 13% 12%
Price (local currency) (3%) (4%) (0%) 2% 5% 5%
CEMEX’s domestic gray cement and ready-mix volumes in Spain decreased 27% and 31%, respectively, during the third quarter of 2011 compared with the same period last year. For the first nine months of the year, domestic gray cement and ready-mix volumes each decreased 12%. Volumes for the quarter continued to be affected by significantly weaker demand in all of our markets, especially in Catalonia, Aragón and Baleares. High inventory levels and lack of credit availability continued to affect the performance from the housing sector, with permits at all time low levels. Activity from the infrastructure sector remained stagnant and at very low levels due to a lack of infrastructure resources and cuts in the national budget. Demand from the industrial-and-commercial sector during the quarter remains depressed given weak domestic economic activity and tighter credit.
In CEMEX’s operations in Egypt, domestic gray cement volumes decreased 5% during the third quarter of 2011 and 4% during the first nine months of the year versus the comparable periods of last year. During the quarter, the overall business environment continued to be challenging as a result of the ongoing political unrest. In the infrastructure sector, most of the projects are on hold due to a reduction in government expenditures. Spending from other demand segments is stagnant as a result of heightened uncertainty given the current political situation.
Our domestic gray cement volumes in the Mediterranean region decreased 14% during the third quarter of 2011 and 7% for the first nine months of the year versus the same periods in 2010.
South/Central America and the Caribbean
January – September Third quarter
l t l % l t l %
2011 2010 % Var. 2011 2010 % Var.
Var.* Var.*
Net sales 1,298 1,078 20% 19% 453 366 24% 24%
Operating EBITDA 386 363 6% 4% 144 108 33% 34%
Operating EBITDA margin 29.7% 33.7% (4.0pp) 31.9% 29.6% 2.3pp
In millions of US dollars, except percentages.
Domestic gray cement Ready mix Aggregates
Year over year percentage January – January January
Third Quarter Third Quarter Third Quarter
variation September September September
Volume 5% 6% 17% 19% 40% 63%
Price (USD) 7% 8% 7% 7% (0%) 6%
Price (local currency) 5% 9% 5% 7% (1%) 8%
In CEMEX’s operations in Colombia, our domestic gray cement volumes increased 8% during the third quarter of 2011 and 2% during the first nine months of the year versus the comparable periods last year. Construction activity for the quarter was driven by the residential sector, particularly from middle and high income segments, which have benefited from stable interest rates, controlled inflation, and favorable macroeconomic conditions. In addition, a recovery in low income housing, supported by subsidies in interest rates and construction of macro projects by the government aided growth in the quarter. Construction spending in the industrial-and-commercial sector, mainly in warehouses and commercial buildings, had a positive effect on volumes for the quarter.
Our domestic gray cement volumes in the South/Central America and the Caribbean region increased 6% during the third quarter of 2011 and 5% during the first nine months of the year versus the comparable periods of last year.
2011 Third Quarter Results
Page 5
OPERATING RESULTS
Asia
January – September Third quarter
l t l % l t l %
2011 2010 % Var. 2011 2010 % Var.
Var.* Var.*
Net sales 381 390 (2%) (7%) 130 124 5% 1%
Operating EBITDA 63 102 (38%) (40%) 20 29 (32%) (34%)
Operating EBITDA margin 16.5% 26.2% (9.7pp) 15.2% 23.4% (8.2pp)
In millions of US dollars, except percentages.
Domestic gray cement Ready mix Aggregates
Year over year percentage January – January January
Third Quarter Third Quarter Third Quarter
variation September September September
Volume (6%) 1% (1%) 8% (2%) (1%)
Price (USD) (3%) (5%) 14% 12% 13% 11%
Price (local currency) (7%) (8%) 7% 7% 5% 7%
In the Philippines, CEMEX’s domestic gray cement volumes remained flat during the third quarter of 2011 and decreased 11% during the first nine months of the year compared with the same periods in 2010. The decline was driven by election related spending last year, as well as the lack of government spending year to date. The current administration’s anti-corruption efforts have resulted in a very deliberate and stringent process for project bidding and disbursement of funds, causing delays to infrastructure plans, including the implementation of public-private partnership projects. In addition, unfavorable weather conditions in many regions of the country hampered construction activity during the quarter. Volumes for the quarter were partially mitigated by increased demand from the residential sector, supported by remittances from overseas workers, and by the demand for office space from the industrial-and-commercial sector, sustained by the business process outsourcing industry in the country.
Our domestic gray cement volumes in the Asia region increased 1% during the third quarter of 2011 and decreased 6% during the first nine months of 2011 versus the comparable periods of last year.
2011 Third Quarter Results
Page 6
OPERATING EBITDA, FREE CASH FLOW AND DEBT-RELATED INFORMATION
Operating EBITDA and Free Cash Flow
January September Third quarter
2011 2010 % Var. 2011 2010 % Var.
Operating income 737 728 1% 305 284 7%
+ Depreciation and operating amortization 1,056 1,101 353 364
Operating EBITDA 1,794 1,829 (2%) 658 649 1%
Net financial expense 954 834 334 291
Maintenance capital expenditures 159 180 72 88
Change in working capital 435 460 (60) 84
Taxes paid 169 191 19 44
Other cash items (net) 100 (103) 30 (109)
Free cash flow after maintenance capital expenditures (23) 268 N/A 263 250 5%
Expansion capital expenditures 79 77 32 23
Free cash flow (102) 191 N/A 231 228 1%
In millions of US dollars, except percentages.
During the quarter, free cash flow and additional debt were used to comply with the Ready Mix USA put option million obligation and other corporate uses. during the quarter. In addition, we had a positive conversion effect in the amount of US$347
Information on debt and perpetual notes
Third quarter Second quarter Third quarter
2011 2010 % Var. 2011 2011 2010
Total debt 17,294 16,775 3% 17,251 Currency denomination
Short term 2% 4% 2% US dollar 77% 66%
Long term 98% 96% 98% Euro 20% 25%
Perpetual notes 1,161 1,328 (14%) 1,177 Mexican peso 3% 9%
Cash and cash equivalents 736 838 (12%) 675 Other 0% 0%
Net debt plus perpetual notes 17,719 17,265 3% 17,753
Interest rate
Consolidated funded debt/EBITDA* 7.20 7.61 7.16 Fixed 57% 37%
Variable 43% 63%
Interest coverage* 1.87 1.96 1.87
In millions of US dollars, except percentages and ratios.
* Calculated in accordance with our contractual obligations under the Financing Agreement.
On September 23, 2011, CEMEX extended the maturity of its existing securitization program relating to the accounts receivable of its main subsidiaries in France for 18 months, until March 23, 2013. As part of the extension, CEMEX incorporated in to the program the accounts receivable of its main subsidiaries in the United Kingdom into the program. On-going costs of the transaction remain unchanged (conduit cost of funds + 120 bps).
2011 Third Quarter Results
Page 7
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 10,413,374,680
Less increase (decrease) in the number of CPOs held in subsidiaries 0
Stock based compensation 31,291,902
End of quarter CPO equivalent units outstanding 10,444,666,582
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 September 30, 2011, executives had outstanding options on a total of 90,297,054 CPOs, with a weighted average
strike price of approximately US$1.89 per CPO (equivalent to US$18.92 per ADS). Starting in 2005, CEMEX began offering
executives a restricted stock ownership program. As of September 30, 2011, our executives held 40,719,183 restricted
CPOs, representing 0.4% 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.
Third quarter Second quarter
Notional amounts (1) 2011 2010 2011
Equity (2) 2,802 1,644 2,969
Estimated aggregate fair market value (1) (3) 36 (62) 159
In millions of US dollars.
The based estimated upon quoted aggregate market fair prices market andvalue estimated represents settlement the approximate costs, which settlement fluctuate over result time. asFair of the market valuation values date, and determined notional amounts upon termination do not represent of theamounts contracts of considering cash currently the exchanged notional amounts between and the quoted parties; market cash prices amounts as well will be as relation to the fair market values of the underlying hedge transactions and the overall reduction other derivative items as of the settlement date. Fair market values should not be viewed in isolation, but in CEMEX’s rather in exposure to the risks being hedged.
Note: Under Mexican Financial Reporting Standards (“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 case changes in the fair market value of the related derivative instruments are recognized temporarily in equity and then reclassified into earnings as the inverse effects of the underlying hedged items flow through the income statement. As of September 30, 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$91 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 September 30, 2011, the notional amount of this derivative was US$192 million, with a positive fair market value of approximately US$55 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 September 30, 2011, the fair value of this financial guarantee represented a liability of US$4 million, which is net of a collateral deposit of US$264 million.
(3) Net of a cash collateral deposited under open positions. Cash collateral was US$270 million as of September 30, 2011.
2011 Third Quarter Results
Page 8
OPERATING RESULTS
Consolidated Income Statement & Balance Sheet
CEMEX, S.A.B. de C.V. and Subsidiaries
(Thousands of U.S. Dollars, except per ADS amounts)
January—September Third Quarter
INCOME STATEMENT like-to-like like-to-like
2011 2010% Var. 2011 2010% Var.
% Var. *% Var. *
Net Sales 11,436,744 10,576,665 8% 3% 3,967,151 3,765,301 5% 1%
Cost of Sales(8,133,862)(7,530,061)(8%)(2,781,453)(2,668,711)(4%)
Gross Profit 3,302,882 3,046,604 8% 2% 1,185,698 1,096,590 8% 4%
Selling, General and Administrative Expenses(2,565,548)(2,318,802)(11%)(880,869)(812,221)(8%)
Operating Income 737,333 727,803 1%(4%) 304,829 284,369 7% 6%
Other Expenses, Net(365,703)(308,861)(18%)(92,693)(124,997) 26%
Operating Income After Other Expenses, Net 371,630 418,942(11%) 212,136 159,372 33%
Financial Expenses(1,073,260)(958,828)(12%)(371,152)(332,571)(12%)
Financial Income 25,907 24,304 7% 9,012 6,927 30%
Exchange Gain (loss), Net(101,844) 65,549 N/A(217,439) 109,129 N/A
Monetary Position Gain (loss) 10,745 11,767(9%) 2,608 4,925(47%)
Gain (loss) on Financial Instruments(419,436)(118,028)(255%)(339,492)(33,642)(909%)
Total Comprehensive Financing (cost) Income(1,557,886)(975,236)(60%)(916,462)(245,231)(274%)
Net Income Before Income Taxes(1,186,256)(556,294)(113%)(704,326)(85,859)(720%)
Income Tax(191,449)(129,003)(48%)(110,786)(8,074)(1272%)
Net Income Before Participation
of Uncons. Subs.(1,377,706)(685,297)(101%)(815,112)(93,932)(768%)
Participation in Unconsolidated Subsidiaries(40,073)(42,592) 6%(7,473) 7,614 N/A
Consolidated Net Income (loss)(1,417,779)(727,889)(95%)(822,585)(86,318)(853%)
Non-controlling interest Net Income (loss)(1,893) 9,029 N/A(882) 2,949 N/A
CONTROLLING INTEREST NET INCOME (LOSS)(1,415,886)(736,918)(92%)(821,703)(89,267)(821%)
Operating EBITDA 1,793,654 1,829,082(2%)(6%) 657,965 648,649 1%(1%)
Earnings (loss) per ADS(1.36)(0.74)(84%)(0.79)(0.09)(782%)
As of September 30
BALANCE SHEET 2011 2010% Var.
Total Assets 39,944,643 43,631,658(8%)
Cash and Temporary Investments 736,267 837,728(12%)
Trade Accounts Receivables 1,225,392 1,229,536(0%)
Other Receivables 718,375 1,303,995(45%)
Inventories 1,309,066 1,389,799(6%)
Other Current Assets 304,368 229,121 33%
Current Assets 4,293,468 4,990,179(14%)
Fixed Assets 17,871,469 18,818,296(5%)
Other Assets 17,779,706 19,823,183(10%)
Total Liabilities 24,510,219 25,919,042(5%)
Current Liabilities 4,053,851 4,649,906(13%)
Long-Term Liabilities 16,964,858 16,134,465 5%
Other Liabilities 3,491,510 5,134,671(32%)
Consolidated Stockholders’ Equity 15,434,425 17,712,616(13%)
Non-controlling Interest and Perpetual Instruments 1,428,282 1,604,763(11%)
Stockholders’ Equity Attributable to Controlling Interest 14,006,143 16,107,853(13%)
2011 Third Quarter Results
Page 9
OPERATING RESULTS
Consolidated Income Statement & Balance Sheet
CEMEX, S.A.B. de C.V. and Subsidiaries (Thousands of Mexican Pesos in nominal terms)
January—September Third Quarter
INCOME STATEMENT 2011 2010% Var. 2011 2010% Var.
Net Sales 138,384,603 134,958,250 3% 50,184,459 48,271,160 4%
Cost of Sales(98,419,735)(96,083,580)(2%)(35,185,377)(34,212,876)(3%)
Gross Profit 39,964,868 38,874,670 3% 14,999,082 14,058,285 7%
Selling, General and Administrative Expenses(31,043,135)(29,587,908)(5%)(11,142,995)(10,412,670)(7%)
Operating Income 8,921,733 9,286,762(4%) 3,856,087 3,645,615 6%
Other Expenses, Net(4,425,006)(3,941,066)(12%)(1,172,567)(1,602,466) 27%
Operating Income After Other Expenses, Net 4,496,727 5,345,696(16%) 2,683,521 2,043,148 31%
Financial Expenses(12,986,442)(12,234,647)(6%)(4,695,072)(4,263,561)(10%)
Financial Income 313,476 310,118 1% 114,008 88,808 28%
Exchange Gain (loss), Net(1,232,308) 836,399 N/A(2,750,603) 1,399,039 N/A
Monetary Position Gain (loss) 130,019 150,150(13%) 32,988 63,144(48%)
Gain (loss) on Financial Instruments(5,075,171)(1,506,034)(237%)(4,294,569)(431,286)(896%)
Total Comprehensive Financing (cost) Income(18,850,426)(12,444,012)(51%)(11,593,250)(3,143,856)(269%)
Net Income Before Income Taxes(14,353,699)(7,098,317)(102%)(8,909,729)(1,100,708)(709%)
Income Tax(2,316,538)(1,646,079)(41%)(1,401,438)(103,504)(1254%)
Net Income Before Participation
of Uncons. Subs.(16,670,238)(8,744,396)(91%)(10,311,167)(1,204,212)(756%)
Participation in Unconsolidated Subsidiaries(484,889)(543,473) 11%(94,536) 97,618 N/A
Consolidated Net Income (loss)(17,155,127)(9,287,869)(85%)(10,405,703)(1,106,595)(840%)
Non-controlling interest Net Income (loss)(22,907) 115,210 N/A(11,155) 37,806 N/A
CONTROLLING INTEREST NET INCOME (LOSS)(17,132,220)(9,403,079)(82%)(10,394,548)(1,144,400)(808%)
Operating EBITDA 21,703,217 23,339,084(7%) 8,323,258 8,315,684 0%
Earnings (loss) per ADS(16.45)(9.41)(75%)(9.97)(1.14)(771%)
As of September 30
BALANCE SHEET 2011 2010% Var.
Total Assets 554,032,202 549,758,897 1%
Cash and Temporary Investments 10,212,018 10,555,377(3%)
Trade Accounts Receivables 16,996,183 15,492,152 10%
Other Receivables 9,963,866 16,430,333(39%)
Inventories 18,156,749 17,511,466 4%
Other Current Assets 4,221,588 2,886,927 46%
Current Assets 59,550,404 62,876,255(5%)
Fixed Assets 247,877,277 237,110,531 5%
Other Assets 246,604,521 249,772,111(1%)
Total Liabilities 339,956,733 326,579,933 4%
Current Liabilities 56,226,908 58,588,814(4%)
Long-Term Liabilities 235,302,577 203,294,260 16%
Other Liabilities 48,427,248 64,696,859(25%)
Consolidated Stockholders’ Equity 214,075,469 223,178,963(4%)
Non-controlling Interest and Perpetual Instruments 19,810,269 20,220,013(2%)
Stockholders’ Equity Attributable to Controlling Interest 194,265,201 202,958,950(4%)
2011 Third Quarter Results
Page 10
OPERATING RESULTS
Operating Summary per Country
In thousands of U.S. dollars
January—September Third Quarter
like-to-like like-to-like
2011 2010% Var. 2011 2010% Var.
NET SALES% Var. *% Var. *
Mexico 2,661,434 2,534,283 5%(0%) 856,314 867,978(1%)(3%)
USA 1,838,579 1,918,777(4%)(9%) 712,545 683,079 4%(4%)
Northern Europe 3,632,610 3,064,922 19% 10% 1,301,868 1,190,039 9% 3%
Mediterranean 1,336,637 1,370,877(2%)(5%) 424,206 447,821(5%)(7%)
South / Central America and Caribbean 1,297,833 1,077,762 20% 19% 452,893 365,989 24% 24%
Asia 381,369 390,263(2%)(7%) 130,455 124,139 5% 1%
Others and intercompany eliminations 288,283 219,781 31% 23% 88,870 86,256 3% 3%
TOTAL 11,436,744 10,576,665 8% 3% 3,967,151 3,765,301 5% 1%
GROSS PROFIT
Mexico 1,303,619 1,204,135 8% 3% 410,673 396,022 4% 2%
USA(49,521)(19,703)(151%) N/A 15,372(4,747) N/A(5%)
Northern Europe 900,499 724,405 24% 16% 360,619 332,955 8% 3%
Mediterranean 471,163 514,380(8%)(10%) 140,958 183,055(23%)(24%)
South / Central America and Caribbean 524,245 461,133 14% 12% 189,064 142,914 32% 33%
Asia 107,219 140,418(24%)(27%) 34,167 42,603(20%)(23%)
Others and intercompany eliminations 45,657 21,837 109% 73% 34,845 3,789 820% 831%
TOTAL 3,302,882 3,046,604 8% 2% 1,185,698 1,096,590 8% 4%
OPERATING INCOME
Mexico 774,417 755,092 3%(3%) 247,388 249,458(1%)(2%)
USA(496,342)(480,915)(3%)(2%)(142,254)(155,811) 9% 9%
Northern Europe 121,427 21,278 471% 432% 95,069 81,035 17% 12%
Mediterranean 265,116 327,692(19%)(18%) 78,235 117,589(33%)(33%)
South / Central America and Caribbean 319,264 298,028 7% 5% 122,255 86,545 41% 42%
Asia 48,100 86,371(44%)(46%) 14,788 23,746(38%)(39%)
Others and intercompany eliminations (294,649)(279,744)(5%)(1%)(110,652)(118,193) 6% 9%
TOTAL 737,333 727,803 1%(4%) 304,829 284,369 7% 6%
2011 Third Quarter Results
Page 11
OPERATING RESULTS
Operating Summary per Country
EBITDA in thousands of U.S. dollars. EBITDA margin as a percentage of net sales
January—September Third Quarter
like-to-like like-to-like
2011 2010% Var. 2011 2010% Var.
OPERATING EBITDA% Var. *% Var. *
Mexico 884,707 865,719 2%(3%) 285,111 286,098(0%)(2%)
USA(80,376)(8,823)(811%)(2081%)(10,147)(2,010)(405%) N/A
Northern Europe 332,724 221,170 50% 40% 169,927 150,813 13% 7%
Mediterranean 345,046 409,367(16%)(16%) 104,368 144,953(28%)(28%)
South / Central America and Caribbean 385,604 363,034 6% 4% 144,312 108,364 33% 34%
Asia 62,850 102,184(38%)(40%) 19,770 29,100(32%)(34%)
Others and intercompany eliminations(136,902)(123,569)(11%)(3%)(55,375)(68,669) 19% 23%
TOTAL 1,793,654 1,829,082(2%)(6%) 657,965 648,649 1%(1%)
OPERATING EBITDA MARGIN
Mexico 33.2% 34.2% 33.3% 33.0%
USA(4.4%)(0.5%)(1.4%)(0.3%)
Northern Europe 9.2% 7.2% 13.1% 12.7%
Mediterranean 25.8% 29.9% 24.6% 32.4%
South / Central America and Caribbean 29.7% 33.7% 31.9% 29.6%
Asia 16.5% 26.2% 15.2% 23.4%
TOTAL 15.7% 17.3% 16.6% 17.2%
2011 Third Quarter Results
Page 12
OPERATING RESULTS
Volume Summary
Consolidated volume summary
Cement and aggregates: Thousands of metric tons. Ready-mix: Thousands of cubic meters.
January—September Third quarter
2011 2010% Var. 2011 2010% Var.
Consolidated cement volume * 50,483 49,543 2% 17,454 17,170 2%
Consolidated ready-mix volume 40,949 37,997 8% 14,513 13,710 6%
Consolidated aggregates volume 120,979 119,764 1% 43,216 44,172(2%)
Per-country volume summary
January—September Third quarter Third quarter 2011 Vs.
DOMESTIC GRAY CEMENT VOLUME 2011 Vs. 2010 2011 Vs. 2010 Second quarter 2011
Mexico 1%(1%)(8%)
U.S.A.(4%) 2% 10%
Northern Europe 12% 2% 5%
Mediterranean(7%)(14%)(13%)
South / Central America and Caribbean 5% 6%(1%)
Asia(6%) 1% 0%
READY-MIX VOLUME
Mexico 13% 10% 0%
U.S.A.(5%) 9% 24%
Northern Europe 12% 3%(1%)
Mediterranean 4%(1%)(6%)
South / Central America and Caribbean 17% 19% 3%
Asia(1%) 8% 3%
AGGREGATES VOLUME
Mexico 3%(0%)(2%)
U.S.A.(11%)(10%) 4%
Northern Europe 6%(1%) 2%
Mediterranean(5%)(7%)(3%)
South / Central America and Caribbean 40% 63% 11%
Asia(2%)(1%)(6%)
* Consolidated cement volume includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker.
2011 Third Quarter Results
Page 13
OPERATING RESULTS
Price Summary
Variation in U.S. Dollars
January—September Third quarter Third quarter 2011 Vs.
DOMESTIC GRAY CEMENT PRICE 2011 Vs. 2010 2011 Vs. 2010 Second quarter 2011
Mexico 9% 5%(7%)
U.S.A.(1%) 0%(1%)
Northern Europe (*) 9% 7%(5%)
Mediterranean (*)(3%)(4%)(4%)
South / Central America and Caribbean (*) 7% 8% 3%
Asia (*)(3%)(5%)(1%)
READY-MIX PRICE
Mexico 11% 7%(9%)
U.S.A. 2% 4% 1%
Northern Europe (*) 10% 8%(4%)
Mediterranean (*) 5% 7%(2%)
South / Central America and Caribbean (*) 7% 7% 2%
Asia (*) 14% 12% 0%
AGGREGATES PRICE
Mexico 19% 15%(10%)
U.S.A. 9% 12% 0%
Northern Europe (*) 10% 9%(4%)
Mediterranean (*) 13% 12%(3%)
South / Central America and Caribbean (*)(0%) 6%(6%)
Asia (*) 13% 11% 2%
(*) Volume weighted-average price.
2011 Third Quarter Results
Page 14
OPERATING RESULTS
Price Summary
Variation in Local Currency
January—September Third quarter Third quarter 2011 Vs.
DOMESTIC GRAY CEMENT PRICE 2011 Vs. 2010 2011 Vs. 2010 Second quarter 2011
Mexico 3% 3% 1%
U.S.A.(1%) 0%(1%)
Northern Europe (*) 1% 2%(1%)
Mediterranean (*)(3%)(4%)(2%)
South / Central America and Caribbean (*) 5% 9% 4%
Asia (*)(7%)(8%)(2%)
READY-MIX PRICE
Mexico 5% 5%(1%)
U.S.A. 2% 4% 1%
Northern Europe (*) 2% 2%(1%)
Mediterranean (*)(0%) 2% 2%
South / Central America and Caribbean (*) 5% 7% 3%
Asia (*) 7% 7% 0%
AGGREGATES PRICE
Mexico 13% 13%(2%)
U.S.A. 9% 12% 0%
Northern Europe (*) 3% 4%(0%)
Mediterranean (*) 5% 5% 1%
South / Central America and Caribbean (*)(1%) 8%(4%)
Asia (*) 5% 7% 3%
(*) Volume weighted-average price.
2011 Third Quarter Results
Page 15
OTHER ACTIVITIES
CEMEX completes roll-over of securitization of accounts receivables program in Mexico
On August 9, 2011, CEMEX announced that it successfully rolled-over its securitization of accounts receivables program in Mexico. To fund the transaction, a trust (at HSBC Mexico) issued MXN$2.5 billion (approximately US$202 million using an exchange rate of MXN$12.37 per U.S. dollar) of receivables?backed bonds maturing on October 5, 2015. The sale of receivables is on a non-recourse basis and does not represent debt for CEMEX. The bonds were priced at a spread of 200 bps over the 28-day TIIE interbank rate. Proceeds of the securitization were used to fully amortize the receivables-backed bonds issued in July 2009 under the securitization program which is being rolled-over and to pay down debt.
CEMEX enhances its operations with new business process model
On September 5, 2011, CEMEX announced the successful execution of its integration to an SAP-centric enterprise platform for its operations across all business lines in Mexico, Spain and Costa Rica. This platform is already implemented in other operations, including the United States, the United Kingdom, Germany, and France, among others. Cement, ready?mix concrete and aggregates operations are now using one of the most advanced enterprise application software available in the market, to provide more value for CEMEX’s customers, suppliers and other key stakeholders. CEMEX achieved this integration in a record time with the help of a transformation team that included key representatives of the different business operations and expert guidance from individuals in the internal CEMEX business process areas. In the following 12 months, the integration process will continue in Central and South America, Europe and Asia. During the project, CEMEX received support from its subsidiary Neoris, a global business and IT consulting firm with extensive experience in SAP integrations.
CEMEX announces progress on its affordable housing initiative
On October 13, 2011, CEMEX announced a number of developments in the progress of its affordable housing initiative, a project that was undertaken to help provide quality concrete housing to low-income families in developing countries. The housing initiative, which was launched in 2010, is defined by a two-tiered approach of providing affordable quality building solutions while also identifying adequate financial solutions to meet each family’s needs. As part of the initiative, CEMEX housing experts have developed several prototypes of concrete houses for various types of urban and rural communities. These prototypes have been adapted to local usage and customs in different regions of developing countries. The cost of building these houses is under US$10,000, including finishes, fixtures, and equipment. CEMEX is also working with various institutions to obtain suitable financial product fees and payment terms for the beneficiaries. As of today, CEMEX has implemented 30 housing projects under this initiative in coordination with third-party developers in five countries and the expectation is to have approximately 5,000 homes built by the end of 2011. As a result of the worldwide housing deficit an estimated 1.1 billion people in urban areas live in inadequate housing. Mitigating the deficit is a challenge that requires joint action between governments, financial institutions, NGOs, and private enterprises. CEMEX has already collaborated with a number of important international, federal, state and local organizations to provide such affordable housing.
Texas General Land Office Litigation
The Texas General Land Office (“GLO”) alleged that CEMEX failed to pay approximately U.S.$550 million in royalties related to mining by CEMEX and its predecessors since the 1940s on lands that, when transferred originally by the State of Texas, contained a reservation of mineral rights. The petition filed by the GLO also states that the state is seeking injunctive relief, although the state has not acted on such request. On December 17, 2009, the Texas court handling this matter granted CEMEX’s motion for summary judgment, finding that the GLO’s claims had no merit. The GLO filed a Motion for reconsideration that was denied by the court. The GLO then appealed the El Paso Court of Appeals, and on August 31, 2011, the Court of Appeals reversed the trial court’s judgment and rendered judgment in favor of the state with respect to the ownership of the mineral rights on the lands mined by CEMEX and its predecessors in interest. CEMEX intends to appeal the Court of Appeal’s decision with respect to the ownership of the mineral rights to the Texas Supreme Court and will continue to vigorously defend the claim.
Antitrust Investigations in Mexico
In January and March 2009, we were notified of two findings of presumptive responsibility against CEMEX issued by the Mexican Competition Authority (Comisión Federal de Competencia or “CFC”), alleging certain violations of Mexican antitrust laws. We believe these findings contain substantial violations of rights granted to us by the Mexican Constitution. With respect to the second case (the one that we were notified of in March 2009), on October 14, 2011, the CFC determined to close the case due to a lack of evidence sufficient to impose sanctions. The first case (the one that we were notified of in January 2009) remains ongoing.
Acquisition of Ready Mix USA LLC
In connection with CEMEX’s joint ventures with Ready Mix USA: a) CEMEX Southeast, LLC, the joint venture which had been owned 50.01% by CEMEX; and b) Ready Mix USA LLC, the joint venture which had been owned by Ready Mix USA, on September 30, 2010, Ready Mix USA exercised its put option. On August 1, 2011, after performance of the obligations by both parties under the put option agreement, CEMEX acquired its partner’s interests in Ready Mix USA LLC and CEMEX Southeast LLC in exchange for approximately US$352 million and the assumption of approximately US$28 million in net debt. CEMEX´s consolidated balance sheet and the consolidated statement of operations as of and for the period ended September 30, 2011 include the balances of Ready Mix USA LLC as of September 30, 2011 and the results of operations for the two-month period ended September 30, 2011. There is no goodwill arising from the transaction since, under Mexican FRS, in transactions between joint venture partners, any difference between the purchase price paid and the estimated fair value of the net assets acquired should be recognized directly in equity. At the date of this report, CEMEX is in the process of determining the fair value of the net assets acquired, and expects to finalize such process during the fourth quarter of 2011.
2011 Third Quarter Results
Page 16
OTHER INFORMATION
Mexican Tax Reform 2010
In November 2009, the Mexican Congress approved amendments to the income tax law that became effective on 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 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 have 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 it 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 resulting 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. With respect to 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%), and, in relation to this, the consolidation effect for 2005 has already been notified to CEMEX and considered. 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 thepayment 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 of the law related to 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$235 million against a credit to “Retained earnings.” In 2010, changes in the parent company’s tax payable associated to the tax consolidation in Mexico are as follows (approximate US$ Millions):
2010
Balance at the beginning of the period $846
Income tax received from subsidiaries $180
Restatement for the period $26
Payments during the period ($23)
Deduction associated with additional tax rules ($210)
Other ($92)
Balance at the end of the period $727
As of December 31, 2010, the balance of tax loss carryforwards that have not been considered in the tax consolidation was 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 were as follows (approximate amounts in millions of US dollars):
2011 $43*
2012 $48
2013 $48
2014 $139
2015 $147
2016 and thereafter $302
$727
* The payment for 2011 was made on March 31, 2011 in the amount of Ps506 million, equivalent to approximately US$42.52 million. This payment included 25% of the amount that corresponds to the year 2005.
Effects of the nationalization of CEMEX Venezuela on our financial statements
Our consolidated balance sheets as of September 30, 2011 presented elsewhere in this quarterly report, include within “Other Assets” our net investment in our confiscated Venezuelan assets as of the same date. Our net investment in our Venezuelan assets as of September 30, 2011 was as follows: Millions of pesos September 30, 2011 Net total assets MXN6,675
2011 Third Quarter Results
Page 17
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, all entities that trade their securities on 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 planning its IFRS migration process during the last quarter of 2009. In summary, the status of CEMEX’s IFRS migration process as of September 30, 2011, was as follows:
Stage 1. Communicationto the organization and IFRS training
Activities undertaken and finalized between November 2009 and June 2010. Jointly with its external consultants 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) mandatory 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. Evaluationof 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.
As of September 30, 2011, CEMEX has concluded its initial balance sheet under IFRS. With the information available, the expected main impacts by line item of the consolidated balance sheet as of January
1, 2010, are as follows:
No. Account Type Explanation
1 Accounts Asset An increase in both
receivables / Other Liability accounts is expected as a
financial result of the current
obligations securitization programs,
which are not expected to
comply with all the IFRS
39 derecognition
requirements;
consequently, any
resources obtained under
these programs would be
recognized against a
liability.
2 Inventories Asset Based on IFRS, a small
decrease resulted from
certain spare parts that
were reclassified to fixed
assets.
3 Fixed Assets Asset The valuation of CEMEX´s
major fixed assets at fair
value generated the most
significant increase in the
consolidated balance
sheet as of the transition
date.
4 Other Intangible Asset An increase in this
Assets account results mainly
from the reclassification
of mining rights that were
previously recognized
within fixed assets.
5 Employee benefits Liability At the transition date, all
actuarial gains or losses
under deferral were fully
amortized against equity,
causing an increase in the
liability.
6 Deferred income Liability The balance increased at
taxes the transition date mainly
due to an increase in fixed
assets as mentioned
above.
7 Stockholders´Equity Equity Based on IFRS 1, most
IFRS first time adoption
effects at the transition
date were recognized
directly against retained
earnings, such as the
fixed assets revaluation,
net of their deferred
taxed effect, etc.
Finally, to conclude the Stage 2, CEMEX now expects to complete the adaptation of its transactional systems for the ongoing generation of information under IFRS during the fourth quarter 2011.
Stage 3. Parallelfinancial information generation under IFRS
During the third and fourth quarter of 2011, CEMEX will undertake the preparation of its consolidated financial statements under IFRS for the years 2010 and 2011. As of September 30, 2011, this process was approximately 50% of complete. Considering the effects determined in CEMEX’s initial IFRS balance sheet, the expected main impacts as a result of the revaluation of its main fixed assets to fair value are increases in the non-cash depreciation and depletion amounts in CEMEX’s IFRS statements of operations for the year 2010 and each year thereafter, as compared to those previously reported under Mexican FRS.
2011 Third Quarter Results
Page 18
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 third quarter of 2011 and third quarter of 2010 are 12.65 and 12.82 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 June 30, 2011, and June 30, 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
Northern Europe includes operations in Austria, the Czech Republic, France, Germany, Hungary, Ireland, Latvia, Poland, and the United Kingdom, as well as trading operations in several Nordic countries. The Mediterranean region includes operations in Croatia, Egypt, Israel, Spain, and the United Arab Emirates.
The South/Central America and Caribbean region includes CEMEX’s operations in Argentina, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Jamaica, Nicaragua, Panama, and Puerto Rico, as well as trading operations in the Caribbean region. The Asia region includes operations in Bangladesh, China, 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
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 are investments completed with the purpose of ensuring the company’s operational continuity. These includes replacement capital expenditures, which are projects required to change obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or company policies.
Net debt equals total debt 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 Strategic capital expenditures are investments completed with the purpose of increasing the company’s profitability. These includes growth capital expenditures, which are designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are designed to increase profitability by reducing costs.
Working capital equals operating accounts receivable (including other current assets received as payment in kind) plus historical inventories minus operating payables.
Earnings per ADS
The number of average ADSs outstanding used for the calculation of earnings per ADS was 1,042.9 million for the third quarter of 2011, 1,041.5 million for the first nine months of 2011, 999.7 million for the third quarter of 2010, and 988.9 million for the first nine months of 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 ?September Third quarter
2011 2010 2011 2010
Average Average Average Average
Mexican peso 12.10 12.76 12.65 12.82
Euro 0.7077 0.7632 0.7122 0.7624
British pound 0.6191 0.6523 0.6220 0.6412
Amounts provided in units of local currency per US dollar.
2011 Third Quarter Results
Page 19
| Exhibit 3
|
Exhibit 3
|
|
Forward looking information
This presentation contains certain forward-looking statements and information relating to CEMEX, S.A.B. de C.V. and its subsidiaries (collectively, “CEMEX”) that are based on its knowledge of present facts, expectations and projections, circumstances and assumptions ab
out future events. Many factors could cause the actual results, performance or achievements of CEMEX to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political, governmental, and business conditions globally and in the countries in which CEMEX operates, CEMEX’s ability to comply with the terms and obligations of the financing agreement entered into with major creditors and other debt agreements, CEMEX’s ability to achieve anticipated cost savings, changes in interest rates, changes in inflation rates, changes in exchange rates, the cyclical activity of the construction sector generally, changes in cement demand and prices, CEMEX’s ability to benefit from government economic stimulus plans, changes in raw material and energy prices, changes in business strategy, changes in the prevailing regulatory framework, natural disasters and other unforeseen events 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 as anticipated, believed, estimated, expected or targeted. Forward-looking statements are made as of the date hereof, and CEMEX does not intend, nor is it obligated, to update these forward-looking statements, whether as a result of new information, future events or otherwise.
UNLESS OTHERWISE NOTED, ALL FIGURES ARE PRESENTED IN DOLLARS, BASED ON OUR MEXICAN FRS FINANCIAL STATEMENTS
Copyright CEMEX, S.A.B. de C.V. and its subsidiaries.
2
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3Q11 results highlights
January – September Third Quarter
l-t-l % l-t-l %
Millions of US dollars 2011 2010 % var 2011 2010 % var
var var
Net sales 11,437 10,577 8% 3% 3,967 3,765 5% 1%
Gross profit 3,303 3,047 8% 2% 1,186 1,097 8% 4%
Operating income 737 728 1% (4%) 305 284 7% 6%
Operating EBITDA 1,794 1,829 (2%) (6%) 658 649 1% (1%)
Free cash flow after (23) 268 N/A 263 250 5%
maintenance capex
Fourth consecutive quarter of year-over-year growth in sales
Infrastructure and housing were the main drivers of demand for our products Year-over- year growth in EBITDA and free cash flow in U.S.-dollar terms
3
|
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Consolidated volumes and prices
9M11 vs. 9M10 3Q11 vs. 3Q10 3Q11 vs. 2Q11
Domestic gray Volume (l-t-l1) 0% (1%) (2%)
cement Price (USD) 5% 4% (3%)
Price (l-t-l1) 1% 2% 0%
Volume (l-t-l1) 6% 4% 1%
Ready mix Price (USD) 8% 7% (3%)
Price (l-t-l1) 2% 3% 0%
Volume (l-t-l1) 2% (2%) 1%
Aggregates Price (USD) 11% 10% (3%)
Price (l-t-l1) 5% 6% (0%)
Consolidated ready-mix volumes showed year-over-year growth for the fourth consecutive quarter Decline in domestic gray cement volumes mainly the result of decrease in volumes in Mexico, Spain and Egypt Stable sequential pricing in the three products on a like-to-like basis
1 Like-to-like volumes adjusted for investments/divestments and, in the case of prices, foreign-exchange fluctuations
4
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3Q11 achievements
Fourth consecutive quarter of year-over-year growth in sales
Favorable volume dynamics in the U.S., Northern Europe and the South, Central America and Caribbean regions
Have practically eliminated our refinancing risk until December 2013
Early evidence of transformation success
Expected to result in a recurring improvement in our steady state EBITDA of US$150 million during the second half of this year, having achieved about one third during the quarter
Expected to reach run rate of recurring improvement in our EBITDA generation of US$400 million by the end of 2012
Achieved record 25.8% alternative fuel substitution rate during 3Q11
Alternative fuels are now tied with coal as our second most important fuel, after pet coke
5
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October 2011
Regional Highlights
|
|
Mexico
Millions of
US dollars 9M11 9M10 % var l-t-l % var 3Q11 3Q10 % var l-t-l % var
Net Sales 2,661 2,534 5% (0%) 856 868 (1%) (3%)
Op. EBITDA 885 866 2% (3%) 285 286 (0%) (2%)
as % net sales 33.2% 34.2% (1.0pp) 33.3% 33.0% 0.3pp
Volume 9M11 vs. 3Q11 vs. 3Q11 vs.
9M10 3Q10 2Q11
Cement 1% (1%) (8%)
Ready mix 13% 10% 0%
Aggregates 3% (0%) (2%)
Price (LC) 9M11 vs. 3Q11 vs. 3Q11 vs.
9M10 3Q10 2Q11
Cement 3% 3% 1%
Ready mix 5% 5% (1%)
Aggregates 13% 13% (2%)
Infrastructure and the industrial-and-commercial sectors were the main drivers of consumption for our products Increased investment in the higher end of the formal residential sector driven by increased commercial lending, although more mortgages being used for existing homes Self-construction sector expected to benefit from increased employment and remittances
7
|
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United States
Millions of
US dollars 9M11 9M10 % var l-t-l % var 3Q11 3Q10 % var l-t-l % var
Net Sales 1,839 1,919 (4%) (9%) 713 683 4% (4%)
Op. EBITDA (80) (9) (811%) (2081%) (10) (2) (405%) N/A
as % net sales (4.4%) (0.5%) (3.9pp) (1.4%) (0.3%) (1.1pp)
9M11 vs. 3Q11 vs. 3Q11 vs.
Volume 9M10 3Q10 2Q11
Cement (4%) 2% 10%
Ready mix (5%) 9% 24%
Aggregates (11%) (10%) 4%
Price (LC) 9M11 vs. 3Q11 vs. 3Q11 vs.
9M10 3Q10 2Q11
Cement (1%) 0% (1%)
Ready mix 2% 4% 1%
Aggregates 9% 12% 0%
Increase in cement volumes due to a slight improvement in operating environment Housing starts year to date as of September were flat versus the same period last year Federal highway program extended until March 2012 The industrial-and-commercial sector has stabilized
8
|
|
Northern Europe
Millions of
9M11 9M10 % var l-t-l % var 3Q11 3Q10 % var l-t-l % var
US dollars
Net Sales 3,633 3,065 19% 10% 1,302 1,190 9% 3% Op. EBITDA 333 221 50% 40% 170 151 13% 7% as % net sales 9.2% 7.2% 2.0pp 13.1% 12.7% 0.4pp
9M11 vs. 3Q11 vs. 3Q11 vs. Volume 9M10 3Q10 2Q11
Cement 12% 2% 5% Ready mix 12% 3% (1%) Aggregates 6% (1%) 2%
1 9M11 vs. 3Q11 vs. 3Q11 vs.
Price (LC)
9M10 3Q10 2Q11
Cement 1% 2% (1%) Ready mix 2% 2% (1%) Aggregates 3% 4% (0%)
Regional growth continued during the quarter, although at more moderate pace The residential sector was main driver of demand in Germany and France, while the infrastructure sector drove volumes in Poland We expect cement volumes in the region to show double-digit growth during 2011
1 Volume-weighted, local-currency average prices
9
|
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Mediterranean
Millions of
9M11 9M10 % var l-t-l % var 3Q11 3Q10 % var l-t-l % var
US dollars
Net Sales 1,337 1,371 (2%) (5%) 424 448 (5%) (7%) Op. EBITDA 345 409 (16%) (16%) 104 145 (28%) (29%) as % net sales 25.8% 29.9% (4.1pp) 24.6% 32.4% (7.8pp)
9M11 vs. 3Q11 vs. 3Q11 vs. Volume 9M10 3Q10 2Q11
Cement (7%) (14%) (13%) Ready mix 4% (1%) (6%) Aggregates (5%) (7%) (3%)
1 9M11 vs. 3Q11 vs. 3Q11 vs.
Price (LC)
9M10 3Q10 2Q11
Cement (3%) (4%) (2%) Ready mix (0%) 2% 2% Aggregates 5% 5% 1%
In Egypt, cement volumes during the quarter were affected by the political instability and suspension of infrastructure projects Ready-mix volumes, driven by our Israeli and UAE operations, were offset by declines in Spain and Egypt
1 Volume-weighted, local-currency average prices
10
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South/Central America and Caribbean
Millions of
9M11 9M10 % var l-t-l % var 3Q11 3Q10 % var l-t-l % var
US dollars
Net Sales 1,298 1,078 20% 19% 453 366 24% 24% Op. EBITDA 386 363 6% 4% 144 108 33% 34% as % net sales 29.7% 33.7% (4.0pp) 31.9% 29.6% (2.3pp)
9M11 vs. 3Q11 vs. 3Q11 vs. Volume 9M10 3Q10 2Q11
Cement 5% 6% (1%) Ready mix 17% 19% 3% Aggregates 40% 63% 11%
1 9M11 vs. 3Q11 vs. 3Q11 vs.
Price (LC)
9M10 3Q10 2Q11
Cement 5% 9% 4% Ready mix 5% 7% 3% Aggregates (1%) 8% (4%)
Increased domestic gray cement consumption in Colombia, Costa Rica, Panama, Guatemala and Nicaragua
During the quarter, all the region except Panama and Guatemala experience double-digit growth in ready-mix volumes
Favorable demand for building materials in Colombia driven by the residential sector, supported by favorable economic conditions
Expansion in the region reflects government policies supporting home ownership and infrastructure development
1 Volume-weighted, local-currency average prices
11
|
|
Asia
Millions of
US dollars 9M11 9M10 % var l-t-l % var 3Q11 3Q10 % var l-t-l % var
Net Sales 381 390 (2%) (7%) 130 124 5% 1%
Op. EBITDA 63 102 (38%) (40%) 20 29 (32%) (34%)
as % net sales 16.5% 26.2% (9.7pp) 15.2% 23.4% (8.2pp)
9M11 vs. 3Q11 vs. 3Q11 vs. Volume 9M10 3Q10 2Q11
Cement (6%) 1% 0% Ready mix (1%) 8% 3% Aggregates (2%) (1%) (6%)
1 9M11 vs. 3Q11 vs. 3Q11 vs.
Price (LC)
9M10 3Q10 2Q11
Cement (7%) (8%) (2%) Ready mix 7% 7% 0% Aggregates 5% 7% 3%
Increase in cement volumes driven mainly by a positive performance in Thailand
Demand for building materials in the Philippines was negatively affected due to the government’s suspension of key infrastructure projects, as well as by the postponement of public-private partnerships projects
Unfavorable weather conditions in the Philippines hampered construction activity during the quarter
1 Volume-weighted, local-currency average prices
12
|
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October 2011
3Q11 Results
|
|
Operating EBITDA, cost of sales and SG&A
January – September Third Quarter
l-t-l l-t-l
Millions of US dollars 2011 2010 % var 2011 2010 % var
% var % var
Net sales 11,437 10,577 8% 3% 3,967 3,765 5% 1%
Operating EBITDA 1,794 1,829 (2%) (6%) 658 649 1% (1%)
as % net sales 15.7% 17.3% (0.6pp) 16.6% 17.2% (0.6pp)
Cost of sales 8,134 7,530 (8%) 2,781 2,669 (4%)
as % net sales 71.1% 71.2% (0.1pp) 70.1% 70.9% (0.8pp)
SG&A 2,566 2,319 (11%) 881 812 (8%)
as % net sales 22.4% 21.9% 0.5pp 22.2% 21.6% 0.6pp
Lower operating EBITDA margin due to: product and geographic mix as well as input cost inflation in our cement business Excluding energy and distribution costs, cost of sales plus SG&A declined by 2.1 percentage points during the quarter versus the same quarter last year; excluding the price effect, the decrease is about half of this, reflecting the success of our transformation process
14
|
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Free cash flow
January – September Third Quarter
Millions of US dollars 2011 2010 % var 2011 2010 % var
Operating EBITDA 1,794 1,829 (2%) 658 649 1%
Net Financial Expense 954 834 334 291
Maintenance Capex 159 180 72 88
Change in Working Cap 435 460 (60) 84
Taxes Paid 169 191 19 44
Other Cash Items (net) 100 (103) 30 (109)
Free Cash Flow after Maint.Capex (23) 268 N/A 263 250 5%
Strategic Capex 79 77 32 23
Free Cash Flow (102) 191 N/A 231 228 1%
Partial reversal during the quarter of investment in working capital
Other cash items during the quarter include sale of operating assets for US$52 million
15
|
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Other income statement items
Foreign-exchange loss of 217 million dollars due mainly to the depreciation of the Euro and the Mexican peso versus the U.S. dollar; most of these losses are non-cash and are related primarily to intercompany operations Loss on financial instruments for the quarter of US$339 million resulted mainly from the equity derivatives related to CEMEX shares; about half of this loss is non cash
16
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October 2011
Debt information
|
|
Debt-related information
Have substantially addressed all of our financing needs through December 2013 With latest prepayment, we have now paid more than half of the initial exposure under the Financing Agreement and, together with previous milestones, avoided about US$150 million in interest expense increases
18
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Consolidated debt maturity profile
Total debt excluding perpetual notes as of September 30, 2011 US$ 17,294 million
Millions of
US dollars
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
2011 2012 2013 2014 2015 2016 2017 2018 2019
23
334
652
8,078
1,442
2,573
666
2,171
1,355
Financing Agreement
Other bank / WC debt
Fixed Income
Certificados Bursátiles
Convertible Subordinated Notes
19
|
|
October 2011
Appendix
|
|
Additional information on debt and perpetual notes
Currency denomination1
Mexican peso
3%
Euro 20%
U.S. dollar 77%
Interest rate1
Variable 43%
Fixed 57%
Third Quarter Second Quarter
Millions of US dollars 2011 2010 % Var. 2011
Total debt 17,294 16,775 3% 17,251
Short-term 2% 4% 2%
Long-term 98% 96% 98%
Perpetual notes 1,161 1,328 (14%) 1,177
Cash and cash equivalents 736 838 (12%) 675
Net debt plus perpetual notes 17,719 17,265 3% 17,753
Consolidated Funded Debt2 / EBITDA3 7.20 7.61 7.16
Interest Coverage3 1.87 1.96 1.87
1 Excluding perpetual notes
2 Consolidated Funded Debt as of September 30, 2011 was US$16,279 million
3 Calculated in accordance with our contractual obligations under our Financing Agreement
21
|
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Historical financial information for
Northern Europe and Mediterranean regions
Northern Europe
Millions of US dollars 1Q10 2Q10 3Q10 4Q10 2010 1Q11 2Q11 3Q11
Net sales 766 1,096 1,190 950 4,016 984 1,354 1,302
Gross profit 82 302 333 206 931 183 360 361
Operating income (100) 35 81 (13) 12 (52) 80 95
Operating EBITDA (34) 100 151 48 271 13 152 170
Operating EBITDA margin (4.4%) 9.1% 12.7% 5.1% 6.7% 1.4% 11.2% 13.1%
Mediterranean
Millions of US dollars 1Q10 2Q10 3Q10 4Q10 2010 1Q11 2Q11 3Q11
Net sales 445 477 448 446 1,816 436 477 424
Gross profit 150 180 183 166 681 159 171 141
Operating income 88 120 118 101 425 90 97 78
Operating EBITDA 116 147 145 127 533 116 125 104
Operating EBITDA margin 26.2% 30.8% 32.4% 28.5% 29.4% 26.6% 26.2% 24.6%
22
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9M11 volume and price summary: Selected countries
Domestic gray cement Ready mix Aggregates
9M11 vs. 9M10 9M11 vs. 9M10 9M11 vs. 9M10
Prices Prices Prices Prices Prices Prices
Volumes Volumes Volumes
(USD) (LC) (USD) (LC) (USD) (LC)
Mexico 1% 9% 3% 13% 11% 5% 3% 19% 13%
U.S. (4%) (1%) (1%) (10%)1 2% 2% (7%)1 8% 8%
Spain (12%) 7% (1%) (12%) 4% (3%) (17%) 12% 4%
UK 5% 8% 2% 12% 7% 2% 4% 8% 2%
France N/A N/A N/A 12% 9% 1% 10% 12% 3%
Germany 14% 8% (1%) 8% 9% (0%) 10% 9% 0%
Poland 16% 13% 4% 33% 26% 17% 3% 34% 24%
Colombia 2% 11% 7% 26% 9% 5% 43% (3%) (8%)
Egypt (4%) (10%) (5%) (19%) (11%) (6%) (17%) (26%) (22%)
Philippines (11%) (2%) (8%) N/A N/A N/A N/A N/A N/A
1 On a like-to-like basis for the ongoing operations
23
|
|
3Q11 volume and price summary: Selected countries
Domestic gray cement Ready mix Aggregates
3Q11 vs. 3Q10 3Q11 vs. 3Q10 3Q11 vs. 3Q10
Prices Prices Prices Prices Prices Prices
Volumes Volumes Volumes
(USD) (LC) (USD) (LC) (USD) (LC)
Mexico (1%) 5% 3% 10% 7% 5% (0%) 15% 13%
U.S. 2% 0% 0% (3%)1 3% 3% (8%)1 11% 11%
Spain (27%) 9% 2% (31%) 10% 3% (25%) 10% 3%
UK (4%) 6% 2% (1%) 6% 3% (4%) 7% 4%
France N/A N/A N/A 1% 8% 1% 3% 10% 3%
Germany 4% 7% 0% 5% 6% (1%) 2% 10% 2%
Poland 3% 8% 6% 8% 25% 22% (9%) 18% 16%
Colombia 8% 13% 13% 32% 6% 7% 178% 18% 20%
Egypt (5%) (11%) (7%) (16%) (14%) (10%) (3%) (33%) (30%)
Philippines 0% (6%) (11%) N/A N/A N/A N/A N/A N/A
1 On a like-to-like basis for the ongoing operations
24
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Definitions
9M11 / 9M10: results for the nine months of the years 2011 and 2010, respectively. Cement: When providing cement volume variations, refers to domestic gray cement operations (starting in 2Q10, the base for reported cement volumes changed from total domestic cement including clinker to domestic gray cement).
LC: Local currency.
Like-to-like percentage variation (l-t-l % var): Percentage variations adjusted for investments/divestments and currency fluctuations.
Maintenance capital expenditures: Investments completed with the purpose of ensuring the company’s operational continuity. These includes replacement capital expenditures, which are projects required to change obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or company policies.
Operating EBITDA: Operating income plus depreciation and operating amortization. pp: percentage points.
Strategic capital expenditures: Investments completed with the purpose of increasing the company’s profitability. These includes growth capital expenditures, which are designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are designed to increase profitability by reducing costs.
25
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Contact information
Investor Relations
In the United States
+1 877 7CX NYSE
In Mexico
+52 81 8888 4292
ir@cemex.com
Stock Information
NYSE (ADS): CX
Mexican Stock Exchange: CEMEXCPO
Ratio of CEMEXCPO to CX:10 to 1
26