Bloomberg News

Cemex Posts Seventh Quarterly Loss as U.S. Construction Lags

July 22, 2011

(Updates with free cash flow in seventh paragraph.)

July 22 (Bloomberg) -- Cemex SAB, the largest cement maker in the Americas, reported a loss for a seventh straight quarter and wider than analysts’ expectations because of lagging U.S. housing and public-works construction.

The second-quarter loss totaled $294 million, or 28 cents per American depositary receipt, compared with a loss of $306 million, or 31 cents, a year earlier. Sales rose 8.7 percent to $4.1 billion, the Monterrey, Mexico-based company said in a statement today. Analysts predicted a loss of 6 cents per ADR, the average of seven estimates compiled by Bloomberg.

The U.S. was Cemex’s largest market by sales after it paid $14.2 billion for Rinker Group Ltd. in July 2007, just as the construction industry slipped into recession. After that, the U.S. became Cemex’s second market behind Mexico and operating cash flow has been negative in the U.S. for the last 11 quarters.

“The entire housing sector continues to be plagued, among other things, by a high level of distressed mortgages across most of the states in the U.S., and a large foreclosure inventory,” Vanessa Quiroga, an analyst with Credit Suisse AG in Mexico City, said in a report earlier this month.

One-time expenses totaling $202 million included severance payments and impairment on the value of assets, according to the statement.

Cash Flow

Earnings before interest, taxes, depreciation and amortization -- a measure of cash flow known as Ebitda -- fell 7.4 percent to $615 million from $664 million a year ago. In the U.S. Ebitda was a loss of $22.3 million compared with a gain of $16.6 million a year ago.

Free cash flow, or cash from operations after capital expenses, was negative for a second consecutive quarter. Cemex’s total debt plus its perpetual notes rose to $18.4 billion from $17.9 billion a year ago.

Sales in Mexico rose 4.9 percent to $968 million as cement shipments climbed 3 percent and prices in dollars rose 11 percent because of a stronger Mexican peso. In the U.S., sales fell 9.5 percent to $619 million because of a 10 percent decline in cement shipments.

--Editor: James Callan, John Lear

To contact the reporter on this story: Thomas Black in Monterrey at tblack@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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