North / South America
Cemex 2Q results to show improvement
Jul, 19 2012
- U.S., Mexico performance seen offseting continued weakness in Europe
- Tentative refinancing agreement should improve risk profile
- U.S. dollar gains expected to affect sales, keep bottom line in red
(MEXICO CITY) -- Mexico's Cemex SAB (CX, CEMEX.MX) is expected show improvement in its second-quarter results as recovering U.S. operations offset weakness in Europe, although a stronger U.S. dollar is likely to limit sales in dollar terms and contribute to a net loss for the period.
The Monterrey company, the world's third-largest cement maker, will probably report sales of $4.03 billion for the April-June quarter, according to the median estimate of six equities analysts consulted by Dow Jones, little changed from $4.09 billion in the year-ago period.
Cash flow measured by earnings before interest, taxes, depreciation and amortization, or Ebitda, probably increased to $669 million from $615 million, helped by improvement in the U.S. and by cost-cutting and energy savings. Cemex ran up Ebitda losses in the U.S. in 2010 and 2011, and investors are watching closely for a turnaround this year.
Cemex's net loss is expected to narrow to $155 million from a loss of $294 million in the second quarter of 2011, while several of the analysts predicted a small net profit for the most recent quarter.
Deutsche Bank said in a report that recovering sales volumes in the U.S., and a strong performance in Mexico and elsewhere in the Americas, likely offset weak economic conditions in northern Europe. "A stronger U.S. dollar should also have a negative impact on consolidated revenues as about 80% of Cemex's sales are generated in regions outside the U.S.," Deutsche Bank said.
Dollar strength in the quarter is also likely to generate exchange losses, according to several analysts.
Cemex's recovery from its 2008-2009 earnings debacle has been slower than expected, and its shares have languished as the company's heavy 2014 debt payment schedule approaches. Cemex shares recently traded at 8.98 pesos ($0.68) on the Mexican stock exchange. That was well above their multiyear low of MXN3.13 hit last October, although the price has failed to get back above the MXN10 peso level reached briefly in February.
The shares rebounded late last month when Cemex presented a tentative agreement to reschedule around $7 billion in 2014 debt maturities under a 2009 financing agreement with banks, which would essentially move payments due in February 2014 to February 2017.
Deutsche Bank said it anticipates a successful debt renegotiation benefiting the company's risk profile and that "the market should gradually refocus on Cemex's improving fundamentals."
Cemex plans to report its second-quarter results on Friday before the market opens.
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