UPDATE 2-Mexico's Cemex Q1 net tumbles 99 pct on lower sales

* Reports worse-than-expected $3 mln net profit

* Hit by weak peso and tumbling demand

* Profit crashes 99 pct from yr ago; Cemex posted loss in Q4

* Reiterates optimism on debt refinancing (Adds sales, currency details, background)

By Robin Emmott

MONTERREY, Mexico, April 28 (Reuters) - Net profit at Mexico's Cemex (CMXCPO.MX) (CX.N), the world's No. 3 cement producer, tumbled 99 percent to $3 million in the first quarter, hit by the global economic slump and a weak peso.

Seven analysts polled by Reuters had expected the company to post a net profit of $60 million in January-March, compared to a net profit of $470 million reported a year ago.

Although Cemex, which faces weak sales in its key U.S. and European markets, was barely in the black, Tuesday's results were an improvement from the $707 million net loss Cemex reported in October-December, hurt by a strong dollar.

The company, which faces $4.1 billion in debt maturities this year, said revenues fell 32 percent to $3.7 billion while earnings before interest, tax, depreciation and amortization (EBITDA) dropped 25 percent to $712 million.

Cemex was hurt by the weak Mexican peso, which fell to a 16-year low in March against the U.S. dollar as investors fretted about Mexico's recession-bound economy.

Mexico is Cemex's top market and the company reports in dollars and holds much of its debt in the U.S. currency.

Monterrey-based Cemex, which bought Australia's Rinker in 2007 just as the U.S. housing crisis surfaced, has been struggling to refinance $14.5 billion in bank debt due over the next three years.

Some investors worry Cemex could default on its debt as its U.S. and European cement sales volumes plummet, a bond sale flopped this year and planned asset sales have not materialized.

Cemex has grown from a small Mexican cement producer to operate in more than 50 countries and competes with France's Lafarge SA (LAFP.PA) and Switzerland's Holcim Ltd (HOLN.VX), but said its purchase of Rinker was badly timed.

Shares in Cemex fell 3 percent on Tuesday.

In one sign of concern for investors, Cemex's free cash flow in the first quarter fell 76 percent to $118 million, signaling it had less money to pay off debt.

Net debt at the end of the first quarter was $18 billion.

But Cemex's planning and finance chief Hector Medina reiterated the company's stance that refinancing with banks was going well.

"We are continuing to engage in constructive refinancing talks with our key lenders in an effort to more quickly achieve financial flexibility," he said.

Chief Executive Lorenzo Zambrano told reporters last week he expected the U.S. market would pick up from the first quarter of 2010 for Cemex, the top cement maker in the United States. [ID:nN23341257]

But for the time being, the data is bleak.

Cemex's operations in the U.S. reported net sales of $726 million in the first quarter of 2009, down 39 percent from a year ago. The company said EBITDA decreased 80 percent to $32 million." (Editing by Anshuman Daga)