Weak sales push Mexico's Cemex to wider Q1 loss
(Reuters) - Mexico's Cemex, one of the world's biggest cement companies, reported a wider first-quarter loss on Friday, hurt by a drop in cement sales that offset cost-cutting.
Cemex said weak sales, coupled with a stronger peso, set back turnaround efforts after a battering from costly acquisitions and the U.S. housing crisis.
Still, the company's (CMXCPO.MX)(CX.N) shares rose as much as 2 percent after initially falling, when executives on a conference call reassured analysts they are raising cement prices in many markets and that they are upbeat on infrastructure and housing projects in Mexico.
The Monterrey-based company said the loss grew to $281 million from $30 million a year earlier, and was wider than analysts' expectations of a $178 million loss, according to a Reuters survey.
Core profit, or earnings before interest, taxes, depreciation and amortization, fell 8 percent to $521 million, and was below expectations for $537 million.
Revenue fell 5 percent from the year-earlier period, also missing expectations, on weak sales in northern Europe and the Mediterranean as well as South America, Central America and the Caribbean.
Cemex got a boost from a derivative position tied to its share price that had a fair market value of $375 million in the first quarter this year, compared with a negative value in the same period last year.
Cemex shares rose more than 18 percent in the first quarter. The shares were up 1.5 percent at 14.00 pesos in morning trading.
The company expects a U.S. housing recovery that began at the end of last year to help sales in 2013, executives said.
Fernando Gonzalez, vice president for finance and administration, told analysts on a call that the company increased prices in some parts of the country in April.
Cemex expects its cement sales to increase by 1 percent globally in terms of volume this year, helped by growth in the United States, Gonzalez said.
DECREASE IN SALES COSTS
Cemex benefited from a slight decrease in sales costs as it trimmed expenses in the first quarter, excluding a pension fund item.
The cement maker has been digging out of deep debt obligations for the past few years after paying $16 billion to buy Australian peer Rinker just before the 2008 U.S. housing meltdown.
The company wrapped up a refinancing package in the fall that gave it much-needed room to push back looming debt payments for up to four years.
Cemex has sold off non-core assets to pay off debt. It raised about $1.1 billion in November by selling a bigger-than-expected stake in its Latam unit in an initial public offering in Colombia.
The company remains under pressure, reporting negative free cash flow of $510 million in the quarter, compared with negative $302 million a year earlier.
(Reporting by Elinor Comlay and Gabriela Lopez; Editing by Gerald E. McCormick, Jeffrey Benkoe and Marguerita Choy)
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