* Q2 net loss narrows but misses analysts' expectations
* U.S. operations remain a concern
* Says will meet debt obligations through end 2013
* Stock drops in Mexico, New York
(Adds analyst and officer comments, stock fall)
By Gabriela Lopez and Cyntia Barrera Diaz
MONTERREY/MEXICO CITY, Mexico, July 22 Mexican
cement maker Cemex posted a smaller second-quarter loss but
missed analysts' estimates, hurt by weak U.S. demand and
restructuring and severance expenses.
Cemex (CX.N) (CMXCPO.MX) on Friday reported a net loss of
$294 million for the April-June period, much worse than
analysts' expectations for a loss of $64 million, according to
a Reuters poll. [ID:nN1E76I0KX]
The company lost $306 million in the 2010 second quarter.
Its shares were down 4.6 percent to 8.69 pesos in Mexico,
while its New York-traded shares dropped 5.1 percent to $7.44.
Second-quarter revenue rose 9 percent to $4.1 billion, in
line with forecasts, driven by higher volumes in Northern
Europe, Germany in particular.
But Cemex's sales in the United States dropped 9 percent as
domestic gray, ready-mix and aggregates volumes decreased.
"Even in a seasonally strong quarter, the weakness of the
U.S. construction sector has not allowed (Cemex) to generate a
level of operation to reach at least break-even," said Banorte
analyst Carlos Hermosillo.
Flooding in the U.S. Midwest, the restructuring of Cemex's
Arizona business and heavy rains in California in June dented
volumes in the quarter.
Weak employment in the United States, tight credit and high
inventories hurt the residential sector.
"Uncertainty surrounding the Federal Highway Program
continues to affect the performance from the infrastructure
sector," Cemex added.
The company's second-quarter earnings before interest, tax,
depreciation and amortization, or EBITDA, totaled $615 million,
down 7 percent.
Monterrey-based Cemex spent $202 million in the quarter
related to its restructuring and severance payments. It cut its
workforce worldwide by 6 percent as part of its
Cemex said it ended June with a negative free cash flow of
$16 million. But it assured analysts during a conference call
on Friday that it did not see a significant change this year in
its cost of debt.
Last year it convinced bankers to relax some of the
covenants of the debt refinancing deal that saved it from
defaulting on $15 billion of debt in August 2009.
Fernando Gonzalez, executive vice president of finance and
administration, said on a conference call with reporters that
Cemex has all the funds it needs to meet its debt obligations
through December 2013.
"We are in a comfortable position," he said, adding that
the company did not expect to tap debt markets at least for the
rest of the year.
With operations in more than 50 countries, Cemex's ability
to generate cash is key. The company has had to refinance its
debt on several occasions to prevent interest payments from
Cemex, once famed for buying rivals in developed countries,
ran into deep trouble in 2007 when it bought Sydney-based
Rinker just before the U.S. housing market collapsed and
ensuing global recession erupted.
(Reporting by Gabriela Lopez and Cyntia Barrera Diaz; Editing
by Derek Caney and John Wallace)