UPDATE 2-Mexico's Cemex sees big fall in Q4 results
(Recasts; adds quotes, cement volume details)
MONTERREY, Mexico, Dec 15 (Reuters) - Mexico's Cemex, the world's No. 3 cement maker, said on Monday it expects a sharp drop in fourth-quarter revenues and pre-tax earnings but is making progress on refinancing its huge debt load.
Cemex (CX.N)(CMXCPO.MX), which is facing a sharp slowdown in its top market, the United States, forecast earnings before interest, taxes, depreciation and amortization (EBITDA) of around $800 million in the fourth quarter, about 27 percent lower than the year-ago period.
The Monterrey-based company, which has operations in more than 50 countries, said the sharp fall was exacerbated by the recent loss of its Venezuela assets. Without that loss, EBITDA was likely down 14 percent versus the year-ago period.
Venezuela's President Hugo Chavez expropriated Cemex's operations in August as the socialist government seeks to control big industries in the nation's economy. Cemex and Venezuela have yet to agree on compensation.
Cemex sees its sales falling 23 percent to $4.45 billion in the fourth quarter, partly due to Venezuela. Without the Venezuela losses the drop would be 10 percent.
The company said it was making progress in restructuring its debt with banks by the end of January as it faces $6 billion in maturities due by the end of next year.
Cemex last year bought Australian rival Rinker, which has big U.S. operations, just as the U.S. housing market was collapsing.
Cemex has a net debt of $16.4 billion and despite a good track record in paying back debt, investors worried it is highly leveraged at a time of tight credit are dumping Cemex stock.
Cemex's U.S.-listed shares have lost two-thirds of their value this year.
A failed attempt to lengthen maturities on $418 million in commercial paper last week has made the debt talks all the more urgent, analysts say.
"We have obtained the necessary consent of the relevant bank lenders to amend, among other conditions, the leverage ratio covenant in our existing syndicated loan facilities," Rodrigo Trevino, Cemex's chief financial officer, said in a statement.
Coupled with the tough refinancing environment, Cemex is facing lower sales volumes across its markets, particularly in the United States.
The company expects its cement, ready-mix, and aggregates volumes to fall by 25 percent, 39 percent and 43 percent respectively during the fourth quarter, versus the same period last year.
"For the full year 2008, (U.S.) cement volumes are expected to decrease by about 14 percent, ready-mix volumes are expected to decrease by about 13 percent, and aggregates volumes are expected to decrease by about 3 percent versus the same period in 2007," Trevino said.
Cemex, which is cutting costs and jobs to make it through the global economic slowdown, said it was "cautiously optimistic" about a U.S. infrastructure stimulus plan that could increase cement demand when President-elect Barack Obama takes office next year. (Reporting Robin Emmott; Editing by Lincoln Feast)
