4 Min Read
MEXICO CITY/MONTERREY (Reuters) - Mexico's Cemex, the giant cement company that has been struggling to turn around its debt-laden business since the U.S. housing crisis, said weak sales in Europe offset a pickup in its U.S. business and led it to report a wider-than-expected fourth-quarter loss.
Cemex (CMXCPO.MX) (CX.N) said that although revenue from its hard-hit U.S. unit increased 11 percent, cement sales in northern Europe and the Mediterranean region fell 8 percent and the company's total revenue was flat compared with the year-earlier quarter at $3.71 billion.
The Monterrey-based company's shares fell 3.8 percent to 13.28 pesos after it reported on Thursday a loss of $489 million in the fourth quarter, compared with $761 million a year earlier. Analysts on average expected a loss of $47 million, according to a Reuters survey.
The company's sales in Mexico, where it dominates the cement market, were also a little lower than expected, analysts noted. That may be a result of last year's presidential election and change in administration that has slowed infrastructure projects.
Still, Cemex reported a pickup in operating income and core profit, or earnings before interest, taxes, depreciation and amortization (EBITDA), that confirmed the company was turning around, analysts said.
"This actually looks like a pretty solid quarter even though it was a bit of a miss," said Todd Vencil, an analyst at Sterne Agee in Richmond, Virginia.
Cemex's shares were up 8.7 percent this year through Wednesday, fueled by expectations of a U.S. construction recovery.
Vencil, who spoke before markets opened, said investors may have been getting a little ahead of themselves. "If Cemex ends up being down today I think it's going to be due more to overheated expectations than the reality of the quarter."
Cemex said EBITDA increased 13 percent to $611 million in the quarter from $540 million in the fourth quarter of 2011.
The company also reported a higher quarterly operating profit of $285 million, up 26 percent from $227 million in the year-ago quarter, but below analysts' expectations of $299 million, according to a Reuters survey.
Cemex expects to sell between 1 and 3 percent more cement in Mexico, the United States, Latin America and Asia in 2013. Those increased sales volumes "will more than offset the expected weaker Northern Europe and Mediterranean regions," finance executive Fernando Gonzalez told analysts on a call.
The company also expects to invest about $700 million on capital expenditures this year, with most of that money going toward maintenance and $175 million for "strategic capex," Gonzalez said.
"The fact is that in North America ... we seem to be solidly in the early phases of a good construction recovery," Vencil said. "Europe and Cemex's Mediterranean region is still challenged, but hopefully that goes in the same direction before too long."
Cemex was hurt by the 2008 U.S. housing meltdown shortly after paying out $16 billion to buy Australian peer Rinker. It has been digging out of deep debt obligations for the past three years.
It wrapped up a refinancing package in the autumn that gave it much-needed room to push back looming debt payments for up to four years.
Cemex has also used non-core asset sales in the past 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 IPO in Colombia.
Reporting by Elinor Comlay and Gabriela Lopez; Editing by Maureen Bavdek and Phil Berlowitz