November 27, 2012 / 4:45 PM / 5 years ago

UPDATE 3-Cemex sees cement demand rising as U.S. market rebounds

* U.S. housing starts seen rising 16 pct in 2013

* Residential demand for cement to rise 14 pct

* Cement price to rise $8 per tonne in January and July

By Cyntia Barrera and Gabriela Lopez

MEXICO CITY, Nov 27 (Reuters) - Mexico’s top cement maker, Cemex, expects stronger results at its U.S. operations between 2013 and 2016, suggesting the recovery of one of its top markets is under way after nearly four years of struggle.

Karl Watson, president of Cemex USA, told analysts during a presentation on Tuesday the company expects U.S. housing starts to increase 16 percent next year, reaching 873,000. The company forecast U.S. residential sector cement demand will increase by 14 percent in 2013.

One of the world’s biggest cement makers, Cemex was hit hard by the collapse of the U.S. housing market soon after the company paid about $16 billion to buy Australian peer Rinker.

It recently refinanced a portion of its debt, gaining time to get back on its feet.

Watson said U.S. annual cement sales are now about $3 billion. The company says it might generate U.S. earnings before interest, taxes, depreciation and amortization (EBITDA) of about $1.206 billion by 2016.

And in four years, Cemex might be producing 16 million tonnes of cement in the United States as sales reach $5.4 billion, the company’s management added.

Analysts at the San Antonio, Texas, meeting voiced concern about the so-called fiscal cliff, a combination of government spending cuts and tax increases set to take effect in early 2013 that might tip the U.S. economy back into recession.

“We are heading up. People are investing, signing contracts, there’s real momentum ... We don’t see our business falling off a cliff,” Watson said.

The company, which has presence in more than 50 countries, will raise prices in the U.S. market by more than $8 per tonne in January and July of next year, Watson said.


Monterrey-based Cemex has used non-core asset sales in the past to pay off debt. But with financial pressure cooling after the refinancing of $6.7 billion of debt a few weeks ago, Cemex will not be forced to unload any key assets in the near future.

In the United States, the company does plan to sell about $71 million worth of assets this year and a similar amount in 2013.

Cemex shares closed down 0.76 percent at 11.71 pesos on Tuesday, while its New York-traded stock slipped 1.4 percent to $8.94.

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