July 25, 2019 / 11:52 AM / 5 months ago

Mexico's Cemex quarterly sales dip, sending shares lower

(Reuters) - Mexican cement maker Cemex SAB de CV CMXCPO.MX reported a 3% fall in quarterly sales amid a drop in volumes in all its markets except the United States, sending the company’s shares lower on Thursday.

FILE PHOTO: The logo of Mexican cement maker CEMEX is pictured at a cement plant in Monterrey, Mexico February 4, 2018. REUTERS/Daniel Becerril

The global economic climate took a toll on Cemex’s results, Chief Executive Fernando Gonzalez said in a statement.

“Weaker-than-expected industrial activity and continued trade conflicts have resulted in lower investment in several of our markets,” he said. “Mexico in particular has been affected by these factors, which led to lower-than-expected volumes.”

The lower volumes were partly offset by higher prices across the board, Cemex said.

Shares of Cemex slipped more than 3% on the report.

Jaime Muguiro, Cemex’s president of South America, Central America and the Caribbean, said cement demand trends remained positive in Colombia, but it was not enough to offset increases in coal, electricity and distribution costs in Colombia, and weaker markets across Central America.

In Cemex’s home market of Mexico, net sales sank 13% from a year earlier. Cemex said the country’s infrastructure market has been influenced by “the termination of important projects last year and a slow start in the execution of this year’s budget.”

Net sales climbed 4% in the United States on strong demand for infrastructure, driven by spending on roads in certain states.

Cemex lowered its forecasts for consolidated sales volumes of cement and concrete for 2019, Maher Al-Haffar, executive vice president of investor relations, said during a call with analysts.

Monterrey-based Cemex, which operates in more than 50 countries, has been waging a campaign to cut costs and divest to regain its investment-grade rating.

In May, the company signed a final agreement to divest assets in Germany, saying it would use the proceeds for debt reduction and general corporate purchases.

The company’s controlling interest net income fell 58.7% to $155 million in the second quarter from $376 million a year earlier.

Total net sales fell 3% from a year ago to $3.5 billion.

Cemex’s regional subsidiary Cemex Latam Holdings CLH.CN said in filings to Colombia’s financial regulator it had a net loss of $4 million in the second quarter as sales slumped.

Its net sales dropped 11% in dollar terms between April and June, Cemex Latam said, to $249 million.

Reporting by Sanjana Shivdas in Bengaluru; additional reporting by Julia Love in Mexico City and Nelson Bocanegra in Bogota; Editing by Maju Samuel and Bernadette Baum

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