© Reuters. FILE PHOTO: The logo of Mexican cement maker CEMEX is pictured at it’s plant in Monterrey, Mexico June 8, 2021. Picture taken June 8, 2021. REUTERS/Daniel Becerril/File Photo
By Kylie Madry
MEXICO CITY (Reuters) -Mexican cement-maker Cemex on Thursday reported a 75% slump in third-quarter profit, on a nearly five-fold rise in taxes and as hefty asset sales last year hurt the year-on-year earnings’ comparison.
Cemex’s net profit fell to $126 million, down from $494 million last year, the company said in a filing.
Most of the decline in profit reflected the sale of assets in Costa Rica, El Salvador and a partial stake sale in tech firm Neoris last year, it said.
Had it not been for these asset sales, third-quarter profit would have dipped 26% due to the higher taxes, which rose because of stronger revenue and the foreign-exchange effect on its U.S. dollar-denominated debt, Cemex said.
The Mexican peso appreciated around 14% against the dollar between September 2022 and September 2023. Cemex, which operates in the Americas, Europe, Africa, Asia and the Middle East, holds 75% of its debt in dollars.
Cemex added it expects to close the refinancing of a $1 billion loan and $2 billion revolving credit facility on Oct. 30, a move, previously mentioned by executives, aimed at boosting the company’s credit score from the BB+ rating held by Standard & Poor’s and Fitch.
“Investment grade is closer to reality, finally,” analysts at Santander (BME:) said in a note.
Shares in the firm were up more than 3% in early morning trading.
In Mexico, Cemex’s volumes rose double digits on demand from the formal sector, while in the United States, cement and ready-mix volumes shrank on weakness in the state of California, the company said.
Revenues for the cement-maker rose 16% in the third quarter to $4.57 billion as prices rose from a year earlier.
However, compared with the second quarter, prices largely hovered in the same range in local currency terms.
The Monterrey-based firm’s operating earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 40% in the quarter to $910 million on higher prices and easing input cost inflation, it said.
For the first time since price hikes were implemented, “quarterly EBITDA margin exceeded our goal of recovering 2021 margins,” Cemex said.
Cemex bumped up its EBITDA guidance for the year to $3.3 billion, which Santander analysts noted would be the highest since 2006.
It also revised down working capital investments to $100 million from $250 million.
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