Cemex’s profit in Mexico rises slightly due to price increases and a strong peso.
Mexican Cement Maker Cemex Reports Slight Rise in Q2 Net Profit
By Kylie Madry
MEXICO CITY (Reuters) – Mexican cement maker Cemex has announced a modest increase in second-quarter net profit, driven by double-digit price hikes and a strong peso.
The company reported a net profit of $272 million, a 2% increase compared to the previous year. Revenue also saw a significant rise of 13% to reach $4.57 billion. However, the growth in revenue was partially offset by higher financial expenses and income taxes.
Cemex, which holds a majority of its debt in U.S. dollars, benefited from the depreciation of the greenback against the peso, earning an additional $49.21 million solely from the exchange rate. This is in contrast to a loss of $29.57 million in the same quarter last year. The company also managed to reduce its total debt by 12% to $7.67 million.
Operating earnings before interest, taxes, depreciation, and amortization (EBITDA), or core earnings, experienced a significant boost of 34% to reach $961 million. This growth was driven by positive performance across all four regions where the company operates, as inflationary pressures on input costs began to ease.
CEO Fernando Gonzalez expressed optimism, stating that Cemex is “getting very close” to recovering its 2021 margins.
In the U.S., Cemex’s largest market, revenues increased by 10% year-on-year, compensating for a decline in cement and ready-mix volumes due to adverse weather conditions and weak residential demand. The company expects further price increases in the third quarter.
Although volumes decreased in other markets, including Europe, the Middle East, Africa, and Asia, higher prices helped offset the decline.
In Mexico, sales and volumes grew thanks to the performance of the formal sector. Cement volumes saw a slight increase of 1% compared to the previous year, signaling the first signs of demand recovery in two years, according to Cemex.
The company forecasts an EBITDA of approximately $3.25 billion and anticipates a 10% rise in energy costs per ton of cement produced.
(Reporting by Kylie Madry and Natalia Siniawski; Editing by Varun H K)
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