Cemex shares fall due to unforeseen losses
2023.02.13 14:17
Cemex shares fall due to unforeseen losses
By Ray Johnson
Budrigannews.com – Cemex, a manufacturer of cement in Mexico, reported an unexpected loss on Monday, citing significant one-time charges for the impairment of goodwill and fixed assets.
From a profit of $194.8 million in the fourth quarter of 2021, it plunged to a net loss of $99.1 million during the period. After the company implemented double-digit price increases, analysts had anticipated that profit would rise.
In mid-morning trading, Cemex shares on Mexico’s main stock exchange were down more than 3%.
Although overall volumes decreased, the company’s revenue increased by 8% to $3.87 billion thanks to robust sales growth in Mexico and the United States.
In a conference call with analysts, Chief Financial Officer Maher Al-Haffar stated that “the job is not done yet” and that Cemex will continue to raise prices in 2023.
Cemex recognized a goodwill impairment charge of $365 million, blaming the global high inflationary environment and rising interest rates. Property, machinery, and equipment suffered impairment losses totaling $77 million.
During the quarter, operating earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased by 2% to $630.46 million.
The operating EBITDA margin of Cemex was 16.3 percent, down from 18% in the previous quarter.
In a statement, Cemex Chief Executive Fernando Gonzalez stated, “The contraction was the lowest of the year.” There is growing evidence to suggest that actual margin recovery is taking place.”
Additionally, analysts at Citi stated that Cemex’s 2023 operating EBITDA projection “may imply further downside risk.”
However, it is anticipated that cement sales will decrease slightly throughout the year, and energy costs per tonne of cement produced will increase by approximately 10%.
Citi analysts deemed the company’s fixed-asset investment for the year to be “positive” at approximately $1.25 billion.
