Mexico’s Cemex sees slight profit on price hikes, strong peso

By Kylie Madry

MEXICO CITY (Reuters) – Mexican cement maker Cemex on Thursday posted a slight rise in second-quarter net profit, on the back of double-digit price hikes and a strong peso.

Net profit came in at $272 million, up 2% from the year-ago quarter, Cemex said in a presentation, with revenue up 13% at $4.57 billion.

The increased revenue was dragged down by financial expenses and higher income taxes, the Mexican firm said.

Cemex holds around three-fourths of its debt in U.S. dollars, and the greenback has depreciated some 13% against the peso so far this year.

The company said it earned an extra $49.21 million on the exchange rate alone, compared to a hit of $29.57 million in the year-ago quarter. It also brought its total debt down 12% to $7.67 million.

Operating earnings before interest, taxes, depreciation and amortization (EBITDA), or core earnings, rose 34% to $961 million on growth in all four regions the company serves, as inflationary pressures on input costs began to cool.

2023 “is shaping up to be a very strong year for our company,” CEO Fernando Gonzalez said in a statement, adding Cemex is “getting very close” to recovering 2021 margins.

In the U.S, Cemex’s largest market in the quarter by sales, revenues climbed 10% year-on-year as price increases in all product categories compensated for a drop in cement and ready-mix volumes on poor weather and weak residential demand.

The U.S. will see price increases in the third quarter as well, Cemex said.

Higher prices also offset drop in volumes across product categories in other markets including Europe, Middle East, Africa and Asia.

Meanwhile, both sales and volumes grew in Mexico on the formal sector’s performance. Cement volumes edged up 1% year-over-year, “the first sign of demand recovery in two years,” Cemex said.

Cemex also said it saw a bump from its growth strategy, which includes bolt-on investments, or the acquisition of smaller companies meant to boost its value.