|Yes, demand is strong and the prospect is bright:|
Mexico's Cemex sees Q1 sales up 51 pct on RMC buy
7:47 p.m. 03/16/2006
MEXICO CITY, March 16 (Reuters) - Mexico's Cemex, the world's No. 3 cement maker, said on Thursday it expects first quarter sales to rise 51 percent, boosted by its $5.8 billion acquisition last year of Britain's RMC Group.
Cemex (CX) sales for the period will come in higher than $3.9 billion. Buying RMC, the world's top ready mix concrete maker, doubled Cemex's sales overnight and gave the Mexican company business in established European markets.
Quarterly results for Cemex, which operates in more than 50 countries, are still skewed by the RMC purchase, the biggest ever by a Mexican company. Cemex started consolidating RMC onto its books from March 1 last year.
Cemex also said it expects earnings before interest, taxes, depreciation and amortization, known as EBITDA and a key indicator of financial health, to be about $800 million for the first quarter, up about 26 percent from the year-ago period.
"On a pro-forma basis and including the effect of the RMC consolidation for January and February 2005, net sales and EBITDA for this quarter are expected to increase 9 percent and 23 percent, respectively, in dollar terms," Cemex said.
Cemex said operating income, or EBIT, was about $550 million for the first quarter, up 25 percent. The company is due to report its first-quarter results in April.
Shares of Cemex rose 3.39 percent to 69.9 pesos on Thursday ahead of the company's first quarter guidance. Its American Depositary Receipt (CX) added 3.19 percent to $65.63.
"Our main markets continue to show strong operating performance, increasing our confidence that we will achieve our stated target EBITDA of $4 billion for this year," chief financial officer Rodrigo Trevino said.
Trevino said Cemex expected free cash flow, after maintenance capital expenditures, to exceed $2.5 billion for this year.
In its home market Mexico, Cemex expects cement and ready mix volumes to increase 7 percent and 30 percent respectively, from January-March 2005.
In the United States, now Cemex's biggest market by revenue, cement volumes are seen rising 15 percent in the first quarter. ready mix volumes are expected to soar 52 percent. With the RMC acquisition, Cemex added to its existing U.S. operations.
Cemex's unit in Spain sees cement volumes increasing 8 percent in the quarter and ready mix volumes up 35 percent.
In Britain, cement and ready mix volumes for the quarter are seen rising about 2 percent and 5 percent, Cemex said.