Strategies & Market Trends : Cemex
CX 6.6800.0%Jul 19 8:04 PM EDTNews

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From: - with a K1/13/2006 8:25:11 PM
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CX to raise local prices. I think the most interesting thing about this story is at the end. How will that $200 mil be disbursed and spent? Anyone know?

UPDATE 3-Mexico's Cemex hikes local cement prices 6 pct
Fri Jan 13, 2006 07:23 PM ET

MEXICO CITY, Jan 13 (Reuters) - Mexico's Cemex (CX.N: Quote, Profile, Research) (CEMEXCPO.MX: Quote, Profile, Research) increased domestic cement prices on Friday by an average 6 percent to offset higher production and power costs, a company executive said.

Revenues for Cemex, the world's No. 3 cement maker and the top producer in Mexico and the United States, are heavily influenced by price increases.

Sales in Mexico currently represent 20 percent of total sales which were $4.3 billion in the third quarter. Mexican sales had a higher weighting prior to last year's acquisition of Britain's ready mix concrete maker RMC for $5.8 billion.

Cemex, with operations in more than 50 nations, announced the price increase to clients on Friday, the executive said.

"In the last two years, accumulated inflation has been 8.7 percent while the price of cement has only increased 3.4 percent in the same period," the executive told Reuters.

"The increase is around 6 percent, depending on the region. It is an attempt to compensate for the rise in production costs, among them fuel oil, gas, electricity and gasoline, which have jumped 35.6 percent in the last two years," he said.

The executive said cement prices only increased 1.3 percent in 2005. "The increase was less than half inflation in 2005 which came in at 3.3 percent," he said.

Cemex had tried to push through a domestic cement price increase averaging 5 percent at the start of 2005 but had to make discounts over the year, as demand waned and customers sought rivals, which led to the final 1.3 percent annual hike.

Cemex's local shares dropped 0.33 percent on Friday to 66.43 pesos after hitting an all-time high this week on news that Mexico and Washington were close to bringing an end to a 15-year dispute over U.S. anti-dumping duties on Mexican cement.

Curtailing the dispute will triple Mexican cement exports to the United States, Mexican government sources say, and could also mean a cash windfall for Cemex.

More than $200 million in anti-dumping duty revenues have piled up while the dispute has been in litigation and those funds could be handed out to Mexican and U.S. industries as part of any deal.
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