CEMEX Reports Losses – Analyst Blog

CEMEX S.A.B de C.V.’s (CX) first quarter net loss for fiscal year 2010 was 36 cents per share from 8 cents in the first quarter of 2009. However, the Zacks Consensus Estimate was a loss per share of 19 cents. Net loss was $341 million versus a loss of $61 million in the year-ago quarter based on lower operating income, higher financial expenses, higher other expenses, net, and a tax expense.

 

During the first quarter of 2010, net sales decreased to $3,043 million, representing a decrease of 10% compared with the first quarter of 2009. The decline in sales is the result of lower volumes in Spain, the U.S and Mexico, and lower prices mainly from U.S. and Spanish operations.

 

Cost of sales as a percentage of net sales increased 170 basis points to 73.1% from 71.4% during the first quarter of 2009. Selling, general, and administrative (SG&A) expenses as a percentage of net sales grew 230 basis points to 22.1%. The increase in expenses is mainly the result of lower economies of scale due to lower volumes, especially in the U.S, Spain, and Mexico, besides higher transportation costs.

 

EBITDA dropped 23% year over year to $515 million based on lower contributions from the U.S., Spanish and Mexican operations. EBITDA margin dipped 280 basis points from 19.7% in the first quarter of 2009 to 16.9% in the reported quarter.

 

Net debt at the end of the first quarter was $15,005 million, representing a decrease of $48 million from the previous quarter.

 

Although CEMEX is making genuine efforts to reduce net debt, continued weak cement volumes in Spain and the U.S. remain a problem. Moreover, the overall economic situation is still uncertain.