Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cemex SAB de CV (CX, Financial) achieved its long-running goal of recovering its investment-grade rating, providing a foundation for future growth strategies.
- The company announced a progressive dividend program and a $500 million share buyback program, indicating a commitment to shareholder returns.
- Cemex SAB de CV (CX) significantly rebalanced its portfolio towards developed markets, with 90% of EBITDA now generated in the US, Europe, and Mexico.
- The company reported a record net income of $939 million for the year, driven by strategic divestments and operational efficiencies.
- Cemex SAB de CV (CX) made substantial progress in decarbonization, reducing Scope 1 and Scope 2 CO2 emissions by 15% and 17% respectively, compared to 2020.
Negative Points
- The company faces limited visibility on the 2025 outlook in Mexico due to a challenging comparable base, FX headwinds, and a new administration.
- Cemex SAB de CV (CX) experienced volume declines in several regions, including the US and Europe, due to adverse weather conditions and market dynamics.
- The depreciation of the Mexican peso resulted in a negative EBITDA effect of $48 million in the fourth quarter and $52 million for the full year.
- The company anticipates FX rates to be a headwind, particularly in Mexico and Europe, impacting financial performance in the first half of 2025.
- Cemex SAB de CV (CX) is guiding to a flattish EBITDA performance for 2025, incorporating $150 million in savings from Project Cutting Edge but facing peso headwinds.
Q & A Highlights
Q: Can you elaborate on Cemex's capital allocation priorities for 2025, particularly regarding strategic CapEx, dividends, and share buybacks?
A: Maher Al-Haffar, CFO, explained that Cemex is focusing on increasing free cash flow generation, with a target of $500 million for 2025. This year will likely see peak strategic CapEx spending, with a shift towards small and medium M&A activities. The company aims to reduce leverage and interest expenses, which are currently higher than peers. Fernando Gonzalez, CEO, added that Cemex is transitioning from growth CapEx to include more M&A, while maintaining a progressive dividend policy.
Q: Could you provide more details on Cemex's pricing strategy, especially in the US, Europe, and Mexico?
A: Maher Al-Haffar, CFO, stated that Cemex's pricing strategy remains focused on outpacing input cost inflation. In the US, mid-single-digit price increases were achieved in most markets, except Texas, due to weather disruptions. In Mexico, double-digit price increases were announced across sectors. The strategy aims to maintain or improve margins despite varying local market dynamics.
Q: How does Cemex plan to handle the potential impact of tariffs on Mexican exports to the US?
A: Louisa Page Rodriguez, Chief Communications Officer, noted that Cemex plans to reduce Mexican exports to the US from 5% to about 2.5% of total volumes, regardless of potential tariffs. The company believes tariffs could positively impact pricing if applied broadly, but would be neutral if limited to specific origins.
Q: What is the outlook for Cemex's aggregates business in the US, and why is there an expectation of lower volumes in 2025?
A: Louisa Page Rodriguez explained that some quarries in the US are reaching end of life, leading to expected lower aggregates volumes. Cemex is actively seeking new opportunities to replenish these resources as part of its strategy to boost aggregates in the US.
Q: What are Cemex's views on its current market valuation and steps to improve it?
A: Maher Al-Haffar expressed disappointment with Cemex's current valuation, attributing it to concerns about Mexico's economic outlook and currency volatility. He highlighted ongoing deleveraging efforts and potential for improved interest expense management. The company aims to demonstrate resilience and growth potential, which should eventually lead to a re-rating of its valuation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
