Cemex LatAm Full-Year 2019 Profits Fall Sharply, but Colombia Relatively Positive

Colombia-based cement/concrete producer Cemex LatAm Holdings revealed in a February 12 filing with Colombia’s Superfinanciera oversight agency that its full-year 2019 net profits plummeted to US$4 million, from US$63 million in 2018.

For fourth quarter (4Q) 2019, the company posted a net loss of US$3 million, compared to a 4Q 2018 net profit of US$10 million.

Sales for full-year 2019 likewise declined 11% year-on-year and 9% quarter-on-quarter, according to Cemex LatAm.

Results in Colombia generally improved, compared to company operations elsewhere in Latin America.

“In Colombia, our net sales and operating [cash] flow improved by 7% and 3%, respectively, in terms of local currency throughout the year 2019,” according to Cemex.

Cement prices in Colombia rose by 11% from December 2018 to December 2019 in terms of Colombian pesos, while sales volumes improved by 9% during 2019.

As for the current outlook on expected sales volumes in Colombia, Cemex estimates that 2020 cement volumes will decline by 4% to 6%, but concrete volumes should rise by 3% to 5%.

In the Colombia residential sector, “we estimate that national cement shipments to this sector increased by a low digits during 4Q 2019 and the full year, compared to the same periods last year,” according to Cemex.

“Cement volumes for the self-construction segment [in Colombia] improved during 2019, driven by economic recovery and remittances [of U.S. dollars from Colombians working overseas].

“In [Colombia’s] social housing segment, indicators such as permits, launches and sales improved in double digits during the last six months.”

As for Colombia’s infrastructure sector, “this was the sector with the best performance during 2019, increasing in double digits. We expect the national cement/concrete demand for the fourth generation [‘4G’ highway construction program] to increase more than 50% in 2020.

“Our [2019] volumes for this sector were supported by 4G projects, as well as projects in Bogotá such as the Salitre water treatment plant and the CETIC Hospital, among other projects throughout the country,” Cemex added.

Commenting on the over-all results, Cemex LatAm general director Jesús González stated that the company is “satisfied with our results in Colombia.”

“However, our consolidated results were affected by the depreciation of the Colombian peso against the U.S. dollar and much weaker markets in Panama, Costa Rica and Nicaragua. To respond to this challenge — and as part of our ‘stronger Cemex’ plan in 2019 — we achieved recurring savings of US$20 million and dedicated our free cash flow to reduce financial debt.

“During 2019, our free cash flow improved by 68%, reaching US$93 million and reducing our net debt by US$92 million dollars, or 11%.

“Additionally, during December we refinanced loans with maturity in 2020. Now, our debt maturity profile is more manageable, and we have no significant debt maturities until December 2022.”

Beyond Colombia, Cemex LatAm’s corporate-wide 4Q 2019 volumes of gray cement, concrete and aggregates decreased by 3%, 13% and 10%, respectively, compared to 4Q 2018.

In Panama, 4Q 2019 cash flow dropped by 23%, to US$10 million. Net 4Q sales likewise fell 27%, to US$38 million, according to the company.

In Costa Rica, 4Q 2019 cash flow fell 27%, to US$7 million, while net sales fell 20%, to US$22 million.

In the rest of its operating areas (Nicaragua, El Salvador and Guatemala), cash flow fell 25% year-on- year in 4Q 2019, to US$14 million, while 4Q 2019 net sales declined 11% year-on-year, to US$52 million.