Cemex LatAm Reports Zero Profit for 2Q 2022

Colombia-based Cemex LatAm announced July 28 that its second-quarter (2Q) 2022 operations produced zero profits, down from a modest US$16,000 net profit in 2Q 2021.

Consolidated net sales rose 11% year-on-year on a comparable basis for the ongoing operations once including foreign exchange fluctuations, according to the company. “Higher cement prices and ready-mix volumes were the main drivers of the improvement,” according to Cemex.

Corporate-wide cost-of-sales as a percentage of net sales increased by 7.8 percentage points (pp), from 60.2% in 2Q 2021 to 68% in 2Q 2022. “The increase was primarily due to higher variable costs, mainly in kiln fuel,” according to Cemex.

Operating expenses as a percentage of net sales declined by 2.7pp during the latest quarter, from 26% in 2Q 2021 to 23.4% in 2Q 2022.

Operating earnings before interest, taxes, depreciation and amortization (EBITDA) during the latest quarter declined by 20% on a comparable basis. “Thee decline was mainly due to higher operating costs, despite higher sales,” according to Cemex.

Operating EBITDA margin during 2Q 2022 decreased by 6.1pp year-on-year. “The positive effect from higher cement prices and ready-mix volumes was offset by higher variable costs and a negative product-mix effect,” according to the company.

“In Colombia, our domestic gray cement volumes declined by 6%, while our ready-mix volumes increased by 33%, during the second quarter on a year-over-year basis,” according to Cemex.

“Our cement and ready-mix prices improved by 8% and 2%, respectively, on a year-over-year basis in local-currency terms. The improvement in cement pricing was driven by our price increases in the distribution segment, implemented in December 2021 and April 2022.

“In the ready-mix business, our volume growth during the quarter was supported by increased market demand in the formal sector, and our recent investments to increase the ready-mix footprint mainly in the metro areas of Bogota and Cali,” the company added.

In Panama, domestic gray cement and ready-mix volumes increased by 6% and 25%, respectively, year-over-year. “Volume growth was driven primarily by increased activity in the infrastructure sector, mainly in the third line of the Metro. Despite the improvement, industry volumes are still below pre pandemic levels,” according to Cemex.

Panama cement prices “during the quarter improved by 1% on a sequential basis, stopping the downward trend observed since 2019. During the quarter, our cement plant exported more than 65,000 tons of cement and clinker to nearby markets with supply shortages.”

In the “Rest of Cemex LatAm” region including Guatemala and Nicaragua, “domestic gray cement and ready-mix volumes declined by 6% and 37%, respectively, year-over-year,” according to the company.

“In Guatemala, our domestic gray cement volumes declined by 12% on a year-over-year basis. Our cement volumes declined mainly due to heavy rains during May and June, as well as to our pricing strategy.

“In Nicaragua, our domestic gray cement volumes remained stable year-over-year. After several quarters of cement volume growth in the infrastructure sector, we observed a slight decline during the latest quarter,” the company added.