Cemex shares rallied on Thursday after the Mexican cement maker posted better-than-expected operating profit, which offsets a loss of sales due to bad weather in its largest market and a weaker peso.
Operating income in the second quarter was $665.9 million, according to a filing, above the average estimate of $615.2 million compiled by Bloomberg. The Monterrey, Mexico-based company said it Its EBITDA margin, a measure of profitability that excludes items such as taxes and interest, was the highest since 2016, boosted by higher prices.
The profitability update offset disappointing sales in Mexico and the United States, the two markets that generate the majority of the company’s sales. Cemex He said he faced climate challenges in the countries and experienced headwinds related to the depreciation of the peso. The company has also faced increased competition in markets such as the Middle East and Africa.
Second quarter revenue and net result of majority stake fell below expectations.
The company expects a low- to mid-single-digit percentage increase in EBITDA in 2024, unchanged from last quarter’s estimate. In Mexico, the incoming government’s agenda is considered “favorable” for the company, due to plans to increase housing by 1 million units and develop infrastructure nationwidesaid communications and investor relations executive Lucy Rodriguez on the earnings call.
At the beginning of this year, Cemex regained its investment grade credit rating as it works to reduce its debt loadActinver analyst Ramón Ortiz estimates that leverage will be 2 times net EBITDA at the end of the year and 1.8 times EBITDA at the end of 2025. In its statement, Cemex said that the cost of its debt will remain stable this year.