Mexico’s Cemex Q3 profit slides on year-ago asset sales and as taxes bite

By Kylie Madry

MEXICO CITY (Reuters) -Mexican cement-maker Cemex on Thursday reported a 75% slump in third-quarter profit, on a nearly five-fold rise in taxes and as hefty asset sales last year hurt the year-on-year earnings’ comparison.

Cemex’s net profit fell to $126 million, down from $494 million last year, the company said in a filing.

Most of the decline in profit came from the sale of assets in Costa Rica, El Salvador and a partial stake sale in tech firm Neoris last year, it said.

Had it not been for these asset sales, third-quarter profit would have dipped 26%.

Taxes rose because of stronger revenue and the foreign-exchange effect on its U.S. dollar-denominated debt, Cemex said.

The Mexican peso appreciated around 14% against the dollar between September 2022 and September 2023.

Cemex, which operates in the Americas, Europe, Africa, Asia and the Middle East, holds 75% of its debt in dollars.

The firm’s overall debt decreased 8% in the third quarter.

Cemex expects to close the refinancing of a $1 billion loan and $2 billion revolving credit facility on Oct. 30.

In Mexico, Cemex’s volumes rose double digits on demand from the formal sector, while in the United States, cement and ready-mix volumes shrank on weakness in the state of California, the company said.

Revenues for the cement-maker rose 16% in the third quarter to $4.57 billion as prices rose from a year earlier.

However, compared with the second quarter, prices largely hovered in the same range in local currency terms.

The Monterrey-based firm’s operating earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 40% in the quarter to $910 million on higher prices and easing input cost inflation, it said.

For the first time since price hikes were implemented in 2021, “quarterly EBITDA margin exceeded our goal of recovering 2021 margins,” Cemex said.

Cemex revised their guidance for EBITDA slightly up to around $3.3 billion from around $3.25 billion but revised down investment in working capital to $100 million from $250 million, the company said in a presentation.