Cemex: Slowing Sales in Q4, But Cash Flow Remains Constant

Mar.27.09 | About: Cemex, S.A.B. (CX)

The fourth quarter results for Mexican Cemex (NYSE:CX) showed a 23% decline in Net Sales from 4Q'07, while Majority Net Income was down strongly to a loss of US$707 mln, due to lower Operating Income, loss on financial instruments and impairment expenses.

Under the year as a whole, Majority Interest Net Income fell to US$203mln, a 92% decline from US$2.391 mln in 2007. The 2008 result equals US$0.27 per ADR.

While Sales, Gross Profit, S&A Expenses held relatively stable, Operating Income was down 16%, to US$2.487 mln. The company also reported US$1.917 mln in Other Expenses, which left the real Operating Income at US$569.7 mln. This was a significant decline from US$2.671 mln in 2007.

With respect to the company's Impairment Losses of US$1.500 mln in 4Q, approximately US$1.300 mln related to impairment of Goodwill, US$108 mln related to trademark related intangibles, while US$100 mln related to impairment of property, machinery and equipment. There was also a US$61 mln write-off of goodwill associated with operations in Venezuela.

Cemex' balance sheet as of December 2008 showed US$11.12 bln in Current Liabilities, US$11.8 bln in Long-term Liabilities, and US$17.16 bln in Total Equity. Net Debt was US$17.91 bln, representing an increase of US$1.515 mln from 3Q'08. The increase included the conversion of a US$1.050 mln perpetual loan facility with a group of banks that had received equity treatment under Mexican financial reporting standards into a term loan maturing in 2011.

Net debt/Equity ratio was 4.0 at the end of 2008, compared to 3.4 in 4Q'07. Interest Coverage reached 4.9 at the end of the year, from 5.7 a year earlier.

Cemex' ADRs have a twelve-month negative performance of -75.83%. The current price of $6.47 per ADR reflects a P/E of 4.5 and a Market Cap of US$5.03 bln.

The latest financial statements for Cemex can be found here.

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