Magazine article Global Finance

Cemex Chips Away Debt, Polishes Expansion Plans

Magazine article Global Finance

Cemex Chips Away Debt, Polishes Expansion Plans

Article excerpt

Cemex, the Mexican cement producer with a growing global presence, will achieve its net debt-- to-earnings-ratio target of 2.7 in the current quarter, three months earlier than forecast, says Rodrigo Trevino, chief financial officer. "We plan to use half of our free cash flow in the second half to reduce net debt, bringing the ratio down to 2.5 by the end of this year," Trevino says.

"Debt reduction is a priority for us because we require financial flexibility in an industry that is undergoing consolidation," he says. "This will provide us with the opportunity to add growth beyond organic growth.We also need our shares to be fairly valued."

Cemex, one of the three largest cement producers in the world, has operations in 30 countries and is the world's largest trader of cement. Its expansion plans focus on developing countries, where margins are higher and demographics are favorable."The developing world is experiencing faster growth, and there are more young people who will be reaching the age where they will want to build their own homes," Trevino says.

So why did Cemex last year purchase Houston-- based Southdown, the second-largest cement company in the United States? "We need a solid platform in the United States and access to capital in order to invest in the developing world," Trevino says. "The US is looking great for homebuilders, and more than 50% of our income there will come from infrastructure and public works, which are totally insensitive to the economy and even counter-cyclical. …

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