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UPDATE 5-Mexico's Cemex posts $1.5 bln quarterly loss on impairments

Economic IndicatorsOct 29, 2020 01:20
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(Adds details from earnings call)
By Laura Gottesdiener
MONTERREY, Mexico, Oct 28 (Reuters) - Mexican cement
producer Cemex CEMEXCPO.MX on Wednesday reported a
third-quarter net loss of $1.54 billion, hurt by impairments and
despite a rise in sales after pandemic-linked lockdowns hit the
second quarter.
The company, which operates in more than 50 countries, said
the loss was due to a $1.5 billion non-cash impairment of
goodwill and idle assets, and higher financial expenses.
It flagged the impairment earlier this month, which included
$1.02 billion in goodwill linked to its U.S. operations.
Despite the loss, Chief Executive Fernando Gonzalez said in
a statement he was "pleased with our performance in the third
quarter in which all regions participated in earnings recovery."
Third-quarter sales rose to $3.4 billion, up 3% from a year
earlier and a 17% advance on the second quarter.
The company said the goodwill impairment that spurred the
quarterly loss was driven by a "lack of visibility and high
uncertainty" which caused Cemex to change its cash flow
projections methodology in the United States to five from seven
years and reduce its long-term growth rate to 2% from 2.5%.
Cemex also recognized a $480 million impairment charge on
idle assets and permits mostly related to its U.S. operations.
In a call with investors, Gonzalez also said he expected
capital expenditure to total $750-$780 million this year.
Sales growth this quarter marked a rebound from
second-quarter declines across all of Cemex's markets except for
the United States, as the pandemic hampered construction
worldwide, including industry shutdowns in Colombia, Panama and
Trinidad and a two-month closure of a Cemex plant in the
Philippines.
It saw double-digit bagged-cement growth in Mexico and many
Central American and Caribbean countries, including Nicaragua,
Guatemala, El Salvador, Jamaica and the Dominican Republic.
Cemex said growth was spurred by high levels of remittances,
plus government programs for self construction, particularly in
Mexico, which saw a 14% year-on-year increase in sales.
Gonzalez said he expected 2021 mid-term elections in Mexico
to further stimulate sales.
In Europe, Middle East, Africa and Asia, the company
reported $1.2 billion in sales, up 2% on the year.
Its U.S. sales of $1 billion were up 1%. Gonzalez said
potential stimulus packages in the United States and Europe
could benefit future cement sales in the two markets.
Subsidiary Cemex Latam Holdings said in a filing to
Colombia's financial regulator its losses had deepened to $109
million in the third quarter, compared to a loss of $4 million
in the same period last year, due to a deterioration in assets.
EBITDA was, however, up 10% year-on-year to $51 million.

UPDATE 5-Mexico's Cemex posts $1.5 bln quarterly loss on impairments
 

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