US$ M - Cemex

February 13, 2014
Juan Romero
President - CEMEX Mexico
Legal Disclaimer
This presentation contains certain forward-looking statements and information relating to CEMEX, S.A.B. de C.V. and its
subsidiaries (collectively, “CEMEX”) that are based on its knowledge of present facts, expectations and projections,
circumstances and assumptions about future events. Many factors could cause the actual results, performance or
achievements of CEMEX to be materially different from any future results, performance or achievements that may be
expressed or implied by such forward-looking statements, including, among others, changes in general economic, political,
governmental, and business conditions globally and in the countries in which CEMEX operates, CEMEX’s ability to comply
with the terms and obligations of the facilities agreement entered into with major creditors and other debt agreements,
CEMEX’s ability to achieve anticipated cost savings, changes in interest rates, changes in inflation rates, changes in exchange
rates, the cyclical activity of the construction sector generally, changes in cement demand and prices, CEMEX’s ability to
benefit from government economic stimulus plans, changes in raw material and energy prices, changes in business strategy,
changes in the prevailing regulatory framework, natural disasters and other unforeseen events and various other factors.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated, believed, estimated, expected or targeted. Forwardlooking statements are made as of the date hereof, and CEMEX does not intend, nor is it obligated, to update these forwardlooking statements, whether as a result of new information, future events or otherwise. Unless the context indicates
otherwise, all references to pricing initiatives, price increases or decreases, refer to our prices for our products.
UNLESS OTHERWISE NOTED, ALL FIGURES ARE PRESENTED IN DOLLARS,
BASED ON INTERNATIONAL FINANCIAL REPORTING STANDARDS, AS APPLICABLE.
Copyright CEMEX, S.A.B. de C.V. and its subsidiaries.
2
2013 results driven by historic drop in volumes
Sales and EBITDA 1
(US$ M)
EBITDA Margin
3,376
3,458
1,196
1,253
1,021
2011
2012
2013
35.4%
36.2%
32.0%
(1) Using constant exchange rate of 12.85 Mexican Pesos per U.S. dollar
3,190
3
Aggressively right-sized our business
Sales 1
Headcount
(US$ M)
(Thousands)
-8%
3,376
14.6
3,458
-9%
13.4
3,190
12.2
2011
2012
2013
2011
2012
2013
Despite lower sales, our labor productivity kept growing
(1) Using constant exchange rate of 12.85 Mexican Pesos per U.S. dollar
4
Mid single-digit growth outlook for 2014
Cement volume by sector
and guidance for 2014 1
Industrial & Commercial
Low single-digit growth
Infrastructure
Double-digit growth
22%
25%
16%
38%
Formal Residential
Low single-digit decline
Informal Construction
Low single-digit growth
2014 volumes expected to grow in the mid-single digits
5
Significant increase in government’s
investment budget
Federal investment budget
(US$ B)
2014
YoY
Growth
Roads
5.1
12%
Railways
1.6
910%
Ports
0.3
65%
Other
0.6
7400%
Transportation
7.5
54%
Energy
31.0
10%
Water
3.6
28%
Other
23.7
19%
Total
65.8
18%
Category
Expect on-time execution in 2014
• Operating rules for 2014 programs were
ready and published before January
• Department of Communications &
Transportations (SCT) started an early
bidding process for major 2014 projects
• Technical studies for 92 SCT projects are
ready, which would enable biddings
• Authorized budget deficit of 1.5% of GDP
Source: SHCP, Cámara Mexicana de la Industria de la Construcción (CMIC), CEMEX estimates
Constant exchange rate: 12.85 MXP/USD
6
Expect 10% increase in cement volumes
from highways and dams in 2014
FONADIN projects pipeline
Project
Highways
Investment
(US$ M)
4,425
Palmillas – Apaseo el Grande
725
Tuxpan – Tampico
490
Periférico de Orizaba Stage I
470
Cardel – Poza Rica
450
Jala – Compostela – Banderas
390
15 other
Water
Monterrey VI
1,115
El Zapotillo
1,020
WTP Atotonilco
790
Cutzamala System
550
Source: SCT, CONAGUA, CEMEX estimates
Constant exchange rate: 12.85 MXP/USD
FONADIN: National Infrastructure Fund
In construction
In pipeline for 2014
8,235
1,590
Total highways + water
Recent completion
1,900
Eastern Emitter Tunnel
18 other
CEMEX participation in
major highways and dams
3,170
12,660
7
Largest infrastructure plan in the history
of Mexico
National Infrastructure Plan 2013-2018
2013-2018
Real growth
(US$ B)
versus 2006-2012
44
11%
Roads
29
2%
Railways
7
59%
Ports
5
5%
Airports
3
30%
Communications
53
74%
Energy + Water
211
19%
TOTAL
304
25%
Transportation
Source: Primer Informe de Gobierno (2013), SHCP, INEGI, CEMEX estimates
8
Significant upside from energy reform
Shale gas activity
Eagle Ford vs. Mexico
Deep water oil well activity
U.S. vs. Mexico
Wells drilled in 2012
Wells drilled in 2012
USA: 9,100
USA: 137
Mexico: 3
Mexico: 6
Source: CNH with data from: North Dakota Department of Mineral Resources, Oklahoma Geological Survey, Texas Railroad
Commission, Bureau of Ocean Energy Management, Oil & Gas Journal Well Forecast for 2013.
9
Positive underlying conditions for
housing recovery
Formal job creation
Federal housing subsidies 1
Remittances from the U.S.
(Thousand workers)
(US$ M)
(YoY change, %)
+45%
+36%
631
463
+5% to +6%
937
645
-3.8%
2013
2014e
Source: Banco de Mexico, SHCP, BBVA Bancomer Research
(1) Constant exchange rate: 12.85 MXP/USD
2013
2014e
2013
2014e
10
Competitive advantage through unique
commercial strategy
Leadership in market
value creation
Better serving
each type of
customer
Building
capabilities to
capture value
Distributors
Contractors /
construction
companies
Value before Volume
strategy
Ready-mixers /
concrete
products
manufacturers
Committed and
prepared
sales force
Government
Superior distribution
network
11
Value before Volume strategy to deliver growth
Ready mix
additional
services +
surcharges
“Gross
Minus Logic”
structure for
bagged
cement
• Overtime
• Long-distance delivery
Service Manifesto
 Includes and clarifies additional services offered
• Pumping
• Minimum order
Gross (“street”) price per market
Customer size discount
Payment discount
Pick-up discount
Target price
Transition discount
Promotional discount
Project discount
Invoice price
Volume target fulfillment rebate
Construrama rebate
Net price
12
Innovative solutions for our distributors
2.0
Value
Offer
Goal
Loyalty program
Financing
Grow the pie
Professionalism
Attracts more
customers...
...who purchase
more...
...with better
results...
...and quality
standards
All purchases are
done in
Construrama
Financing options for
all Construrama
customers
Access to more
products at better
prices to increase
share of wallet
To close gaps
between current
and minimum
quality standards
13
New and integrated solutions for contractors
Asphalt projects converted
to concrete pavement
Cross-selling cement
through concrete salesforce
(Thousands of concrete m3)
(Monthly tons per salesman)
~2x
500
100
~3x
Grow
the Pie
233
34
2013
2014e
2013
2014e
Growing the pie through new and existing customers
14
Complete set of solutions for concrete manufacturers
Differentiated and value-based offer
Full product offering
% of ready-mixers and concrete
products manufacturers buying both
cement and aggregates
51%
 Integrated cement, aggregates
and admixtures offer
 Opening of new admixtures
plant in central Mexico
27%
19%
Jan 13
Nov 13
1Q14e
 Technical assistance and
certification
15
Best positioned to serve government clients
Building Materials
Supplier
 Nationwide presence
– Cement
– Ready-mix
– Aggregates
– Technical services
Turnkey Solutions
Provider
 Solutions for road and
transportation projects
– Technical experience
– Largest fleet of
equipment for road
construction
Project
Developer
 Identification / development of
infrastructure projects
 Legal – financial structuring
 Coordination of all project
stages
 Technical and maintenance
 We guarantee the
services
performance of our products
and solutions 100%
Dams
Bridges
Concrete Paving
Soil Stabilization
Airports
BRTs
16
On track to meet mid-term target
 We cover the territory like no one else
 We have the best products and solutions
 We have a superior distribution network
 We have the best people in the industry
Successful reforms set the scene for a
brighter future
17
February 13, 2014
Juan Romero
President - CEMEX Mexico