CEMEX, S.A.B. de C.V. (NYSE:CX) Q4 2018 Earnings Conference Call Transcript

Feb 07, 2019 • 10:00 am ET


CEMEX, S.A.B. de C.V. (NYSE:CX) Q4 2018 Earnings Conference Call Transcript


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Good morning. Welcome to the CEMEX Fourth Quarter 2018 Conference Call and Webcast. My name is Sophia, and I'll be your operator for today. (Operator Instructions) Our host for today are Fernando Gonzalez, Chief Executive Officer; and Maher Al-Haffar, Executive Vice President of Investor Relations, Communications and Public Affairs. And now, I'll turn the conference over to your host, Fernando Gonzalez. Please proceed.

Fernando A. Gonzalez

Thank you. Good day to everyone, and thank you for joining us for our fourth quarter 2018 conference call and webcast. We will be happy to take your questions after our initial remarks. We are pleased with our 6% consolidated topline growth during 2018, with high-single-digit increases in Mexico, the US and our EMEA region. This performance was supported by stronger consolidated volumes and prices.

Our like-to-like consolidated cement, ready-mix and aggregates volumes grew by 1%, 3% and 2%, respectively, during the year. These increases are higher than those we experienced in 2017. For cement, volume increased in markets representing close to 80% of our total volumes. Our prices improved in most of our main markets. During the year, consolidated prices in local currency terms increased by 3% for cement and by 4% for both ready-mix and aggregates.

In the case of ready-mix and aggregates, price expansions were higher than those observed in 2017. However, our price increases were not enough to reflect the higher-than-expected rise in energy cost and led to EBITDA growing by 1%. During this year, we will continue to focus on recovering this lag in input cost inflation. During the year, we generated more than $900 million in free cash flow before expansion CapEx, which resulted in a strong conversion of EBITDA into free cash flow of 36%. In working capital, we reached negative 14 average days during the fourth quarter and ended the year with negative 11 days. Both were record levels for CEMEX in these periods.

In line with our strategy to reach investment-grade metrics by the end of 2020, we reduced total debt by 8% or close to $1 billion during the year and are on track to achieve our debt reduction target. In addition to our deleveraging efforts, we made significant advancements on our other stronger CEMEX objectives during the second half of the year.

On asset sales, we are pleased with the initial response from potential buyers to our divestment initiatives and are well advanced in achieving an important level during the first half of this year. On our cost reduction efforts, we have implemented all initiatives and we expect the full benefit of these actions to be reflected in this year's EBITDA. We will provide you with an in-depth update on both divestments and cost-reduction initiatives during CEMEX Day, which will take place on March 20.

And lastly on dividends, we have now included a proposal for a cash dividend, which will be presented for approval at our Ordinary Shareholders Meeting to be held on March 28. In addition to our stronger CEMEX targets, we made significant advances