Cemex Sab De Cv ((CX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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CEMEX’s latest earnings call presented a mixed sentiment, balancing notable achievements with ongoing challenges. The company celebrated reaching its investment-grade status, significant decarbonization advances, and a record net income. However, it also acknowledged volume declines and currency headwinds affecting overall performance. Despite these obstacles, there is an optimistic outlook for future growth, supported by strategic measures aimed at overcoming current hurdles.
Investment-Grade Rating Achieved
CEMEX proudly announced the achievement of its long-term goal of recovering its investment-grade rating. This milestone is pivotal as it opens opportunities for the company to pursue its growth strategy and enhance sustainable shareholder return programs.
Record Net Income
The company reported a record net income of $939 million for 2024, marking a significant achievement in recent history. This impressive figure was driven by a lower effective tax rate and strategic asset sales.
Decarbonization Efforts
CEMEX has made commendable progress in its decarbonization efforts, reducing its Scope 1 and Scope 2 CO2 emissions by 15% and 17% respectively since 2020. The company also secured EU innovation funding for its carbon capture projects, underscoring its commitment to environmental sustainability.
Portfolio Rebalancing
CEMEX executed $2.2 billion in divestitures as part of its strategy to rebalance its portfolio towards developed markets. This strategic move has resulted in approximately 90% of EBITDA being generated in the U.S., Europe, and Mexico, aligning with the company’s growth objectives.
Urbanization Solutions Growth
EBITDA in urbanization solutions saw a 4% increase in 2024, with margins expanding by 1.1 percentage points. This growth was fueled by high-margin businesses, reflecting the company’s ability to capitalize on urbanization trends.
Volume Declines
The company faced challenges with stable to lower volumes across all regions. The U.S. experienced particular declines due to adverse weather conditions, while Mexico dealt with a challenging second half of the year.
FX Headwinds
CEMEX encountered foreign exchange headwinds, with the depreciation of the Mexican peso impacting EBITDA by $48 million in the quarter and $52 million for the full year. This challenge highlights the company’s exposure to currency fluctuations.
U.S. Weather Impacts
Extreme weather events, including hurricanes and freezes, significantly impacted operations in the U.S., resulting in an estimated $38 million EBITDA loss. This situation underscores the vulnerability of the company’s performance to climate-related disruptions.
Forward-Looking Guidance
Looking ahead, CEMEX shared insights into its strategic direction and financial outlook. The company reported a leverage ratio of 1.8 times, its lowest since the global financial crisis, thanks to substantial divestitures. With a focus on inorganic growth in the U.S. and plans to reduce strategic CapEx spending, CEMEX aims to deliver $150 million in EBITDA savings by 2025 through a three-year $350 million cost program. This forward-looking approach signals the company’s commitment to sustainable growth and operational efficiency.
In summary, CEMEX’s earnings call painted a picture of a company at a crossroads, celebrating significant achievements while acknowledging ongoing challenges. The mixed sentiment reflects optimism for future growth, bolstered by strategic initiatives and resilience in the face of adversities. As CEMEX navigates these dynamics, its commitment to sustainability and shareholder value remains evident.
