Reuters: Market News: UPDATE 4-Mexico's Cemex U.S. volumes soar in early 2012

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UPDATE 4-Mexico's Cemex U.S. volumes soar in early 2012 Mar 30th 2012, 01:59 Thu Mar 29, 2012 9:59pm EDT * Company sees recovery in key U.S. market * Good weather helps performance * Prices stock issue for dividend payment By Cyntia Barrera and Gabriela Lopez MEXICO CITY, March 29 (Reuters) - Mexico's Cemex said on Thursday that it may have recorded strong double-digit growth in U.S. cement volumes in the first two months of the year helped by good weather, based on industry estimates. "The first two months of the year have been great; demand nationwide has been up in excess of 20 pct year-over-year," Maher Al-Haffar, vice president of corporate communications and investor relations, told Reuters. "A very important driver is the fact that we had fantastic weather in the first quarter and last year in the first quarter we had particularly cool weather. March continues to be very good weather as well, but we need to be very cautious not draw any conclusions." Al-Haffar said Cemex boosted its price per tonne by $5 in January mostly in the U.S. Midwest. The company is readying another increase of between $5 and $6 per tonne for April, effective in a larger number of U.S. markets. Monterrey-based Cemex has been recovering from the effects of the 2008 financial crisis, which sank it deep into debt shortly after closing one of its most ambitious transactions to date, the 2007 acquisition of Australia's Rinker. Cemex shares ended up 0.61 percent at 9.88 pesos on Thursday, while its New York-traded shares gained 1.43 percent to $7.80. DEALING WITH DEBT PILE Cemex, which this week closed on a debt exchange offer that fell short of market expectations, had total debt, including perpetuals, of over $18 billion as of the end of 2011. Late on Thursday, Cemex said in a statement to the Mexican stock exchange that it will pre-pay 2.62 billion pesos ($203.88 million)in local debt plus one month of interest payments on April 9. While the company has no significant maturities due until 2014, analysts still expect Cemex, one of the world's biggest cement makers, to eventually seek an extension on the expiry dates. "We are getting a lot of good ideas from the market," Al-Haffar said. "At this point in time, there is nothing we can comment on, but everybody wants to address that situation sooner rather than later. We are quite confident that we will be able to reach a workable solution." Cemex has said it is in good shape to meet two covenants this year which call for the reduction of its funded debt to 6.5 times its earnings before interest, taxes, depreciation and amortization (EBITDA) in June, and an even lower ratio of 5.75 times by December. The cement maker, which has operations in more than 50 countries, has to reduce its funded debt, or that included in a 2009 refinancing agreement, by around $800 million to meet all its 2012 obligations. Additionally, the company has embarked on an asset sale plan under which it will unload $500 million in noncore belongings this year to help ease its debt burden. In 2011, the company sold $225 million of assets, mostly real estate. As part of this plan, Cemex is mulling the sale of a carp fishing lake in the United Kingdom, but did not say how much it would obtain from the deal. Al-Haffar declined comment on other asset sales during the year's first quarter. In a separate statement on Thursday, Cemex said it had priced a stock issue that it will use as a dividend payment to shareholders. "The subscription price is 9.8792 pesos per new Cemex CPO (share)," the company said. Shareholders will receive 1 new Cemex CPO share for every 25 CPOs held. Holders of Cemex American depositary shares, or ADS, will get 1 newly issued ADS per 25 ADSs held. The dividend payment was voted on a meeting last month. Record date is March 29. New CPOs will be delivered starting on Friday while ADSs will be distributed on or about April 3, the company said. Link this Share this Digg this Email Reprints

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