Cemex said Tuesday that it expected recent acquisitions and higher government and private spending in Mexico to help offset declines in its two largest foreign markets, the U.S. and Spain.
Monterrey, Mexico-based Cemex SAB de CV, one of the largest cement producers in the world, said it expected the U.S. residential housing market to continue to decline in 2008, but at a slower pace than last year.
"We now see cement demand for this sector for our market declining by about 24 percent," Hector Medina, the company's executive vice president, told a conference call.
The company has begun cutting costs and will rely on greater-than-expected synergies from the acquisition of Australian building materials maker Rinker Group Ltd. to help mitigate the U.S. declines, Medina said.
At the same time, increased government spending on infrastructure projects in Mexico and "a strong residential sector" boosted by tens of thousands of new mortgages will also help offset declines in the U.S. and Spain, Medina said.
"We are optimistic about the trend of cement demand in Mexico," Medina said. "We now see cement volume rising by about 3 percent in 2008."
Cemex reported first-quarter profits of $470 million on Monday, up 18 percent from the year-ago period, citing more efficient delivery in most markets and the integration of Rinker Group Ltd. into its operations.
Sales grew 26 percent to $5.4 billion in the first quarter, the company said.
First-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, rose 10 percent from the year-ago period to $951 million.
Cemex will focus on paying down debt, much of it acquired in the $15.3 billion takeover of Rinker in July. Net debt fell by about $91 million during the fourth quarter and stood at about $18.8 billion at the end of March.
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