What's more fun than watching cement dry? Lots of things, actually, including reading about the financial achievements of one of the world's largest cement makers. It just so happens that you'll have the opportunity to do so tomorrow, when Mexican cement giant Cemex (NYSE:CX) releases its numbers for Q4 and FY 2005.

Wall Street Wisdom:

  • General consensus. Unusually for a Mexican company, 12 Wall Street analysts follow Cemex. They split their votes 2:1, "buy" versus "hold."
  • Revenues. Analysts believe that in Q4 2005, Cemex grew its sales by -- wait for it -- 88%. Wow. But to do that, the company needed some help; it completed its acquisition of Britain's RMC Group last year, so tomorrow's sales will be a combination of the two companies' Q4 performance.
  • Earnings. None of that detracts from predictions that the company has grown profits by 63% year over year. For a contrast, look next door at Procter & Gamble (NYSE:PG), which is also reporting earnings tomorrow. In the wake of its Gillette acquisition, P&G's profits are actually expected to fall.

Margin watch:
For the record, here are Cemex's rolling margins in recent quarters.

Marg . %

6/04

9/04

12/04

3/05

6/05

9/05

Gross

43.3

43.5

43.7

43

41.9

41.6

Op.

22

22.7

22.8

21.4

19.4

18.2

Net

12

14.5

19.8

16.1

19.8

18.8

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

If you're wondering how the company managed to achieve better net margins than operating margins in the past two trailing-12-month (TTM) periods, you're not alone. From reviewing the company's past financials, it appears that this Twilight Zone effect originated in the December 2004 quarter, when Cemex "adjusted" its net margin upwards by 3 billion pesos to bring its books into line with U.S. GAAP requirements.

Foolish take:
In other words, it was an anomaly. Starting next quarter, the December 2004 discrepancy will begin working itself out of the company's TTM results. Until it has done so, focus on gross and operating margins. The story there seems to be one of a company that is quickly becoming enormous -- but perhaps sacrificing profits in its quest for revenues.

Competitors:
There's really only one other company with global cement operations on a scale capable of competing with Cemex: France's Lafarge SA (NYSE:LR).

Fool contributor Rich Smith does not own shares of any company named above.