The building materials giant says that for the first time since the launch of its pricing strategy in 2021, designed to regain profitability after a surge in input cost inflation, quarterly EBITDA margin exceeded its goal of recovering 2021 margins.
The company adds that controlling interest net income (loss) resulted in an income of $126mn in the third quarter of 2023, down by 75% from $494mn in Q3 2022. After adjusting for an "extraordinary gain" from the sale of Costa Rica, El Salvador and Neoris assets in the prior year, net income declined by approximately $130mn due to higher taxes.
Free cash flow after maintenance capex grew significantly, reflecting EBITDA growth and lower working capital spending. The leverage ratio stood at 2.16x, marking the third consecutive quarter of declining leverage, accelerating the path to an investment grade rating.
Cemex says results were bolstered by the company's strong pricing across all markets, decelerating input cost inflation, contributions from Cemex’s growth investment strategy, and urbanisation solutions business. In Q3, growth investments contributed 11% of incremental EBITDA and 10% of total EBITDA.
Net sales in Mexico increased 21% in Q3 to $1,361mn, while EBITDA grew 31% to $399mn. EBITDA margin expanded 2.4pp to 29.3%.
Net sales in Cemex’s operations in the United States rose 5% to $1,394mn. EBITDA increased 36% to $268mn, and EBITDA margin reached 19.3%, a 4.4pp expansion.
Cement and ready-mix volumes in the US declined, primarily due to continued weakness in California, and several large industrial projects were winding down. Aggregate volumes grew in the quarter, benefiting from recent acquisitions in Florida and Canada.
US commercial and residential activity slowed during the quarter, while infrastructure activity continued to grow.
In the Europe, Middle East, Africa, and Asia region, net sales were up 2%, to US$1,306m. EBITDA was $213mn, 12% higher, while EBITDA Margin increased 1.5pp to 16.3%.
Cemex’s operations in South, Central America, and the Caribbean region reported net sales of $442mn, an 11% growth, while EBITDA rose 18% to $105mn. EBITDA Margin increased 1.0pp, to 23.8%.
“2023 is proving to be an exceptional year for our company, and I am especially encouraged by our recovery of EBITDA margins to 2021 levels, a key strategic priority,” says Cemex CEO Fernando González.
“The success of our pricing strategy, the contribution of growth investments and our fast-growing urbanisation solutions business, as well as decelerating cost inflation, are contributing to profitability in a very meaningful way. Importantly, we are making significant progress on our decarbonisation roadmap, reducing Scope 1 and Scope 2 carbon emissions by 12% and 11%, respectively, since 2020. Prior to the introduction of our Future in Action program in 2020, a reduction of this magnitude would have taken almost 15 years."