Cemex Guatemala operations.
Cemex SAB de CV has sold its Guatemalan operations for US$200 million to Holcim Group as it continues to rebalance its portfolio and double down on its bolt-on investment strategy in its key markets such as the United States.
The transaction closed on September 10 and is Cemex’s third market divestment in 2023.
Holcim Limited, a Swiss multinational company known as Holcim Group, acquired three ready mix plants, five distribution centres, and one grinding mill which had an installed capacity of 0.6 million tons per year. These assets were held by Cemex Guatemala, SA which was Cemex’s main operating subsidiary in Guatemala. Cemex Guatemala SA spent US$21 million between 2022 and 2023 on capital expenditure.
“In 2024, we have accelerated the execution of our portfolio rebalancing strategy with the announced sale of more than US$2 billion in assets located primarily in emerging markets. We are now primed for the next stage by redeploying most of the divestment proceeds in developed markets, primarily the US. We expect these efforts to drive sustainable growth for our business in the short and medium term,” said Cemex Chief Executive Officer Fernando A González Olivieri in a press release.
Cemex’s last major transaction with Holcim was in June 2015 when it acquired all of Holcim’s assets in the Czech Republic, Gador cement plant (cement capacity of 0.85 million tons) and its Yeles cement grinding station (cement capacity of 0.90 million tons) in Spain, while simultaneously divesting its assets in the western part of Germany. Holcim owns 52 per cent of Minerales y Agregados SA in Guatemala and operates in nine markets within Latin America. Holcim also operates in Asia Pacific, Europe, Middle East and Africa and North America.
Cemex Guatemala SA falls under Cemex’s South, Central America and the Caribbean (SC&C) segment. However, the size of the subsidiary resulted in it falling under the rest of SC&C which consists of Peru, Puerto Rico, Nicaragua, Jamaica, the Caribbean, and Guatemala, excluding the operations of Trinidad Cement Limited (TCL).
This rest of SC&C segment generated US$414 million in sales during 2023 with an operating EBITDA (earnings before interest, tax, depreciation and amortisation) of US$90 million which eventually translated to operating profit of US$77 million. The rest of the SC&C segment had US$280 million in assets and US$111 million in liabilities at the end of 2023. Cemex’s Jamaican operations, through Caribbean Cement Company Limited (CCC), generated $27.72 billion (US$178.90 million) in revenue during 2023. CCC is set to complete its expansion programme to increase its production capacity to 1.3 million tonnes in 2025 with the company now producing 4,000 metric tonnes on some days after its recent maintenance shutdown.
Cemex had announced in early August that it had entered into an agreement to sell its operations in the Dominican Republic to Cementos Progreso Holdings, SL for US$950 million which it expects to close in the fourth quarter (October to December) of 2024.
Cemex Asia BV entered into an agreement during April for the sale of its operations and assets in The Philippines with DACON Corporation, DMCI Holdings, Inc and Semirara Mining and Power Corporation. This is expected to be closed by the end of this year subject to approval by the Philippine Competition Commission and the fulfilment of any mandatory tender offer requirement by the purchasers to the shareholders of CHP (Cemex Holdings Philippines, Inc) which is listed on the Philippine Stock Exchange. Cemex had previously sold its operations in Costa Rica and El Salvador to Cementos Progreso and sold its 65 per cent stake in Neoris NV during 2022.
All of these divestments/sales are meant to optimise Cemex’s portfolio for EBITDA growth which will be supported by bolt-on investments in core businesses and acquisitions in different markets. Most of the press releases on these divestments have mentioned reducing debt, funding other corporate purposes and funding for its bolt-on investment growth strategy in key markets.
Some recent acquisitions include a majority stake in RC-Baustoffe Berlin GmbH & Co KG, a recycling company and part of the Heim Group in Germany to grow its Regenera circularity business. Cemex also signed a joint venture agreement with ALBA to produce biochar, a carbon-neutral fuel derived from biomass at its Rüdersdorf cement plant in Germany.
Additionally, Cemex executed another joint venture agreement Couch Aggregates and Premier Holdings in the USA to expand its aggregates businesses which helps makes concrete mixes more compact.
During 2023, Cemex also acquired the assets of Atlantic Minerals Limited in Newfoundland, Canada to increase its aggregates reserves for the USA market. It also acquired a 51 per cent stake in Israel-based SHTANG Recycle Limited which was meant to strengthen its bolt-on acquisitions in developed markets.
“The only thing, frankly, that we can do is continue to deliver growth in our business. I mean, I think that’s very important, highlighting also the profile of our US business. Our US business is growing materially, and we’re expecting it to grow significantly over the next two to three years,” Cemex Chief Financial Officer Maher Al-Haffar said on a July 25 earnings call.
Cemex’s operations in the USA and Mexico make up about 60 per cent of the group’s consolidated sales with the latest second-quarter report showing that the USA made up 30 per cent of the group’s US$193 million operating EBITDA in urbanisation solutions. For the overall US$1.74 billion in EBITDA that Cemex recorded for the first half of 2024, the USA represented 30 per cent of the group’s EBITDA.
Cemex said it intends to grow this contribution to 40 per cent in the medium term by increasing growth capital expenditure and investing the proceeds of the divested markets into the USA.
“You’ve seen that despite headwinds in volumes, pricing is very good. Margins have improved significantly to historic levels and we’re continuing on that. We were expecting the US business to continue to contribute to the overall contribution of our EBITDA in the next two to three years. And so, we just need to continue to deliver that and highlight that to the market,” Al-Haffar added.
Cemex has had a blockbuster year with the company being upgraded to an investment grade credit rating by Fitch Ratings and S&P Global Ratings to BBB– with a stable outlook. The company was also able to refinance €750 million in debt during April and has no material debt maturities until 2026. With its total debt load now reduced to US$7.55 billion and 70 per cent being fixed rate, Cemex continues to make strides in cutting its leverage ratio which stood at 2.13 times at the end of June. The company intends to cut that leverage ratio down to 1.50 times in the next three years.
Cemex was also able to restart its dividend programme after five years with the company paying US$120 million (MX$2.03-billion) between June 18, 2024 and March 11, 2025, with those dividend payments being made quarterly.
Cemex paid a US$30-million dividend or US$0.02067 per American depository share (ADS) on September 24. Its next earnings release is set for October 28.
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Publish date : 2024-10-01 18:14:00
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