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FACTS: Cemex yesterday (February 2nd) reported Q4 2011 EBITDA of $542m, comfortably ahead of both the Davy estimate of $515m and consensus of $525m. Q4 2011 sales rose 6.0% year-on-year (yoy) with EBITDA up 13% yoy. EBITDA margins increased by 90bps yoy.
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ANALYSIS: The period was characterised by much better weather yoy versus Q4 2010, which resulted in better-than-expected results in Northern Europe (EBITDA +72% yoy) and the US (EBITDA was -$20m versus -$36m in Q410). The group reported a reasonable result in Mexico (EBITDA +7% yoy), while Spain and Egypt had a tough quarter (Mediterranean EBITDA -26% yoy). The result from Asia was difficult due to the Philippines, and EBITDA was down 8% yoy. Net debt (including perpetual) at end-2011 was $16.9bn (net debt/EBITDA as calculated by Cemex was 6.64x so complied with December 2011 covenants of net debt/EBITDA 7.0x). The next covenant test will be 6.5x at end-June 2012. The group sold $225m of assets in 2011 and expects to sell a further $500m in 2012. The restructuring programme delivered cost savings of $150m in H2 2011, and management expects to reach a run-rate of $400m by end-2012.
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DAVY VIEW: This set of results from Cemex is along expected lines, with good weather providing decent numbers in the US and Northern Europe. Geographically, it looks like HeidelbergCement receives the most positive read-through (US, Germany, Poland) from these results, while Lafarge is the next loser (Egypt, Spain). We reiterate our view of being long HeidelbergCement and underweight Holcim and Lafarge into the Q4 2011 earnings season. HeidelbergCement will be the first out of the blocks with a trading statement on February 9th.
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