CEMEX, S.A.B. de C.V. Q1 FY2025 earnings call

CEO Transition

• Jaime Muguiro appointed CEO effective April 1; new regional presidents bring fresh perspectives.

Project Cutting Edge

• Cost-savings program aiming for $350M recurring EBITDA savings by 2027 ($150M in 2025). Focuses on supply chain optimization, operations footprint review, and free cash flow initiatives.

Regional Performance

• Mexico: Challenging first half (peso depreciation, pre-election slowdown), but April sequential improvement; 9% bagged cement price increase effective April 1.
• U.S.: Unusually cold winter disrupted activity; infrastructure and industrial/commercial sectors support, but residential softness; progress on Project Cutting Edge with maintenance adjustments.
• EMEA: EBITDA grew 49%, margin up ~3 ppt; Europe weather impact, but Germany's €500B infrastructure package boosts outlook; Middle East and Africa stable with volume growth.
• South, Central America, Caribbean: Prices solid, volumes up in cement/ready-mix; Urbanization Solutions EBITDA growth 16%.

Consolidated net sales were resilient, with pricing partially mitigating volume impacts in Mexico and the U.S. EBITDA was aligned with flat expectations for the full year. Mexican operations were affected by peso depreciation ($65M headwind), pre-election slowdown, and seasonality. U.S. and Eastern Europe were impacted by adverse weather. Product segments: Cement had volume variation in Mexico (pre-election base, new government seasonality) and U.S. (weather). Ready-mix saw 3% cement and 6% ready-mix volume growth in South/Central America. Aggregates in Mexico had 1% volume decline but EBITDA margin expansion. Urbanization Solutions had 14% sales decline but 0.5 ppt EBITDA margin expansion (driven by circularity business with 5% EBITDA growth). Net CO2 emissions per ton of cement equivalent reduced 1.6% YoY; record net income from Dominican Republic divestment.

Full Year Outlook

• Aligned with flat EBITDA expectation; improved free cash flow expected; EMEA volume guidance upwardly revised.

Capital Allocation

• Focus on deleveraging, accretive acquisitions in U.S., and shareholder returns via dividends and share buybacks; review of growth investment pipeline for return metrics.

• Macro Uncertainty: Global economic uncertainty impacts market conditions and capital allocation.
• Weather Impact: Adverse weather in U.S. and Eastern Europe affected operations/volumes.
• Tariff Uncertainty: Potential tariffs on cement imports in U.S. could impact pricing/supply chain.

Q: Details on Project Cutting Edge cost reductions and geographical mix focus A: Jaime Muguiro mentioned working on incremental structural cost savings by reducing overheads across the portfolio, and focusing on improving free cash flow conversion from every asset, optimizing CapEx and considering divestments if assets don't meet ROCE above WACC.

Q: Share buybacks and capital allocation priorities A: Jaime Muguiro stated share buybacks are in the tool kit, with capital allocation focusing on deleveraging, enhancing shareholder returns via dividends and buybacks, and opportunistic small to mid-sized acquisitions in U.S.

Q: Impact of tariff uncertainty on cement imports A: Jaime Muguiro discussed plans to introduce surcharges to pass along tariff costs, leverage Mexican network via free trade agreement, and use rail/maritime from Mexican capacity to displace imported sources.