UPDATE 2-Cemex 2nd-qtr profit falls as crisis weighs

Wed Jul 29, 2009 6:01am IST

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* Cemex posts weak profit but beats expectations

* Net sales and EBITDA fall as U.S. volumes slump

* No sign of recovery in global construction sector (Recasts, adds analyst comment, background on asset sales)

By Robin Emmott

MONTERREY, Mexico, July 28 (Reuters) - Mexico's Cemex, the world's No. 3 cement maker, reported weak but slightly rosier than expected second-quarter net profits on Tuesday as it limps through the global economic crisis under a heavy debt load.

Cemex (CMXCPO.MX) (CX.N) said its net profit fell 58 percent to $187 million in the April-to-June period as sales in its key European and U.S. markets tumbled and global stimulus packages have yet to revive battered construction sectors.

Seven analysts polled by Reuters had predicted net profit of $164 million in the quarter.

But their estimates for earnings before interest, taxes, depreciation and amortization (EBITDA) were $34 million higher than the $812 million Cemex reported.

The company's EBITDA fell 41 percent in the second quarter while net sales dropped 33 percent to $4.2 billion, also below expectations.

"The company's numbers have come in weak, but the market is more focused on its debt refinancing, which is what matters now," said Francisco Chavez, an analyst at BBVA Bancomer in Mexico City.

Monterrey-based Cemex, which bought Australia's Rinker in 2007 just as the U.S. housing crisis hit, is in urgent talks with its creditors to refinance $14.5 billion in bank debt due over the next three years. Its net debt was $18.3 billion at the end of the second quarter.

Cemex, which operates in 50 countries and competes globally with Switzerland's Holcim (HOLN.VX) and France's Lafarge (LAFP.PA), is asking creditors to give it until February 2014 to pay its bank debt.

The company did not give any updates on its debt talks in its earnings statement.

Cemex agreed last month to sell its Australian operations to Holcim at a fire-sale price of $1.6 billion, about half what it paid in 2007.

But Cemex's efforts to sell its Austrian assets have faltered after Vienna-listed Strabag (STRV.VI) this month pulled out of a $435 million asset deal to buy Cemex units.

NOBODY BUYING CEMENT

Cemex, which last year had its Venezuelan assets nationalized by socialist President Hugo Chavez, is facing some of the most difficult times of its century-long life and second-quarter sales reflected that.

Net sales in the United States fell 43 percent in the quarter to $746 million compared to the same period a year ago. Cement volumes there fell 37 percent.

Cemex said it had yet to see an improvement in construction in the United States and around the world as the U.S. housing crisis has yet to reach its lowest ebb.

"We have not yet seen the positive impact of (government) stimulus packages around the world," the company said.

In Mexico, Cemex's second-largest market, cement sales tumbled 21 percent to $853 million, as an outbreak of H1N1 flu in the country shut down much of the economy in early May.

In Spain, another top market for Cemex and from where it launched its global expansion in the 1990s, net sales for the quarter were $221 million, down 54 percent from the second quarter of 2008. Cement volumes fell 43 percent. (Editing by Phil Berlowitz)

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