February 8, 2018 / 2:40 PM / 3 months ago

Mexican cement maker Cemex posts surprise fourth quarter net loss

MEXICO CITY, Feb 8 (Reuters) - Mexican cement maker Cemex posted a surprise fourth quarter 2017 net loss of $105 million due to lower operating earnings and higher expenses and taxes, despite a jump in sales.

Analysts had been expecting the Monterrey-based Cemex, which has been battling to slash debt and regain its investment grade credit rating, to post net profit of $179 million. By comparison, it posted a net profit of $214 million in the fourth quarter of 2016.

The company, which employs some 40,000 people around the world, said it posted fourth quarter consolidated net sales of $3.4 billion, up 8 percent versus a year earlier. It said sales were up 4 percent on a like-to-like basis for ongoing operations and considering foreign exchange fluctuations.

Cemex said sales grew due to higher prices for its products in local currency terms in Mexico, the United States and Europe, and because of higher cement volumes in the United States, Europe, Asia, the Middle East and Africa.

Cemex makes around 40 percent of its operating profit in Mexico, which is subject to uncertainty this year with presidential elections and the renegotiation of the North American Free Trade Agreement (NAFTA).

The company’s second-largest market is the United States, accounting for around 20 percent of operating profit.

Higher U.S. construction spending, which increased more than expected in December as investment in private projects rose, benefits Cemex’s unit, which is becoming increasingly important.

Cemex’s operating earnings before interest tax depreciation and amortization (EBITDA) slipped 5 percent to $625 million during the fourth quarter.

Barclays said in January it expected Cemex’s EBITDA to grow this year as interest expenses on debt come down.

The global cement industry is preparing for a slightly better year in 2018 as developed markets recover in Europe and the United States, the head of the World Cement Association said in January.

Reporting by Anthony Esposito and Christine Murray; Editing by Will Dunham

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