(Adds details from earnings call)
MONTERREY, Mexico, Oct 28 (Reuters) - Mexican cement producer Cemex on Wednesday reported a third-quarter net loss of $1.54 billion, hurt by impairments and despite a rise in sales after pandemic-linked lockdowns hit the second quarter.
The company, which operates in more than 50 countries, said the loss was due to a $1.5 billion non-cash impairment of goodwill and idle assets, and higher financial expenses.
It flagged the impairment earlier this month, which included $1.02 billion in goodwill linked to its U.S. operations.
Despite the loss, Chief Executive Fernando Gonzalez said in a statement he was “pleased with our performance in the third quarter in which all regions participated in earnings recovery.”
Third-quarter sales rose to $3.4 billion, up 3% from a year earlier and a 17% advance on the second quarter.
The company said the goodwill impairment that spurred the quarterly loss was driven by a “lack of visibility and high uncertainty” which caused Cemex to change its cash flow projections methodology in the United States to five from seven years and reduce its long-term growth rate to 2% from 2.5%.
Cemex also recognized a $480 million impairment charge on idle assets and permits mostly related to its U.S. operations.
In a call with investors, Gonzalez also said he expected capital expenditure to total $750-$780 million this year.
Sales growth this quarter marked a rebound from second-quarter declines across all of Cemex’s markets except for the United States, as the pandemic hampered construction worldwide, including industry shutdowns in Colombia, Panama and Trinidad and a two-month closure of a Cemex plant in the Philippines.
It saw double-digit bagged-cement growth in Mexico and many Central American and Caribbean countries, including Nicaragua, Guatemala, El Salvador, Jamaica and the Dominican Republic.
Cemex said growth was spurred by high levels of remittances, plus government programs for self construction, particularly in Mexico, which saw a 14% year-on-year increase in sales.
Gonzalez said he expected 2021 mid-term elections in Mexico to further stimulate sales.
In Europe, Middle East, Africa and Asia, the company reported $1.2 billion in sales, up 2% on the year.
Its U.S. sales of $1 billion were up 1%. Gonzalez said potential stimulus packages in the United States and Europe could benefit future cement sales in the two markets.
Subsidiary Cemex Latam Holdings said in a filing to Colombia’s financial regulator its losses had deepened to $109 million in the third quarter, compared to a loss of $4 million in the same period last year, due to a deterioration in assets. EBITDA was, however, up 10% year-on-year to $51 million. (Reporting by Laura Gottesdiener, additional reporting by Nelson Bocanegra in Bogota; Editing by Marguerita Choy and Bernadette Baum)
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