Mexican cement maker, CEMEX, S.A.B. de C.V. (CX) completed the sale of its assets in Kentucky to Bluegrass Materials Company, LLC, a subsidiary of Panadero Aggregates Holdings LLC, for $90 million.
Assets include seven aggregate quarries, three resale aggregate distribution centers, and one concrete block manufacturing facility, which were acquired by CEMEX as part of the Rinker acquisition in 2007.
The net proceeds from the sale will be used by CEMEX to reduce its debt. CEMEX continues to strive for a leaner debt structure reducing its total debt to $16.6 billion as recorded at the end of fiscal 2010 from $19.1 billion at the end of the year-ago quarter.
Although, CEMEX has trimmed its EBITDA and free cash flow outlook for fiscal 2010 by 5% to $2.75 billion and 20% to $800 million, respectively, it expects a high single-digit growth in cement sales volumes in the U.S. in 2010.
CEMEX expects consolidated domestic cement volumes to increase by approximately 3%, ready-mix volumes to decline marginally and aggregates volumes to escalate by approximately 1% year over year.
CEMEX competes globally with France’s Lafarge SA and Switzerland’s Holcim Ltd. It has been struggling in a sluggish U.S. housing market, in a weak Spanish market and with a debt overload. However, following its debt refinancing, equity capital issuance, sale of assets in Rinker and the Australian operations, and cost-reduction efforts it is strategically aligning itself to become more lean and agile.
Looking forward, the company will remain focused on paying down its debt and regaining its financial flexibility. We expect the company to benefit from the gradual economic recovery. Thus, we maintain our Neutral recommendation on the stock. The stock currently retains its short term “Sell” rating, equivalent to the Zacks #4 Rank.
CEMEX SA ADR (CX): Free Stock Analysis Report
Zacks Investment Research
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