Cemex to slash debt faster as profit beats expectations

Mexico's Cemex, one of the world's largest cement producers, on Wednesday said it aims to cut debt over the next two years more than it previously planned as it reported that its quarterly profit unexpectedly surged by 81 percent.

Shares in Cemex rose more than 4.14 percent to 13.57 pesos by 1:25 p.m. local time.

The company said second-quarter net profit rose to US$205 million, almost double analysts' estimate of US$107 million in a Reuters poll, boosted by its Mexico business and exchange rate gains.

Cemex also said it now aims to cut total debt by US$3 billion to US$3.5 billion in the next two years, up from a previous target of up to US$2 billion. It aims to sell assets worth up to US$2 billion, up from a previous goal of US$1 billion to US$1.5 billion.

Chief Executive Fernando González told journalists that the company hoped it could cut debt to a level that would let it regain its investment grade credit-rating status in 2018.

Consolidated net sales for the second quarter rose 6 percent to US$3.7 billion on a like-to-like basis for ongoing operations and adjusting for currency movements, roughly in line with a Reuters poll.

Mexico net sales grew 7 percent to US$796 million, while in the United States they rose 3 percent to US$1.04 billion.

Shares in Cemex are up more than 40 percent this year, boosted by hopes of stronger growth in the United States, its biggest market by sales. U.S. cement growth volume was spurred by residential and infrastructure activity.

Mexico's peso lost almost 6 percent of its value against the dollar during the quarter, amid worries over Britain's vote to exit the European Union. That affects Cemex, which is burdened with a heavy dollar-denominated debt load.

But it said proceeds from listing its Philippines business in June helped reduce total debt plus perpetual notes by US$1.15 billion during the quarter.