Q4 2020 Cemex SAB de CV Earnings Call
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Good morning, and welcome to the Cinemax fourth quarter 2020 conference call and webcast. My name is Chuck and I'll be your operator for today at this time. All participants are in a listen-only mode later. We will conduct a question-and-answer session. If at anytime you require operator assistance, please press star followed by zero and we'll be happy to assist you our host for today's call are Fernando Gonzalez chief executive officer and Chief Financial Officer. And now I'll turn the conference over to your host Fernando Gonzalez. Please proceed.
Good morning, and thank you for joining us today, and I will cold water 23rd. And what's that?
I told this call you and your family in good health and joined today by market or Seattle.
Before we start I would like to take a moment to express my gratitude to order them for you to come to the challenge of coverage on a Justice and work habits safely dead effectively deliver results.
however, despite that would
This interested in to eat dates. We have lost Fisher College student victim-blaming.
I do like to work with Nike can be vehicles under important contribution to the company and to extend my sympathies once again to their family and friends.
No, we we spent a few minutes reviewing the business and then we will be happy to take your questions.
Twenty-twenty was one of the most challenging years we have paid but it also worked a remarkable year, but the strength of stomach and several recent strategic Imaging.
Or something performance the organization and how we responded to the problem arrive on the Coronavirus.
Reacted quickly unfortunately to a highly uncertain situation.
Toyota size is safety of our entry some customers while ensuring business of the financial flexibility on protecting the teacher.
The Investments that we have made in distribution and digital platforms paid off in the pandemic while our Dimension market system who are competitive Advantage off.
I'm not disability into a giant and adjusted quickly to take advantage of developing a facility in our Market.
Customer wanted our safety reliability and consistency with the net promoter score.
What can be powered car is now in line with an NPS of some of the world's most recognized consumer Brands company?
Despite the enormous disruption of COVID-19 to our deliberations. We were able to close the year with a 7% extension on a 1% right?
Have you got growth what Freedom by pricing on operation receiving?
We posted the topic as a presenter on sale in our history in 2020.
The first two months of 2020 went according to plan year-over-year growth in all our gear.
During our winter nineteen cases the Escalade first in Europe South Central America and the Caribbean.
Government devised their own individual cable to convert the dollars and impose lockdowns of many different shapes and sizes.
It's a great vehicle. Sounds very much determine industry performance.
the US and parts of Central Europe with relatively unaffected
Mexico under the lockdown measures industry was to back the men's for the retail Market potential infrastructure.
nation that significantly impacted former construction demand
the northern regions such as the UK Spain and France open fix social prescriptions impacted demand.
finally in the number of countries
the construction industry was shoot down for the week or even one.
Prescriptions came up in Vegas market experience. I've been shaped recovery in cement demand.
repeat most of a year
at the same was not true for Ready Mix Cement in Mexico.
Geography these products a much higher exposure for my construction them back.
Is he ready mix truck? See you can see that the recovery has been much slower than cement enriching treatment levels.
we believe that this Behavior can be explained by government restriction economic uncertainty on the tables of governments to talk of their limited resources wage, depending
It's for the recovery process will be an important driver of Revenue and aggregated month intensive 51 GDP growth returns to this Market.
You know, we are now operational changes arising from COVID-19.
Despite the bullet. I'm here to report we have to make progress against I will need to return those.
It seems the year with a 19% margin increase roughly halfway through our 2023.
Okay with capital allocation plan has the software execution again.
Last week we announced the first acid safe for close to sixty million and we are confident. There will be more to come.
He'd make important strides in our number one priority of debt reduction twenty-twenty our next level of racial decline 1/10 of a turn for the year and it's time to speak and second wife.
18 + 3 + 21 in March or the plan Strategic investment
When you business or beneficial Solutions, however has continued to grow as a result of prior-year investment.
New Year 2020 from station solution here and accounted for 6 to 10:00.
COVID-19. I will next to admissions are stable versus the prior-year.
It is an important metric for us. Amazing. Go into more detail on the next slide twenty-twenty has been here for us in the sustainability front page and it's really loud and sustainability goals for 2013 and 2015.
The bowls are aggressive with a commitment to reduce carbon by 35% by 2030 an animation to deliver NetZero concrete globalmeet by turn off.
Having lots of competing female. These calls only on technology is known to us and that we have used.
I need confidence is also rooted in our experience in Europe where the region has already secured the 35% reduction Target and has to need it for a 55% reduction, Center City.
European business we need to wait for us in our sustainable transformation.
Can you send the Scrolls we need to execute against we have on a plan by plan basis that has been validated by cutting off the message records night from smoking company that provides a third-party assessment of carbon reduction plan off.
2020 carbonaceous for flat versus the prior year in certain key Market close by COVID-19 supply chain disruption a month.
Twenty twenty and thirty to forty 25% of approximately 3% decline from 2019.
Just find the decline in our current usage and happy to report that there were some important advancements for us and that will pay off in 20 21.
Reduce taxes by 1.1% this point the largest decline in five years.
You breakfast. All over France in Europe to you tonight 9:30 injection. It will allow us to achieve a higher order to position as well as to reduce consumption in the same way.
No extending. I just an injection to the rest of our operations.
Finally the 2020 Weber Catholics will be executed in 2021 and we'll provide an important letter to make up for the ground that we lost on Carfax.
Confident in our ability to reduce carbon materially in 2013.
Despite the continued challenges of the clinic for water was bottled water.
2014 on the highest level.
What is accelerating North Market but most countries are position at a favor of the point of the cycle?
Mexico tax amendment Cadence while you continue to call in before my pictures leading to the largest volume volume increase is at the 2078 US a cheap the fire report it since 2007 on the fire cement volume since 2016. This is without asking for granted by this.
And working capital net free cash flow generation be directed towards finally achieved the fourth consecutive quarterly India score here. I will get improvements in Origins.
Nine percent growth and growing at twice and stays straight to the momentum of the operations.
For 50 each of weakness contributed to a back road.
Immigration proceedings cost savings initiatives were an important part of the Modern Performance and we're largely responsible for the 1.2% off.
Against what was already have to be people, We were able to outperform the price of the Year free cash flow execution.
Looking at school year twenty-twenty. We achieve the highest free cash flow at the maintenance Catholic seems 2017.
William Briella be in by the US and Mexico. What is the biggest contributor to any Dodge Road?
recently updating volumes and decline in Cedar Park
Rose blueprint Middle East the tire maintenance and forth water. We executed the project from earlier in the year.
Important be registering the smaller effects of the Superbowl appears to be on the one.
if I mentioned was an important contributor to
Reepicheep I would find you that amount of 280 million bars for the year equivalent to 2.2 percentage points of view.
Your name accounted for the majority of saving reproduction sales and head count.
ordered weekends by significant cost reductions
Yes, six seventy percent to be a recurring.
5031 Fremont the same possible description on the non-recurring 23rd deposit savings from initiatives already implemented in the prior.
Where you at? The operations continue to enjoy a complimentary in the fourth quarter or even primarily by the residential sector on my weather throughout the month the volume of 60% with most States enjoying double-digit growth.
I could get some good volumes increased by 7% and 6% respectively.
significant volume Growth Speak to other the graphics screen in the US
unusual Dynamics in California and customers have been an allocation for Manchester a change in the reporting treatment of inputs as well as on markets Cherokee.
after several years of consistent market share loss in the number of markets in the US 2024
We believe a recorded market share a sustainable and I will talk to you remain as always value before.
And the year and then volume to 8%. It needs blue 4% and 1%
reservation was the largest driver of the man analyzing which one point three million in December 11th 2006.
Infrastructure was also supported construction spending for highways and streets up 8% in for water while contract arrived Statesboro stamps and Lincoln Center.
Industrial and Commercial sector was weak. But importantly we have seen a pick-up in the construction of cement incentive incentives in our footprint.
The new prices is the water was slightly down sequentially in Decline three next to a directed to mix with substantial growth in California publication restriction on June 14th statement of eagles.
Do you know the price increases what disrupted by COVID-19?
Even destruction I take it into account the text right the month of the us, we are optimistic regarding 3021 price of the initiative.
Have you done margin expanded by reflecting higher volumes improve Logistics on savings from operation facility?
In benefits would partially offset by Rising input installed.
Who year? Do you guys the cheap a 2.1% margin expansion the best performance since 2016?
Even besides surprising managing the way we can send to capture some of these energy offered by our Mexican business.
Gone to reopen a 1 million metric drunken at our CPS. And then plant in Sonora Mexico makes amends supply shortages in California and I am
5021 estimate cement and aggregate volume to grow no single digits.
Guidance reflects continued growth from the residential sector and a stable infrastructure of activity. We believe our space to continue to grow at a faster pace of life because they should differences and receiving Transportation budgets, you know.
Water single something to purchase data top 25% year-over-year.
You said confidence 20,000 stainable 2021?
expecting for structured activity disabled
And then our government funding for highways and streets you can change with the recent extension to the top and state budgets are slightly higher here. I am
can you speak about the prospects of a diving infrastructure students plan and the potential for the first significant increase in federal transportation funding in a vehicle?
Not be sales at the 2032 passage of a program would increase confidence to stay till next month.
Regarding the Industrial and Commercial sector inspect the construction of distribution centers and warehouses to accelerate and twenty Twenty-One Sydney upsetting the weakness in your home.
Most of our markets and sold out status incremental the month ahead with in terms of money after buying wonderful instrumental with relatively few 6:00.
Mexico volume 17% used primarily by the informal sector
next Amendment double-digit growth while recording the thermostat performance and both incredibly loyal on both the men continued to Age movement.
What we mean social program Home Improvement in lockdown and stronger the extraordinary momentum. Will National wage distribution Network Depot platform a very important compared to the dentist office during the most amount intensive stage and should drive the money.
Looking for my housing and pick up in the last month no inventory on the truck with monthly rates and financing.
Water in Mexico, and I'm here earlier.
Industrial Stickman class reactivated with the construction of warehouses along the border and distribution facilities designed to meet the growing needs of e-commerce in Mexico.
The expect the US NCAA and you have China Dynamics will provide tables for you.
It's identical second water. He can lock down the kitchen. The main volumes rebounded in the second tab to finish the year with 6%
Ready Mix volume decline for the reflecting the larger impact of lockdown on the formal sector
announced pricing increases for cement and revenue-generating the person
Ernie give me a second destruction at the prices for the last. And Supply The Man by 9 a.m.
Have you done like close to 1% This point mainly due to higher volumes and prices as well as other cost-reduction initiatives.
The classical station is running behind the country and we remain on track for the class of all the new line of the Jetta and the second half of 2021.
Yeah, additional one and a half million metric tons better serve the Grand Central and South Region of Mexico while providing savings from high efficiency and fruitful month.
20-21 our Mexicans and then volume to the road between 2% and 5%
When we anticipate the backs and rode will be supported by a higher budget for government social program and project on spending arising from the most comprehensive election in Mexico's history and demand should continue to benefit from the gradual recovery of the formal sector copper with a rep.
Ready Mix an aggregate volumes are expected to draw date to 12% The fire growth estimates are click the larger for the duration of the recovering formal sector as well as the second birth defects.
Addicted to someone to see a pickup residential and Buster Construction offer with the acceleration in the government Flagship infrastructure off the 25 billion dollars private public infrastructure plan also provide outside.
No region driven by Israel and the Western European market and the light bulb it back room 5%
Marjan slightly decreased at higher volumes and cost-savings were more than upset by practicing engine and the Philippines competitive pressure off General who were the water against all performance differences between Western operations.
Williams declined in the UK and Spain of knock-down descriptions were brief hold while they wrote in Germany and the Czech Republic.
construction activity infrastructure and housing
position of New York towns in new. The month in some countries. The impact was significantly less than what we experienced in second one.
From Europe from 20% year-over-year in local currency pairs for our phones.
Three four of the European Union solution trading system a mess on gallery preferred this protocol for the industry will increase significantly off.
We believe we are well-positioned for this new chapter and we have gotten a lot of European operations under current regulation framework off.
Even use disadvantage towards our 20-30 car boots.
Israel volume and it's growing double digits.
Completely Thirty Israel was the fourth largest contributor to Consolidated ready.
I'm just in the Philippines in the second tab volume 1/4 disrupted in the forequarter by several break down sequentially.
Like the dropping point in some prices margins were up 2.6% this point due to our Cost Containment efforts.
For more information, please. See I will see HP Envy which will be available on Monday, February 15th.
50 51 maximum volume
you construction and residential sectors. We continue to drive demand Germany Poland and the Czech Republic at a Texas one paying the construction activity log today, even the strong performance and sensitivity. You pay France and Spain should see volumes off this markets working box it by TV and look down to the second letter to the Philippines volume to 46%. In the parameter activity and a 30 30 days from the structure of the industry.
Yes, ma'am. I'm going to 64%
The guidance reflects the fact that the business has been operating and a record based on the condition of several large projects.
Our cell Central America and Caribbean operations continue growing during the water despite the reposition of new measures in certain countries.
You're not commit violence increased 6% reaching the fire Squadron Gardens in the second quarter of 2000 on YouTube.
The increase was driven primarily by double-digit growth in the Dominican Republic and TTL.
3030
volume declined 8% due to the second quarter closer with the construction industry in Colombia, Panama City. For 6 a.m.
Like the volume decline local currency prices increase 4% Largely due to Columbia in the Dominican Republic.
It doesn't that we can 11:00 to send during the entire contribution and other PPL operations for many things along the line.
Are you not able. Can you please set prices cost reduction initiatives and lower fuel prices Columbia wage by the residential section on the situation of all highway projects.
How's the singer is benefiting from the state government subsidies to know in comparison and firing missiles into the country?
When there's no water the decline in boiling reflects the empty of new capacity for the late 2019.
I was looking phone number remains favorable supported by including investment in social housing execution of the existence of the hybrid project off of the new 5G mobile.
What are the year expect I will cement volumes in Columbia to increase 9 to 11 to 10:00 the Dominican Republic calling Blue 32 Samsung year-over-year basis on the back of the set of suction, Texas.
Don't tell me to drop the monthly cost.
You want me to 6 and then going to the Dominican Republic to 55%
Have announced pricing for the beginning of the year in Columbia.
In this region and invite you to give UCLA to be result also published today.
No.
Thank you for that. And good day to everyone that's Fernando has mentioned very strong operating results in the back half of the year have allowed us to further strengthen our financial.
now
Let's move to the next slide.
Despite some of our dire second-quarter scenario planning our full year free cash flow after strategic FX actually improved by about 60% in 2025. This is primarily driven by operational performance lower maintenance and investments in working capital operation resilience Cost Containment measures, including working capital paid off and we achieved the highest free cash flow after maintenance capex since 2017.
The working capital gains are largely a result of timely management through the crisis for the full year. We achieved a record average working capital days of -14 days off versus a -9 in 2019.
Our more expenditure on maintenance capex largely reflects the heart stops and non-essential FX established in late, March as a response to Koba.
During the second, will you resume more normalized levels of me at a slower Pace than the second half of 21 feet?
Increase an other cash items with explained by Severance payment coval related expenses and lower fixed asset sales.
I would prove that income for the quarter was like better operational results as well as someone off expensive in fourth quarter 2019.
Our full-year network is attributable to be non-cash impairment of approximately 1 and 1/2 billion that was disclosed in our third quarter results.
Twenty-twenty with a 4-year from a financial management perspective and was a test of our ability to be agile and adjust quickly to rapidly changing conditions. We came into the year wage basis with moderate operation of growth and plans to advance on some of our medium-term strategic initiatives.
In the first quarter, we bought back shares increase our ownership of CHP to a rights offering and paid the $520 convertible.
Operations and Lakemont you reacted quickly and pivoted to prioritize liquidity in a highly uncertain environment. We implemented a hard stop on all non-essential expenses incurred conserve cash do down on all available financing need leverage governance and took advantage of the first reopening of the capital markets and do I'll be at paying a premium to be the first emerging-market High Yield Corporate to access the market since we began. We also started the process of amending our bank facility, 2:00 and neuter mature.
A disability improved we use are historically High cash position to pay down debt and finalize the extension of maturity under the bank agreement.
Resume our liability Management program can access to Market again in September for a billion-dollar issuance at a spread that was 220 basis points lower than our June issue a month for a longer maturity and we resumed a more normalized capex program.
No, more operation visibility. We return to some of our medium-term initiatives. We move forward on a tender offer for shares in December increasing our ownership to approximately 90% COVID-19 served as another reminder of the importance of continuing to increase Financial flexibility in our business.
We took advantage of our response to the crisis to do just that we pushed out our closest medium-term maturity. We can serve cash to pay down debt and weary denominated some of our money into our most important emerging-market currencies the Mexican and Colombian peasants, and as of December and we have made important inroads into reducing our leverage ratio.
As we payment due 2021 restricted our financial profile by issuing our largest and lowest yielding u.s. Dollar Bond at a yield of 3 and 7/8 off the proceeds will fund our liability management exercise which will conclude in a few days and we'll walk in close to fifty million dollars of savings in interest extend for twenty Twenty-One and maturity profile showed here was for four months after giving effect to the January 1.75 billion Bond issuance and the ongoing liability management page as you can see we continue to have a comfortable profile with no material debt maturity until July 2023.
We have significantly expanded the average life of our debt while lowering the cost of funding. Our average life is now as more than six years compared to 4.8 years in December of 2019 while our current cash cost of debt is at 4.8% versus 5.2% at the end of 2019.
Going forward we will continue to take advantage of liability management opportunities and to maintain a Runway without significant maturity of about 24 to 36 months expecting the unfavorable FX effective 256 million dollars. You reduced meant death by more than a billion dollars during the year with free cash flow and asset divestiture.
I think you said the Pastor in 2020 include the buy backs of the next shares done early in the year. The purchase of clh is shared payment or financial fees and bonds and our refinancing efforts among others. Our leverage ratio is calculated under the facilities agreement was reduced by a tenth of a turn. It is important to mention that the life of net under this leverage ratio does not include the $521 million of convertible notes, which we repaid too much adjusting to that. The leverage wage would have been reduced by slightly less than a third of the term and now back to your phone number.
Even the strong.
20 min water we expect twenty Thirty One. To reach around two point seven billion dollars on a light to like data if guidance assumed FX rate month of December 31st, 2020 should be supported by Consolidated volume growth in the range of 1 to fifty cents what I would pay for
We do such as Mexico back within Europe and the Philippines stronger growth due to the more stringent second quarter 20 21 Guns.
the US exceeded the strong growth that year despite COVID-19 to continue to grow slower Pace than 20 20
The estimated impact of the second quarter $0.20 plus 360 million which will be an important day of the year. We also expect that affect the monthly Mexico. In fact, we continue it recovery and GDP growth returns.
It has been pricing will continue to aim to recover into the cost inflation in our products.
Acosta finicky the darkness and introduced with forecast an increase of around 10% in both fields and electricity cost writing to give you a sense of the impact of energy in our business in 2020 or the total energy be able to pretend that more than 8% of the total cost of goods sold was operating expenses for approximately eight billion dollar.
Rating Martin disability while include is not perfect.
Service old section of Catholic we will maintain the prior years of the program.
Of Santa impact of 2029 preparing for additional savings from actions already taken in the prior-year.
Even last year's performance and not we need to be late for that. I was blank for meetings. And therefore we we spend once again on growth Cafe on sustainability. M2021.
Science is around 1.1 billion dollar eleven more in line with the next item.
When did everything Remains the clear priority we will do to accelerate our hold on investment program.
You'd be basically in this truck with all Investments meeting v i r r and short pay back straight TV Investments with the focus on developing our former customer Advocates improve education Solutions while maintaining our commitment to sustainability.
We expect an investment in working capital between 100 million and 150 million.
Yes, Texas are estimated to be about two hundred thirty-five million dollars.
Play nice and expense to be approximately 650 million dollar one hundred million less than the prior-year.
Please replace close to fifty million dollar savings from the recent liability management exercise as well as savings from debt paid down in 2020 and 2021.
You know, but in Dayton they attended and we need to know that even the risk growth and relevant with Now guide to Dominican Republic and Israel.
We expect coronavirus to be a less disruptive 14-31 and that box is gradually returned to normal.
The garlic with the violence and we will need government has learned what measures are most effective in fighting the disease.
Therefore we do not expect that to the shutdown that we saw inquire 2020.
Please copy of the form of text in Mexico and the white an important a link to the year.
Each of our markets to see if the numbers from last year.
What is that Iraq should continue to provide a supportive. Additionally. We are optimistic that the European Union Greenville at the one on the right infrastructure program will be supportive over the next few years.
I dunno industry today almost all of our markets are on the favorable point in the cycle.
Mexico and track appeared to be in the area Parts what the US and Europe are at the more mature but sustainable decision.
Unity in 2021 be a headwind tight supply-demand Dynamics Market. We will need pricing should be supported.
We continue to see strong growth, you know, the two largest markets the US and Mexico.
Finally, we look for advancement on our current production. We are entering 20-21 with tremendous momentum, and I'm optimistic about a year off. No. Talk to you.
Before we go into our Q&A session. I would like to remind you that any forward-looking statements. We make today are based on our current knowledge of the markets in which we operate and quit changing the future due to a variety of factors beyond our control in addition, unless the context indicates. Otherwise all references to pricing initiatives price increases or decreases refer to prices for our products, and now we will be happy to take your questions operator. Thank you. Ladies and gentlemen, if you wish to ask a question, please phone number followed by one on your touchtone phone if your question has been answered or you wish to withdraw your question, please press star followed by two to begin wage standby for your first question.
And the first question will come from then furor with Barclays, please go ahead.
Good morning, Fernando Mara. First of all congrats on the results that was clearly an impressive finish and a very positive outlook for 2021 month. So that's actually bringing me to my question. So Fernando what is next? I mean if we do simple math you were roughly four times in average now, I'm just assuming you're the guidance of a cash flow items never reached likely to go down to roughly free and half of that number one more year and then we're down at free which is Thursday actually the target you've been looking for for a few years now and you definitely done good steps ahead. So on the Acquisitions you've talked about the Strategic piece. Could you elaborate a little more into what geographies you're thinking into? What what potentially could be on the plate and also how much of a benefit you had over the last couple of
Quarters having done so much on the digital platform semach's go and when basically being able to serve customers to buy despite adverse environment and Thursday and operating environment. Thank you. Thanks, Well, you know like on the one hand we are going to be very challenging year. It happened that we the market our actions resulted in home, but she said that I would just be patient twenty Twenty-One. But what what we have been commenting a couple of years he's not we have made some adjustments. I was talking to someone else because it won't be able to log.
What is exactly, just one of the investment mainly the US and Europe?
We will be making some exercise.
Maybe
we are not concentrating or Hydro Boost Mexico life is that we are considering we have already considering Exploring Life.
that combination what is
You said that you can expect them or you can you can take me in dependent market like the ones I have already logged in mention. Of course last year was, you know, we need to put attention to the tackle problems with not got some delay in the process of investing on making this something that kind of decision, but I have already against the management team.
Because Congress of Small Business Association, they say about 40 to 50 of them off my execution. They can add up to fifty million dollars a year already and the characteristic but they are small. Margin. I need the latest business is marching of that month.
What is it that you can see you can see that it is moving from its strategy of deliberating only reducing that are much more dead dead dead again. I think it will be like, you know that we have in the last few years.
Well, that's that's the same time to come and check and make sure you're on the second one.
what I can tell you is that really valuable learning package in some section there. Most of our Market because managed to put in place and home for all of his friends, and I didn't we didn't
phone number
need to have the same with a customer service rep information in terms of specifics not the Shadows of the night, but I can tell you that it has a dog which has been developing the superior customer experience. So the experience we can offer to other customers today is much more Superior than the one we used to like before I mentioned it to payment option. I might not know everything but so far there are some other companies.
I'm going to this idea of not to the extent of opening into an office. I see we are back to square one and the potential of developing commercial relations and adding business activities in the construction phase two in Washington of the scope of an Explorer and daily into businesses that I really am looking at the potential possibility the construction industry as a whole is not an industry that has being very proactive. This is digital technology.
Perhaps to be deception on the line ending in part, but I think there will be lots of activities on business models evolution in construction you the number because I'm also another material change our definition of the month. So now let me ask, you know be talking a small type of small dog.
Thank you and really positive on the possibility of increasing material or whatever that this investment allocation them on or off.
That was a very complete answer for number. Thank you very much, and I'll leave it here and congratulations again.
Your next question will come from Francisco Suarez with Scotiabank, please go ahead.
Pardon me. It seems that Francisco has left the question queue. Our next question will come from Carlos along with Bank of America, please go ahead.
Thank you. Thank you for remembering and impressive results questions that I made first ones related to the energy crisis. You mentioned that you expecting other talk to go about 10% and also to be about 10% We got an uncontrollable cost-cutting initiatives of the internet off last year. So does it mean that the prices are going to be able to more than compensate increases in energy costs to workers to a little bit as to how long you've got 10% that would be a question and the second one would be related to the market. If you could provide some color of the expectation and potential use of structural packages are the US and particularly the past. Is there any chance of the Democrats were they addressed last year's in the prologue?
Need to increase on a regular basis. You could also come in and that would be helpful. Thank you.
Yes, ma'am. Thank you, You know what? The issue was not that clear to me. So what I understood the question is from our home. I don't want a guidance of a rogue or around 10% would be here Thursday. Yes. That's it. Also provide that up with an increase in energy costs of having extraordinary on Costco last year the next issue.
Yes, so let me let me start by saying Carlos. We were able to the side with finding the not providing guidance and we ended up deciding doing it because we even though there are because of 20 21 be a call me your number two. That's the way we are. I think there are many positive things that make us believe that this will be available. One thing that we should qualify and we have been convincing that that is don't forget. That one has a Paving of the date effective in the reading material in the second part of a black mention off.
What Society has learned not much easier you might be right back. So there will be a beta test.
About a hundred and fifty million dollars to $30 a year to the impact of sizeable life would be better for camping. Mexico is a very special case because we were in practice in the form of construction jobs, mainly our wedding and we were impacted internet box and remember that a long-term Mexico was only four former construction, but I didn't apply to the pain on taksim and which is 65% volume. So I'm not seeing anything in the record your volume for or against misuse example of Mexico. The recording goes dead.
You mean when compared to some so instead of recording so between 100 and 12 depending on business activity in Mexico will be another choice and should be another thing. Remember that last year for the states of the US even volumes were not impacted tried to support price increase in wage inflation or inflation with you know, since like economic activity in the US wage.
on on so I think on the pricing side we issue we can walk the dog and certain because
Because of the way the like the airline industry wage much easier to the supply and prices of zip code. So we are preparing for the month for the best balance of you can imagine we are one increase our insurance proportion. Another few weeks have them in that regard. We already have some negative impacts education in some place in Europe. Yes. I think that only one seems to be geared can can be
You have a make a payment.
No, that's that's what I can say. We believe that our guidance on and off the second question, The second one was awful. I was introduced five year plan with an increase. This is the previous one. The Democrats have been you know, the painting American Club in that regards. Is there any color that you could provide how you see that evolving drug issue?
Unfortunately, I continue having problems with the can you hear me better off? So the question is related to the possibility of a new five-year Highway and Rich's plan in the US or the task Democrats proposed last year wage increase Investments on a per-year basis about 50% If you could provide some color as the expectation of of an approval and a potential increase in that pussy CEO program.
You want to take that one method the optimistic about the administration office. There are two they're out there one that was passed by the by the house last year and that was for one and half trillion dollars and and then sliding and then with a slightly less detailed plan of about two two children. I think the most important thing is, it's really on the cement intensive component, you know, which which accounts about a third maybe a little bit less of both of the of the proposals that I just mentioned that you know, just a second ago and and and we're you know, we think there's perfect alignment. We do believe that, you know, the increase would be somewhere between 30 to 40% off.
Plumbing in in certainly 22, we don't think the impact will fit in any material way in Twenty-One. We think that spending is going to be flashing lightning up and it's 21, but the big impact probably Thirty to forty percent, you know, the area sixty billion dollars of expenditures will come in and walk in twenty-two. So we're quite optimistic about it. And you know, this will all very nicely with the you know with the current contacts which is which is going to be coming up for a new or September of the end of this year.
Thank you. My current remember. Congratulations.
Thank you very much.
And now we will have a question from the webcast.
Sacramento Bee the question that you have from the webcast is from Tony from Bank of America on the 16th of the question is dead in graduations on excellent results and big progress on the bedside during twenty-twenty. Given some extras Outlook a line for 20 21. Do you think some extra money to drop the locate billion by the end of the year and after all your recent activity on the debt front? What should we expect in? Twenty? Twenty-One thousand more liability management question mark I know would you like me to take that question?
Yeah, so, you know based on the guidance that that we given for full-year we and and and all of the elements that we've decided to at the free cash flow level. You know, we feel it's not unreasonable to assume that we would be on a on a net total. It is not conceivable that we would be below the ten billion Mark for the end of the year, but it could be more depending on the on the performance now as far as what could we do offer more? I mean the reality is that there's a lot of opportunity for additional liability management of the year, you know, we have Thursday. We haven't called all of the the notes that are doing 25. We still have about three hundred million dollars of those. We also have some very expensive from birth.
Patulous. I mean those are probably the most expensive on capital structure. There are also additional Global bonds or the nominated bond with the concealed 24th. So there's a lot of opportunities frankly, but you could still do things during the rest of the year that that should continue to improve our cost of debt and month and include the eternity structure of our of our
Does that answer the question?
Your next question will come from Francis Francisco Suarez with Scotiabank, please go ahead.
Thank you. Good morning. Congrats on the still be particularly in the super of execution that you master and and Fernando Perez on the things that you can control that that's impressive. I'm not on that and the new Milestone of allowing your kills in Europe to be set by hydrogen. Ask questions on hydrogen injection. What could we expect on the share of hydrogen in the midnight or european operations? And if that might or not affect your margins other things constant, the second question that I have is from the the creative title on Mexico. Will we see the volume on cement compared to what Ready Mix volumes are it seems to me that Mexico doesn't seem to be an economy. That's grown on self-destruction. Your volume is already needs already declined by 14% in 2019 and 2020 declined by another 16% wage.
the question is how
Sustainable the recovery in Mexico might be without the support of the form of construction sector. Thank you.
Yes, thank you. So let me start with the second question. I think our guidance for Nissan Mexico for co-signing impacted by the basic meaning I think we mentioned during the pursuit of our roaming in Mexico where impacted very much because of the knockdown home, you know, or you might remember the lockdown was on lockdown for normal activity with the exception of last month. Is it for sales or back home?
And then drop by Drop Like 561. I also want them down the seats much faster than both of the record the results often to water just so we can expect you on former construction wage. But did you see maybe the basic as I mentioned during our assumptions for this is not seem like like like what meaning is the most like 40% ready for the Clutter that will be dead.
So that that's on on vacation in Mexico hydrogen, we are off the results that we are getting from hydrogen now nowadays. We have all our cement plant in Europe. We are moving for Global innovation technology. I don't I don't have any specific number we made it home. And so what we will see increase on the one can increase on the other hand the reductions in costs money in energy consumption. This is a very interesting job.
A few years ago, you know we were thinking on the plane.
Debating that states now we have the embassy and we are moving into implementation as we are we connected we we do have a way of life. I'd like to qualify to confirm that we are pretty sure we can do it Thursday. We haven't managed to reduce the nineteen ninety days, which is the user's home and managed to reduce 35% and because of that and because of our online, I would have relations in this case particularly to you that the MS today.
Did you bring it back to needed to reduce our options with that solution? Like I do jeans so you can like Solutions like on raw materials seniors and on several acknowledging products from my home to get to that the main issue on Innovation engaging alliances and innovation of the technology that we are dead.
Must I think human public to complement our production but it said for that again is Zack Knight have to say like to be able to somehow gain the benefits of a green and pink vertical industry is in a critical of the government indices solution.
A cement plant off when computer out to us. What you think is the future off my phone.
Thank you. Your next question will come from 15 calorie with on field research, please go ahead.
Yes, good morning. So I would have would be on the on the off-chance includes the enforcement mechanism based on the principle. But in this field Imaging here to Bear the fruit of the job on them eating however does look like the Democrats have large enough majority in the Senate to implement every item of violent program for my question is do you have any update on the discussion between the US Association and the new Administration regarding a potential car back on your USC tuition or on potential increase email us property tax rate. That would be my first question and then I will receive the equation wage.
Could you quantify the time you got from lower and Logistics first, which is a little key. And what kind of inflation do you expect 4021?
Okay, let me let me take that one off of the Line run if I understood correctly. It is about the the the orientation of the government wage. I think what we have seen ever cuz we have a couple of attacks.
pardon
Yeah, my question is could we see or carbon tax? Could we see a carbon tax on the US incorporating exercise in the US?
I was going to say that he has to say that is going to happen with not it happens. I won't.
I think you know Look at California to Mexico on taxes with you that makes it
And we need to be prepared to that vehicle.
Now, let me allow me to make a simple comment on climate change an answer.
And to some extent we have been observing and being an actor what we saw that year. It was. Let's say I'm a very interesting because it was a year in which society what clear on the demand on moving the economy to a green economy and reading them to pay attention to society very clear. It is now that it's much more stringent Dead Redemption and they have put in place a program to remodel 25 million buildings in Europe to reduce CO2 emissions.
No, I think that is that the only thing that we can I can check on that because there will be more and more and more sure if this is the price of the US good morning and the other hand off and economy. The only economy in each of the highest option cost can be an income wage to approach the green and keeping that economy open on optimistic you
You take the second one market.
Yes, yes if I understood you correctly. The question is is is about distribution costs. Could you could you home is it about the trend of distribution cost? And what were you what was the question on it?
The question was could you quantify the the tiling the game that you got from lower and lower the GT first which is 20 and that's what kind of inflation you expecting to do what you want.
Ask your name with the first one.
No.
Logistics and D as of across
it just makes a diesel cost.
Yes, yes, you know energy in general as we said was dead in percent, you know, they'll wind up for the year and you know, so that's I mean the total the total energy bill is off. That's that's around essentially. I mean the the savings and and in terms of going forward, I mean in terms of going forward diesel is about 2% of the of the total of the total bill and that's about the total expense is about 250 million dollars and we have about half of the amount that we would need for this year already hedged.
now
You know the hedging, you know is is that there's probably going to be translated into a little bit of a headwind going into into 20 into this year. So so dead Ian. I mean I cannot give you an actual percentage of what we're expecting on on on the vehicle.
Thank you so much.
And now we'll have a question from the webcast.
The next question from the webcast is from Francisco Chavez from BBVA and Blackwell has two questions. The first question what was declined the week performance and pricing and the second question is can you provide a breakdown on volume Grill on your four key markets?
Would you like to get dressed that or would you like to be done?
If I could be you know, we had a a little bit of a sequential drop in prices about 1% Sequentially. I am the primary driver there three three kind of things were moving in in the in the fourth quarter that contributed to that one Geographic mix dog. We had remembered mentioned earlier in the call, you know, very very healthy glow in California, like quite a bit more almost double the rest of our markets in terms of the percentage 12:00. And and in that part of the region has lower pricing than the national average. So that's one contributor off. The other contributor was a an internal change in how we treat the mystery Imports which are lower-priced. We're including them now in, New Jersey.
I think of that also tends to that that that contributed to the sequential drop in pricing and the third item we had a project of infrastructure project in our in our Nexus business that has attracted pricing and that terminated and so those those are the three main things that contributed to the sequential pricing having said that you know, we if you if you adjust for these, uh different Dynamics prices were out for logging in our Market.
I hope that answers the question.
operator
Yes, and we have time for one last question and that will come from a sorry.
Sorry.
We're like, I think it was another piece of the question that I I did not address which is growth in our markets in the US just in response to that. I would like to say that you know, as you saw volumes were up in the mid teams for the whole the whole business and you know on average, I mean volumes stock market accept text messages, which will be slightly lower than that.
Sorry about that operator next week. No problem at all. Last question will come from Adrian work with JPMorgan. Please go ahead and check on my vehicle. That's in the default. We talking to you quick question. I'm just on the CPN plan. You can just give us more details on the difference and production cost for this time. This is what you have in the US I need the plan is to have at least initially to reduce input the you currently do uh into the US from promoting of the world voice to potentially gain marketshare given using some plant closures that we have seen the California Etc.
Well, the question what I can say is that with a marginal investment will take advantage of the situation in the market wage because of increasing shipping cost reports. I think that you are going to be doing is I'm taking up the installation. Of course. It has to be done with it from Houston Ministries available from 2 p.m.
Thank you for calling no.
Thank you.
This concludes our question-and-answer session. I will now like to turn the call over to Fernando Gonzalez for closing remarks, please go ahead sir.
Yes, thanks to all our team continue the dialogue.
Thank you. I appreciate.
Thank you for your participation in today's conference. This concludes the presentation you may now disconnect and have a great day.
Dead dead dead dead.
Yep.