Q4 2021 Cemex SAB de CV Earnings Call
Good morning, and welcome to the <unk> fourth quarter 2021 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 any time you require operator assistance. Please press star followed by zero.
Speaker 1: Good morning and welcome to the CIMEX fourth quarter 2021 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 any time you require operator assistance, please press star followed by zero and we will be happy to assist you. And now I would like to turn the conference over to Ms. Lucy Rodriguez, Chief Communications Officer. Please proceed.
And we will be happy to assist you and now I would like to turn the conference over to MS. Lucy Rodriguez Chief Communications Officer. Please proceed.
Good morning, Thank you for joining us today on our fourth quarter 2021 conference call and webcast.
Speaker 2: Good morning. Thank you for joining us today on our fourth quarter 2021 conference call.
Hope this call finds you and your families good health.
Speaker 2: I hope this call finds you and your families in good health. I am joined today by Fernando Gonzalez, our CEO , and Maher Al-Hafar, our CFO . As always, we will spend a few minutes reviewing the business, and then we will be happy to take your questions. I will now hand it over to Fernando. Fernando? Thanks, Luci. And we just saw that the business selling
I'm joined today by Fernando Gonzalez, our CEO and Mark <unk> our CFO .
As always we will spend a few minutes reviewing the business and then we will be happy to take your questions I will now hand it over to.
Ananda.
Thanks, Luke and good day to everyone.
I'm quite proud of Brexit directly one results I want to offer my congratulations and thanks to the men and women that Pemex will make this happen every day.
Speaker 3: I'm quite proud of 2021 results and what to offer. My congratulations and thanks to the men and women at Cemex who make this happen every day.
Most importantly, I mean, another year of coffee, we were able to keep our employees safe.
Speaker 3: And third, and most importantly, I mean, it's another year of COVID, we were able to keep our employees safe and our operations running.
Our operations are running.
Dave.
Speaker 3: This in and on itself is a huge success.
On itself.
Okay.
We also achieved exceptional financial and strategic.
Speaker 3: but we also achieved a section of financial under the BEU performance.
Performance.
In the year.
Speaker 3: During the year, we delivered 18% growth in NEPITA, the highest in NATECA.
We delivered 18% growth in EBITDA.
Isn't that big.
Inflation of course.
Speaker 3: inflation of course, where it's probably at in June .
You probably had in June .
We responded quickly within the constraints of the industry pricing to pass through cost inflation in all regions.
Speaker 3: We responded quickly within the constraints of the industry pricing paradigm to pass through cost inflation in all regions.
While we achieved I think the whole cement pricing default.
Speaker 3: While we achieved admirable cement pricing results with the best annual growth since 2016, it still was not sufficient to compensate for rising energy and transportation costs.
All growth since 2015.
It is not sufficient to compensate for rising energy and transportation costs.
Traditionally the most significant price action in our industry takes place in January April in most markets around the world.
Speaker 3: Traditionally, the most significant price action in our industry stays in January and April in most markets around the world.
While we expect that.
Speaker 3: While we expect that this year's annual increases will be important in our goal to recover market
The increases will be important in our go to the corporate margins.
We will continue throughout the year, well adjust our pricing strategy.
Speaker 3: We will continue throughout the year to adjust our practice strategy to reflect cost pressure.
Auspicious.
Adjusting for asset sales.
Speaker 3: Adjusting for asset sales, we reached an 8% return of capital for the year, the highest level since 2007.
Reached an 8% return of capital for the year the highest level since 2007.
Adjusting for goodwill impairment there.
Speaker 3: adjusting for goodwill, the return on Capitán would exceed 14%.
Kathy would exceed 14%.
When you get into a lot of it.
Speaker 3: Two-year Airtel margins improved 0.8% response.
She had a one eight percentage points.
These shipment comes despite inflation and margin headwinds from product mix as well as rising inputs.
Speaker 3: This achievement comes despite inflation and marginal headwinds from product mix as well as rising imports.
Full year margins were just shy of our operational resilience Colo placement you Seth.
Speaker 3: Four-year margins were just shy of our operation receivance goal of 20%.
In terms of British flow, we generated more than one 1 billion bothers, a 15% increase from 2020.
Speaker 3: In terms of free cash flow, we generated more than $1.1 billion, a 15% increase from 2020.
Money that we used to de lever as one last fall our growth strategy.
Speaker 3: money that we used to deliver as well as our growth strategy.
Yeah.
The 11% increase in sales was driven by strong growth in volumes and prices.
Speaker 3: The 11% increase in sales was driven by strong growth in volumes and price.
Consolidated cement.
Speaker 3: Solidated volumes for cement, ready mix, and aggregates grew mid-single digits, with all regions contributing to growth.
Cement ready mix and aggregates grew mid single digits with all regions contributing to growth.
The 6% growth in cement volumes is the highest since 2006.
Speaker 3: 6% growth in cement volumes is the highest since 2006.
I'm wondering what complemented by strong pricing with consolidated cement prices rising 5% wireless point to point pricing from December to December rose, 10%.
Speaker 3: The volume increase was complemented by strong pricing, with consolidated cement prices rising 5%, while point-to-point pricing from December to December rose 10%.
If we get a strong drung wafer pricing momentum in 2022.
Speaker 3: This suggests a strong runway for pricing momentum in 2022.
Importantly, all reading.
Speaker 3: Importantly, all regions participated in the pricing game.
In the pricing gate.
Yeah.
What are your 18% the largest increase in more than a decade, driven by pricing and volume.
Speaker 3: Full unit is increased 18%, the largest increase in more than a decade driven by pricing and oil wow.
Well the monetization solutions also contributed with EBITDA rising 22%.
Speaker 3: Urbanization solutions also contributed with EBITDA rising 22%.
We expect these grumping or monetization solutions to continue in 2020 two as our investment portfolio runs off.
Speaker 3: We expect this growth in urbanization solutions to continue in 2022 as our growth investment portfolio runs out.
What is the contribution of Brian is quite significant in the food you waterfall. It does not fully offset the rising by the whole call lightly in energy right now.
Speaker 3: While the contribution of pricing is quite significant in the full-year waterfall, it does not fully offset the rising variable costs, largely in energy, freight, and inputs.
Yes.
Hum.
Our results did not show the rapid increase in cost we experienced in the second half.
Speaker 3: annual results do not show the rapid increase in cost we experienced in the second half.
Oh fixtures, primarily in our Americas region.
Speaker 3: The hot-spressures were felt primarily in our cement operation.
While ready mix and aggregates margins were stable to improving.
Speaker 3: while ready-mix and aggregate margins were stable to improve.
Our pricing strategy publicly.
Speaker 3: Our pricing strategy for 2021 got off to a strong start with our annual price increases in the first half, calibrated to our expectations for input cost inflation in the year.
<unk> got off to a strong start.
Price increases in the first half.
Right.
And as for input cost inflation in the year.
Margins expanded two five percentage points at the British gas.
Speaker 3: Margins expanded 2.5 percentage points in the first half.
So Matt.
Speaker 3: The majority of pricing actions occur in the period from January to April prior to the start of the construction season.
Your pricing actions and the period from January to April prior to the start of the construction season.
Around midyear, we began excuse me.
Speaker 3: Around mid-year we began to experience a significant drop in cost, primarily energy and...
It's the kind of run up in costs, primarily energy equals that.
That was not contemplated in our pricing strategy.
Speaker 3: that were not contemplated in our pricing strategy.
While we moved quickly to adjust to meet additional pharma or full price increases it was not sufficient to keep pace with the call.
Speaker 3: While we moved quickly to adjust mid-year with additional summer fall price increases, it was not sufficient to keep pace.
Consolidated margins declined <unk> eight percentage points in the second half.
Speaker 3: Consolidated margins declined 0.8 percentage points in the second half, while pretty mixed and aggregate margins held up well.
While the British and aggregate markets held up well the.
Margins were impacted.
And while we were quite successful the year with cement prices.
Speaker 3: And while we were quite successful in the year with cement prices, it was not sufficient.
It was not sufficient.
As you can see on this slide.
Cement prices rose, 5% in fiscal 'twenty one.
And we haven't seen since 2016.
Speaker 3: best pricing we have seen since 2016.
Prices up 10%.
Speaker 3: prices are up 10.2% from December to December .
From December to December .
They were very prepared to manage the inflationary challenge.
Speaker 3: Today, we are better prepared to manage the inflaxionary challenge.
When coupled with the concentration in our customized 22 price announcements scheduled for January and April .
Speaker 3: have retracted the cost pressures in our customary 2022 price announcements scheduled for January and April .
We are also assuming that inflation is not transitory.
Speaker 3: We are also assuming that inflation is not transitory.
We are prepared to respond to changes in the environment.
Speaker 3: And we are prepared to respond quickly to changes in the environment.
Our goal.
Starting over marketing in line with our operation precedent.
Speaker 3: to recover margins in line with our operation proceedings.
2021 was a year of great progress in our strategic priorities.
Speaker 3: 2021 was a year of great progress in our strategic priorities.
I mean, 2021 we continued to strengthen our capital structure.
Speaker 3: And in 2021, we continue to strengthen our capital structure.
Perhaps the most beautiful might be they never actually dropping below three times for the first time, India.
Speaker 3: with perhaps the most visible metric being leverage dropping below three times for the first time in the year.
You should expect that deleveraging will continue with the goals of.
Speaker 3: You should expect that the leveraging will continue with the goal of an investment-grade rating insight.
Beckman great racing inside.
We advanced messaging really you know, we're all appraisal proceedings go to optimize and rebalance our portfolio for growth.
Speaker 3: We advance massively in our operations resilience goal to optimize and rebalance our portfolio for growth.
We invested heavily in our growth.
Speaker 3: We invested heavily in our growth portfolio 2021, spending $380 million, the most in the last decade, and continue to reposition our business towards the bed of March.
Might be one spending $308 million the most in the last decade and continue to reposition our business toward the bedroom market.
And this was in spite of supply chain issues that delayed many growth projects.
Speaker 3: And this was in spite of supply chain issues that delayed many growth projects.
'twenty two.
Speaker 3: For 2022, we plan to accelerate the pace with an expected $600 million investment in strategic assets.
Plans to accelerate the pace with an expected 600 million borrowers investment in strategic Capex.
This includes execution on our pipeline of close to $900 million in a fruitful phone market enhancement projects.
Speaker 3: This includes execution on our pipeline of close to $900 million in approved bolt-on market enhancement projects, primarily in...
Ideally in the window market.
At legacy cement capacity additions of $4 3 million metric tons.
Speaker 3: as well as legacy cement capacity additions of 4.3 million metric tons.
Importantly, our growth strategy is paying off resulting in $100 million of increments of every time.
Speaker 3: Importantly, our growth strategy is paying off, resulting in $100 million of incremental EBITDA in 2021 and an estimated $100 million for 2020.
One <unk>.
An estimated $100 million for 'twenty to 'twenty two.
Our growth strategy also in April .
Speaker 3: Our growth strategy also entails repositioning the existing portfolio towards the better market.
What was the dental market.
And we announced important water.
Speaker 3: To that end, we announced in four quarters the pending sale of our operations in Costa Rica and El Salvador for $375 million.
Pending sale of our operations in Costa Rica on is how do I bought for 300 something $5 million.
We expect this transaction to close in the first step and proceeds will support our growth investments in developed markets as well.
Speaker 3: We expect this transaction to close in the first half and proceeds will support our growth investments in developed markets as well as the network.
Yeah.
We will continue exploring divestment opportunity people not whatever that might be.
Speaker 3: We will continue exploring divestment opportunities in our emerging market assets and remain committed to our goal of increasing the weight of developed markets within our portfolio.
And remain committed with a goal of increasing the weight of developed market within an hour's worth of ammonia.
But what do you want to choose what not just financial.
We integrated our climate action ambition by committing to the most aggressive bidding policy in our industry and develop our detailed plans by science road map to get there.
Speaker 3: We accelerated our climate action ambition by committing to the most aggressive 2030 goals in our industry, and developed a detailed plant-by-plant roadmap to get us there.
These projects when validated by you see I I remember well below two degrees scenario.
Speaker 3: These targets were validated by SBCI under the well-beloved two-degree scenario. Currently, the most ambitious...
We're going to need the most ambitious pathway or the industry.
And we signed the business ambition for one and a half to Greek Midland legend, but we win our lineup what Saudi is one there is a pathway available for our industry.
Speaker 3: And we signed the Christmas ambition for one and a half degree commitment, pledging that we will align our targets once there is a pathway available for our.
And most importantly, we made significant progress against our climate goals. He ended up pretty good.
Speaker 3: And most importantly, we made significant progress against our climate goals in the first year.
Got it when the Haitians declined one 4%.
Speaker 3: Carbon emissions declined 4.4 percentage points, the largest annual decline we have achieved.
I guess I know decline we have achieved.
Yeah.
The board of our Houston didn't actually surprised me ease of course.
Speaker 3: The goal of our Future in Action strategy is, of course, to provide greener products and services to our customers so that the built world of the future is more sustainable and future-friendly.
Right.
And services to all of the customers saw that this was all the future is more sustainable and good.
Right.
As of March 31, we have successfully rolled out net zero low carbon concrete and low carbon cement on the debates about label in our market.
Speaker 3: As of March 2021, we have successfully rolled out net-zero low-carbon concrete and low-carbon cement under the BERT-12 label in our market.
Our.
Speaker 3: Our Betwa Net Zero Low Carbon Concrete, the first in the industry, allows our clients to customize their carbon footprint to that particular need.
Net zero low carbon concrete.
Firstly, the industry allows our clients to optimize their carbon footprint.
Lovely.
These are very complementary.
Speaker 3: These based products complement our existing family of sustainable products and solutions designed to meet the needs of a green and circular economy.
Complement our existing family of sustainable products and solutions.
Science to meet the needs of our green and critical that economy.
Energy consumption, improving installation enhances the gift basket, if structures without blindness and factors.
Speaker 3: reducing energy consumption, improving insulation, enhancing the capacity of structures to withstand climate disasters, and of course, reducing carbon emissions.
Reducing carbon emissions.
Yeah.
We have seen very favorable customer as it is as long as possible.
Speaker 3: We have seen very favorable cost and receptivity to those products with best-to-last mass volumes growing almost 50% since its launch in March.
Probably best for cement volumes growing almost 50% since its launch in March.
So I'll, let him with any smuggler three D printing company called Hot we successfully launched G fast and you're getting.
Speaker 3: Finally, with Danish Modular 3D Printing Company Cobalt, we successfully launched DFAST.
The readiness solution for three D printing, that's all one of the car specialized more traditionally use in three D printing.
Speaker 3: very neat solution for 3D printing that costs one-fifth of the cost of specialized mortars traditionally used in 3D printing.
These construction modality optimizes the yourself concrete minimize the transportation cost and weight and makes use of readily available more resources.
Speaker 3: This construction modality optimizes the use of concrete, minimizes transportation costs and weight, and makes use of readily available local resources.
This product has been successfully used in tourists eventual project.
Speaker 3: product has been successfully used in two residential projects.
<unk> the world largest city.
Speaker 3: including the world's largest 3D printed building.
Building.
With our enhanced the carbonization in Brooklyn in play.
Speaker 3: with our enhanced decarbonization program in place.
We'll reduce our carbon emissions by four 4%.
Speaker 3: will reduce our carbon emissions by 4.4% to a historic low of 7%.
Oh, the pillow or semi.
And almost two percentage point decline in clinker factor.
Speaker 3: An anonymous 2% such point declined in critical factors.
With the 1%.
Speaker 3: coupled with a four percentage point increase in the alternative fuel usage drove the carbon reduction.
Turning to fuel usage.
All the carbon reduction.
Our clinker factor performance is attributable to the introduction of lifestyle cement and I'll go to some ambitious material into our processes.
Speaker 3: Our clinker factor performance is attributable to the introduction of limestone, cement and other cementitious materials into our processes.
The U S. We have introduced lifestyle cement in five of our eight black and we are retrofitting of a blast to support additional limestone cement with legislation in the future.
Speaker 3: In the U.S., we have introduced limestone cement in five of our eight plants, and we are retrofitting our plants to support additional limestone cement utilization in the future.
Our they've kind of monetization.
Speaker 3: Our decarbonization experience in 2021 supports our strong belief that climate action is a tremendous opportunity and that the cement industry can shine in a circular economy.
'twenty one support our strong belief that climate action is a tremendous opportunity.
Cement industry can shine in that private economy.
As I have said before.
We have the knowledge and tools in place today to achieve our goals.
Speaker 3: We have the knowledge and tools in place today to achieve our 2030 goal.
The technological challenge lies on the.
Speaker 3: The technological challenge lies on the period beyond 2030 to reach net zero.
The city to reach net zero.
There are many possible.
Speaker 3: There are many possible decarbonization options out there.
Options out there.
We view this as the babies.
Speaker 3: We view this decade as the period to test and scale developing technology.
Depends on scale developing technologies.
I've met with World class expert.
Speaker 3: partner with world-class experts, identify the most promising and put in place the infrastructure necessary for deployment.
You didn't define the most promising.
The infrastructure necessary for deployment.
Carbon capture is many forms offers the most encouraging prospects to get to net zero.
Speaker 3: Carbon capture in its many forms offers the most encouraging prospects to get to net zero.
I'm excited about what I see in terms of our innovation pipeline.
Speaker 3: I'm excited about what I see in terms of our innovation pipeline.
We are engaged in seven cartland captured industrial pilots, which that various methodologies.
Speaker 3: We are engaged in seven carbon capture industrial pilots which test various metabolic
Three of the projects currently have all financing in place.
Speaker 3: three of the projects currently have co-financing in place from the EU and the US Department of Energy.
From the EU and the U S Department of Ed.
Oh Gee.
With our ongoing financing partnership we announced last week.
Speaker 3: With our ongoing scientific partnership, we announced last week that for the first time we have produced clinker using solar energy.
First time, we have produced clinker using solar energy.
How do you sleep.
Speaker 3: Historically, solar has not been able to reach a high enough temperature to substitute fossil fuels in the kingdom.
It has not been able to reach a high enough the temperature.
Boston fuels in the key.
We will continue to take these breakthrough at scale.
For the first time ever.
Speaker 3: first time ever. We are introducing electric vehicles into our ready-to-use fleet in three countries.
We're introducing electric vehicles into our ready mix fleets in three countries.
This work is closely aligned to what we're counting membership in the first movers coalition.
Speaker 3: Work is closely aligned to our founding membership in the First Movers Coalition, where we have committed to support breakthrough technology in the development of electric heavy-duty trucks.
We have committed to support breakthrough technology in the development of electric heavy duty trucks.
The largest really makes it the western world.
Our ability to transition our fleet to electric would be awful event.
Speaker 3: Our ability to transition our fleet to electric would be a pivotal event. We continue to lead the industry in hydrogen technology, using hydrogen injection to amend alternative fuel usage in our field.
We continue to lead the industry in hydrogen technology.
I forget injection a man alternative fuel usage.
We are currently using hydrogen injection throughout Europe , I'm not rolling it out globally.
Speaker 3: We are currently using hydrogen injection throughout Europe and are rolling it out globally.
Our recently announced partnership with higher up on the new hydrogen injection technology.
Speaker 3: Our recent announced partnership with HIROC on a new aggregate injection technology will further accelerate this strategy.
Further accelerate this strategy.
Allowing us to increase I think in usage fivefold.
Speaker 3: allowing us to increase aggregate usage by 5 fold.
We are also working with John and the guys on the Green hydrogen project in Mallorca, Spain.
Speaker 3: We are also working with ACCIONA and ENAGAS on a green hydrogen project in Mallorca, Spain.
We believe the experience like knowledge, we gained in this project will be instrumental in event.
Speaker 3: We believe the experience and knowledge we gain in this project will be instrumental in eventually fueling a cement plant with hydrogen.
Really feeling after the main problems with I forget.
And just a few of the many acknowledging we aren't looking to meet our net zero goal.
Speaker 3: and just a few of the many technologies we are looking at to meet our net zero goal.
Yes.
The world is rapidly outgrowing, the Nashville resource reserves.
Speaker 3: The world is rapidly outgrowing the Binance National Resource Reserve.
Despite the warm embrace I truly circular economy.
Speaker 3: In this time, the world must embrace a truly circular economy and the cement industry plays an important role in this.
Industry plays an important role in it.
Although the industry can provide a valuable service to the communities for one of society's most intractable challenge wheat.
Speaker 3: Our industry can provide a valuable service to communities for one of society's most intractable challenges.
Great.
Yeah.
Two our use of alternative fuels and raw materials that makes up some 50 times the way that we generate.
Speaker 3: To our use of alternative fuels and raw materials, CEMEX absorbs 50 times the waste that we generate.
The ability of cement plastic waste.
Speaker 3: The ability of cement plants to use society waste as alternative fuels reduce fossil fuel consumption as well as the amount of waste deposited in landfills where it produces methane, a greenhouse gas that is 80 times more harmful to the environment than CO2.
Waste, that's alternative fuels reduce fuel consumption as well as the amount the way positive in light what it produces methane a greenhouse gas that is eight times more harmful to the vitamin C O two.
2021 alternative fuels.
Speaker 3: In 2021, alternative fuels constituted 29% of our fuel mix, a record
29%, Oklahoma excuse me.
I'd records substitution rate.
Europe of course.
Speaker 3: Europe , of course, leads the way with approximately 60% of our fuel mix being alternative.
The way, we are approximately 60% of our fuel mix being alternatives.
Outside of Europe , we are moving quickly to boat usage.
Speaker 3: Outside of Europe , we are moving quickly to boost its use.
Yeah.
Our Mexican operation.
Speaker 3: Our Mexican operation is spearheading this effort with a 9% point increase in autonomous vehicles in 2021.
Okay.
We got nine percentage point increase in the tuck in deals in 2021.
It is possible due to our growing sustainable waste management business in Mexico, Colombia.
Speaker 3: Its success is possible due to our growing sustainable waste management business in Mexico.
Do you have in place at 'twenty, one our Mexican operation consumed approximately 13% of the parcel weight generated in Mexico City.
Speaker 3: During 2021, our Mexican operation consumed approximately 13% of the total waste generated in Mexico City.
We continue to expand the business on in fourth quarter announced the acquisition of how sustainable waste management facility Inc.
Speaker 3: We continue to expand this business and, in the fourth quarter, announce the acquisition of a sustainable waste management facility in Querétaro.
I would like to emphasize that our transition to a low carbon economy is not only good for the world, but it's also probably double for solid.
Speaker 3: I would like to emphasize that a transition to a low-carbon economy is not only good for the world, but it's also profitable for them.
While there are a number at all not all that levered.
Speaker 3: While there are a number of other levers, I would like to focus
I would like to focus on our alternative fuel strategy.
In 'twenty, one alternate fuels accounted for 90% of our skill mix and produce savings of 200 million bars vegetables, possibly shoot.
Speaker 3: In 2021, alternative fuels accounted for 29% of our fuel mix and produced savings of $200 million versus fossil fuel.
These savings.
What is shipped through the significant price differential fortunes fuels on alternatives.
Speaker 3: achieved through the significant price differential between fossil fuels and alternative fuels.
Yeah.
You said your innovation is central to all that we do at Etame.
Speaker 3: Digital innovation is central to all that we do at SAMHSA.
Including our commercial outreach our operations as well.
Speaker 3: including our commercial outreach, our operations, as well as our administrative management.
Well, how about administrative management.
On the commercial side, San Francisco is it pretty spot on the globe.
Speaker 3: On the commercial side, Semexco is the first and only global digital platform in the industry that covers the full customer year.
I mean, the industry that covers the full customer journey.
What percent of our sales are now perfect through stomach school.
Speaker 3: 61% of our sales are now processed through Semexco.
We are continuously innovating with new version responding to customer feedback.
Speaker 3: We are continuously innovating with new versions, responding to customer feedback.
I'm Gonna need Watson deal what happened then.
It's been an important competitive advantage for us over the last few years.
Speaker 3: been an important competitive advantage for us over the last
Yeah.
We use advanced analytics to predict behavior and improve decision, making across our supply chain.
Speaker 3: We use advanced analytics to predict behavior and improve decision-making across our supply chain.
That Mexico reliability and service is a key factor in our securities the highest net promoter score ever.
Speaker 3: SEMEC's score on liability and service is a key factor in our securing the highest net promoted score ever for two consecutive years.
Consecutive years.
On the operational side my children do not run our cement plants more effectively as we can.
Speaker 3: On the operations side, machine learning is helping us run our cement plants more effectively as we look to optimize energy efficiency, fuel mix, carbon production, and schedule maintenance in our team.
To optimize energy efficiency you would make.
Carnival.
And scheduled maintenance in our team.
Our operational experience coupled with our open innovation platform to allow us to do so.
Speaker 3: Our operational experience coupled with our open innovation platform have allowed us to solve some pain points in the industry.
In the industry.
Yeah.
So dealing with the complexity of the ready mix business, we happened to venlo appropriate thought he cloud based ready mixed management system that is now being commercialized externally under the name.
Speaker 3: To deal with the complexities of the ReadyMix business, we have developed a proprietary cloud-based ReadyMix management system that is now being commercialized externally under the ARCIC name.
This solution its independent ready mix. It has the capacity to integrate end to end commercial on order fulfillment processes.
Speaker 3: This solution gives independent ready mixers the capacity to integrate end-to-end commercial and order fulfillment processes.
Yeah.
In our administrative functions, we live in a world class digital partners and expertise to optimize our processes.
Speaker 3: It leverages world-class digital partners and expertise to optimize our processes. Maher will speak in more detail on this.
Meyer will speak in more detail on this.
Through our open innovation platform.
That makes debentures I'm there already.
Unexplored disrupted.
Speaker 3: We are exploring disruptive digital technologies in the construction space.
In the construction space.
Okay.
That makes ventures has invested in 16 stops, including hot runner, which provides lots and lots and lots of delivery of building materials and voice control and job site delivery coordination platform.
Speaker 3: Ventures have invested in 16 startups.
Speaker 3: including Pathrunner, which provides last-minute and last-mile delivery of building materials, and VoiceControl, a job site delivery coordination platform.
I know you usually see.
Thank you Fernanda are.
Speaker 2: Thank you, Fernando. Our U.S. operations experience strong demand dynamics throughout the year across all products, with most of our markets sold out. Sales grew 9% driven by volumes and prices.
U S operations experienced strong demand dynamics throughout the year across all products with most of our markets sold out sales grew 9% driven by volume and pricing.
In ready mix and aggregate volumes were up six eight and 1% respectively.
Speaker 2: Cement, ready-mix and aggregate volumes were up 6, 8, and 1% respectively with the residential sector as the main engine of growth.
The residential sector is the main engine of growth.
Despite difficult prior year comp cement volumes in the fourth quarter were flat.
Speaker 2: Despite difficult prior year comps, cement volumes in fourth quarter were flat, with double-digit growth in Florida and Arizona offset by winter weather in California.
With double digit growth in Florida, and Arizona, offset mild winter weather in California.
With the rapid rise in input cost in May we moved aggressively to address cost pressures for.
Speaker 2: With the rapid rise in input cost in May, we moved aggressively to address cost pressure.
For the first time in 15 years, we introduced a successful second national pricing increase.
Speaker 2: For the first time in 15 years, we introduced a successful second national pricing.
As a result fourth quarter sequential cement prices rose, 1%, while year over year prices increased 6% R.
Speaker 2: As a result, fourth quarter sequential cement prices rose 1% while year-over-year prices increased 6%.
Our efforts to align with cost inflation continue in 2022 with double digit cement pricing.
Speaker 2: Our efforts to align price with cost inflation continue in 2022 with double-digit cement pricing announcements scheduled for the first half. January price increases took effect in Florida, Southern California, and Colorado, regions which represent approximately 40% of our cement volume.
Scheduled for the first half of January price increases took effect in Florida, Southern California, and Colorado regions, which represent approximately 40% of our cement volumes.
Given the continued cost pressure, we have advised customers that they should expect second pricing increase in the year.
Speaker 2: Given the continued cost pressure, we have advised customers that they should expect a second pricing increase in the year.
<unk> cost primarily fuels rose more than 20% in the second half while imports increased almost 30% year over year as a result, EBITDA margin declined 1.2 percentage points in 2021 .
Speaker 2: Energy costs, primarily fuels, rose more than 20 percent in the second half, while imports increased almost 30 percent year over year. As a result, EBITDA margins declined 1.2 percentage points in 2021.
Offset some of the rising input cost pressure in 2022, we will take full advantage of imports from our Mexican operations, a key competitive strength.
Speaker 2: To offset some of the rising import cost pressure in 2022, we will take full advantage of imports from our Mexican operations, a key competitive strength. As we look forward, we will
As we look forward we remain optimistic.
We expect a low single digit growth in volumes for cement ready mix and aggregates driven by the residential sector and a recovery in industrial and commercial.
Speaker 2: We expect a low single digit growth in volumes for cement ready mix and aggregates driven by the residential sector and a recovery in industrial and commercial.
Despite rising interest rates, we are confident we will continue to see residential growth driven by backlog in housing demand finally for infrastructure, we expect the new binding infrastructure built to yield incremental demand for our products towards the end of 2022 .
Speaker 2: Despite rising interest rates, we are confident we will continue to see residential growth driven by a backlog in housing demand. Finally, for infrastructure, we expect the new Biden infrastructure bill to yield incremental demand for our products towards the end of 2020.
2021 was a great year in Mexico with sales rising 17% to record annual sales in peso terms. The industry is operating at a high capacity utilization rate with no new capacity addition, apart from our own.
Speaker 2: 2021 was a great year in Mexico, with sales rising 17% to record annual sales in peso terms. The industry is operating at a high capacity utilization rate with no new capacity additions apart from ARPA.
Topline growth was driven by high single digit volume growth and mid to high pricing for all of our products. In 2021, we saw double digit bagged cement growth during the first half supported by government social programs and record level of remittances slow in the second half as the.
Speaker 2: Top-line growth was driven by high single-digit volume growth and mid-to-high pricing growth for all of our products.
Speaker 2: In 2021, we saw double digit bag cement growth during the first half, supported by government social programs and record level remittances, slow in the second half, as the comps became more difficult and we moved out beyond the midterm election.
Comps became more difficult and we move out beyond the mid term elections.
Speaker 2: As the formal economy picked up steam, bulk cement and ready-mix volumes benefited from higher formal housing and industrial activity.
Formal economy picked up steam bulk cement and ready mix volumes benefited from higher formal housing and industrial activity.
Industrial activity was supported by growth in manufacturing and warehousing onshoring as well as the build out of logistics networks.
Speaker 2: Industrial activity was supported by growth in manufacturing and warehouses, onshoring, as well as the build-out of logistic networks.
In fourth quarter cement volumes declined largely due to a difficult comparison base with fourth quarter 'twenty 'twenty volumes, the highest since 2014, driven by pandemic housing improvement and government social programs.
Speaker 2: In fourth quarter, cement volumes declined, largely due to a difficult comparison base with fourth quarter 2020 volumes, the highest since 2014, driven by pandemic housing improvements and government social programs.
While cement prices grew 9% point to point in Mexico in 'twenty 'twenty. One this increase was not sufficient to compensate for a rapidly escalating cost inflation in the second half driven largely by energy.
Speaker 2: While cement prices grew 9% point-to-point in Mexico in 2021, this increase was not sufficient to compensate for rapidly escalating cost inflation in the second half, driven largely by energy.
While full year margins expanded five percentage points, we saw a deterioration in margins in the second half with fourth quarter margin declining three two percentage points.
Speaker 2: While full year margins expanded 0.5 percentage points, we saw a deterioration in margins in the second half with fourth quarter margin declining 3.2 percentage points.
The compensate for input cost inflation, we announced mid teen percentage price increases for our products effective January 1st.
Speaker 2: To compensate for input cost inflation, we announced mid-team percentage price increases for our products effective January 1st.
In addition, our climate action strategy is also helping us to respond to cost pressures in Mexico.
Speaker 2: In addition, our climate action strategy is also helping us to respond to cost pressures in Mexico.
In fourth quarter 2021, our alternative fuel consumption in Mexico reached 28%.
Speaker 2: In fourth quarter 2021, our alternative fuel consumption in Mexico reached 28 percent.
Regarding 2022 we expect our cement volumes to be flat or decline low single digits, while ready mix and aggregates increased between two and 5%.
Speaker 2: Regarding 2022, we expect our cement volumes to be flat or decline low single digit, while ready mix and aggregates increase between 2 and 5 percent.
Our cement volume guidance is driven by a difficult comparison base in bagged cement in 2021 due to pre electoral spending and stay at home renovation, we expect bagged cement growth in Mexico to adjust to a more normalized trend its formal sector demand accelerates.
Speaker 2: Our cement volume guidance is driven by a difficult comparison base in bagged cement in 2021 due to pre-electoral spending and stay-at-home renovations. We expect bagged cement growth in Mexico to adjust to a more normalized trend as formal sector demand accelerates.
We will take advantage of expected lower cement volume growth to support the needs of our U S business.
Speaker 2: We will take advantage of expected lower cement volume growth to support the needs of our U.S.
With high capacity utilization in the entire industry facing similar cost challenges. We are confident that we should be able to recover input cost inflation.
Speaker 2: With high capacity utilization and the entire industry facing similar cost challenges, we are confident that we should be able to recover input cost inflation.
In EMEA top line annual growth of 6% was driven by higher prices and volumes in most markets European volumes were up mid single digits across our core products led by increasing infrastructure residential activity in the U K Poland France.
Speaker 2: In EMEA, top-line annual growth of 6% was driven by higher prices and volumes in most markets. European volumes were up mid-single digits across our core products, led by increasing infrastructure and residential activity in the UK, Poland, France, and Spain.
In Spain.
We achieved record cement volumes in Europe led by double digit growth in the U K with most markets above pre COVID-19 levels.
Speaker 2: We achieved records, men, volumes in Europe , led by double-digit growth in the UK with most markets above pre-COVID levels.
A second round of price increases was implemented in the second half of the year to respond to the sudden run up in input cost inflation.
Speaker 2: A second round of price increases was implemented in the second half of the year to respond to the sudden run-up in input cost inflation. As a result, our European cement prices in local currency terms rose 1% sequentially and were up 4% for the year.
As a result, our European cement.
Prices in local currency terms rose, 1% sequentially and were up 4% for the year.
We have already announced price increases for January and April in Europe , which we expect will offset inflationary pressures from energy raw materials.
Speaker 2: We have already announced price increases for January and April in Europe , which we expect will offset inflationary pressures from energy and raw materials.
With our favorable carbon credit position, we have not been affected by the rapid run up in carbon costs in 2021 .
Speaker 2: With our favorable carbon credit position, we have not been affected by the rapid run-up in carbon costs in 2021.
Finally in Europe , our urbanization solutions business was an important driver of EBIT growth.
Speaker 2: Finally, in Europe , our urbanization solutions business was an important driver of EBITDA growth.
EBITDA for the EMEA region rose, 4% in 2021 with a slight decline in EBITDA margin.
Speaker 2: EBITDA for the EMEA region rose 4% in 2021, with a slight decline in EBITDA margins.
The Philippine cement volumes were up 7% with all sectors growing volumes were heavily impacted in the fourth quarter by typhoon <unk>, which caused significant disruptions in the central part of the country.
Speaker 2: In the Philippines, cement volumes were up 7% with all sectors growing. Volumes were heavily impacted in fourth quarter by Typhoon Odette, which caused significant disruptions in the central part of the country.
However, we do expect the construction activity to begin in 2022.
Speaker 2: However, we do expect the construction activity to begin in 2020.
Pricing has been improving in the Philippines with three consecutive quarters of growth for more information. Please see our CHP quarterly earnings which will be available. This evening.
Speaker 2: Pricing has been improving in the Philippines with three consecutive quarters of growth. For more information, please see our CHP quarterly earnings, which will be available this evening.
In Israel construction activity was strong in 2021 with average daily sales volumes for ready mix growing double digit.
Speaker 2: In Israel, construction activity was strong in 2021, with average daily sales volumes for ReadyMix growing double digits and with low single-digit growth for Agribusiness.
And with low single digit growth for aggregates.
Finally in Egypt.
Speaker 2: Finally, in Egypt, since the government announced an industry rationalization plan, we have seen an important improvement in prices.
Government announced an industry rationalization plan, we have seen an important improvement in pricing.
For 2022 we are expecting volume growth across our EMEA region supported by fiscal stimulus and the renovation waves in Europe as well as some strong fundamentals in most markets.
Speaker 2: For 2022, we are expecting volume growth across our EMEA region, supported by fiscal stimulus and the renovation wave in Europe , as well as strong fundamentals in most markets.
2021 was a very strong year for our South Central America, and the Caribbean Operation net sales rose, 18% on a like to like basis, the highest annual growth since 2012.
Speaker 2: 2021 was a very strong year for our South Central America and the Caribbean operations. Net sales rose 18% on a like to like basis, the highest annual growth since 2012.
While the region did benefit from an easy comp due to Covid lockdowns in 'twenty 'twenty 2021 cement volumes grew 13% and surpassed pre pandemic levels hit double digit growth occurred in spite of the sporadic pandemic locked down in some markets as well as social protest in Colombia.
Speaker 2: While the region did benefit from an easy comp due to COVID lockdowns in 2020, 2021 cement volumes grew 13% and surpassed pre-pandemic levels.
Speaker 2: This double-digit growth occurred in spite of sporadic pandemic lockdowns in some markets, as well as social protests in Colombia in the second quarter.
In the second quarter.
With volume growth and high capacity utilization the region experienced strong pricing momentum with cement prices up 8% in the fourth quarter.
Speaker 2: With volume growth and high-capacity utilization, the region experienced strong pricing momentum, with cement prices up 8% in the fourth quarter. As a result of tight cost management control, EBITDA grew 25%, while EBITDA margin expanded approximately 2%.
As a result of tight cost management control EBITDA grew 25%, while EBITA margin expanded approximately two percentage points.
Volumes in fourth quarter declined slightly primarily due to Colombia as a result of our pricing strategy.
Speaker 2: Values in fourth quarter decline slightly, primarily due to Colombia, as a result of our pricing strategy.
With continuous cost pressures, we announced price increases in cement to the beginning of the year of approximately mid single digits for the region.
Speaker 2: With continuous cost pressures, we announced price increases in cement for the beginning of the year of approximately mid-single digits for the region.
In Colombia, our full year cement volumes grew 8% supported by housing self construction and infrastructure the outlook for the country in 2022 remains positive with the healthy self construction sector.
Speaker 2: In Colombia, our full-year cement volumes grew 8 percent, supported by housing, self-construction, and infrastructure. The outlook for the country in 2022 remains positive, with a healthy self-construction sector, 4G highway projects, as well as the rollout of new infrastructure programs.
<unk> highway projects as well as the rollout new infrastructure program.
In the Dominican Republic, we saw strong demand break in 2021 with cement volumes up 22% due to unexpected maintenance in fourth quarter, our volumes declined 5%.
Speaker 2: In the Dominican Republic, we saw strong demand growth in 2021, with cement volumes up 22%. Due to unexpected maintenance in fourth quarter, our volumes declined 5%.
Demand is supported by the self construction sector and the reactivation of tourism projects going forward do you expect the self construction sector to continue to benefit from a high level of remittances, while the formal sector maintained its recovery trajectory.
Speaker 2: Demand is supported by the self-construction sector and the reactivation of tourism projects. Going forward, we expect the self-construction sector to continue to benefit from a high level of remittances while the formal sector maintains its recovery trajectory.
We believe that with higher global shipping cost our strong logistics network, coupled with our planned net capacity additions into a sold out region will be an important competitive advantage.
Speaker 2: We believe that with higher global shipping costs, our strong logistics network coupled with our planned cement capacity additions into a sold-out region will be an important competitive advantage.
I invite you to review C. L agents quarterly results, which were also published today and now I'll pass the call Tomorrow here to review our financial developments.
Speaker 2: I invite you to review CLH's quarterly results, which we're also published today. So now I will pass the call to mock her to review our financial development.
Yeah.
Thank you Lucy and good day to everyone as you heard from Fernando our 'twenty 'twenty. One results were quite strong with sales and EBITDA growing the most in a decade and generating around $1 billion in free cash flow for the second year in a row.
Speaker 4: Thank you, Lucy, and good day to everyone. As you heard from Fernando, our 2021 results were quite strong, with sales in EBITDA growing the most in a decade and generating around $1 billion in free cash flow for the second year in a row.
On the debt management and capital structure side.
Speaker 4: On the debt management and capital structure side, our results last year were also quite strong and transformational for us. A year of many
Our results last year were also quite strong and transformational for us.
A year of many records and first.
We issued the lowest cost U S dollar bond in our history.
Speaker 4: We issued the lowest cost US dollar bond in our history. We refinanced our syndicated bank facility at a cost never achieved before, slightly above 1%. And with investment- 0%,
We refinanced our syndicated bank facility and of course never achieved before at slightly above 1%.
And with investment grade style structure.
At first in over a decade, we also introduced a sustainability linked financing framework, which is unrivaled in our industry and includes three key performance indicators and a second party opinion from the leading provider.
Speaker 4: First, in over a decade, we also introduced a sustainability linked financing framework, which is unrivaled in our industry and includes three key performance indicators and a second party opinion from the leading provider.
We paid or refinanced over $7 $5 billion in debt and applied free cash flow and asset sales proceeds to reduce debt.
Speaker 4: We paid or refinanced over $7.5 billion in debt and applied free cash flow and asset sales proceeds to reduce debt. During the year, our consolidated net debt, as measured under our credit agreement, declined by $2.3 billion. And we reduced interest expense by $141 million, representing savings of 20% versus the prior year.
During the year, our consolidated net debt as measured under our credit agreement declined by $2 $3 billion, and we reduced interest expense by $141 million, representing savings of 20% versus the prior year.
We also reduced our leverage ratio by the most ever reaching 273 times a reduction of one four times and significantly lengthened our average life of debt to six two years, the highest in more than a decade.
Speaker 4: We also reduced our leverage ratio by the most ever reaching 2.73 times, a reduction of 1.4 times and significantly lengthened our average life of debt to 6.2 years, the highest in more than a decade.
All these achievements were noted by our rating agencies during the year Fitch upgraded our credit rating by one notch to double B and both Fitch and S&P raised their outlook to positive.
Speaker 4: All these achievements were noted by our rating agencies. During the year, Fitch upgraded our credit rating by one notch to double B, and both Fitch and S&P raised their outlook to positive.
In December we became a founding member of the recently created United Nations Global comeback CFO Task force for the sustainable development goals, which aims among other things to attract more capital towards sustainable development.
Speaker 4: In December , we became a founding member of the recently created United Nations Global Compact CFO Task Force for the Sustainable Development Goals, which aims among other things to attract more capital towards sustainable development.
In line with the task force in schools, we aim to have at least 50% of our debts back sustainability linked by 2025.
Speaker 4: In line with the task force's goal, we aim to have at least 50% of our debt stack sustainability linked by 2025.
We approached 2022.
With a very strong financial position, we do not have any refinancing needs for the next three years, we have minimal exposure to interest rates with 90% of our debt at a fixed rate a very favorable position in an environment of rising rates.
Speaker 4: with a very strong financial position. We do not have any refinancing needs for the next three years. We have minimal exposure to interest rates with 90% of our debt at a fixed rate, a very favorable position in an environment of rising rates.
Our liquidity position today is stronger than ever we have a strong cash position with a record of $1 75 billion committed revolving credit facility that allows us to comfortably navigate through our business cycle.
Speaker 4: Our liquidity position today is stronger than ever. We have a strong cash position with a record of 1.75 billion committed revolving credit facility that allows us to comfortably navigate through our business cycle.
On our risk management side, we are adequately positioned to mitigate risks associated with currency fluctuations in most of our non U S. Dollar markets. We have raised that in various currencies when when pricing is attractive such as the euro Mexican peso, Philippine peso and the Colombian peso, among others, which translated.
Speaker 4: on our risk management side, we are adequately positioned to mitigate risks associated with currency fluctuations in most of our non-US dollar markets.
Speaker 4: We have raised debt in various currencies when pricing is attractive, such as the Euro, Mexican Peso, Philippine Peso, and the Colombian Peso, among others, which translated into a positive $140 million translation effect on our debt this year.
Into a positive $140 million translation effect on our debt this year.
In addition, we have an ongoing Mexican peso hedging strategy that effectively lowered the volatility of the exchange rate at which we convert personal is $2 four tenders of up to 18 months.
Speaker 4: In addition, we have an ongoing Mexican peso hedging strategy that effectively lowers the volatility of the exchange rate at which we convert pesos to dollars for tenors of up to 18 months.
This year, our operations generated $1 $1 billion in free cash flow, an increase of $143 million versus the year before.
Speaker 4: This year, our operations generated $1.1 billion in freakage flow, an increase of 143 million versus the year before.
This growth in free cash flow was driven primarily by higher EBITDA and savings on financial expenses.
Speaker 4: This growth in free cash flow was driven primarily by higher EBITDA and savings on financial expenses.
Investment in working capital was driven primarily by the 14% increase in this in sales this year.
Speaker 4: Investment in working capital was driven primarily by the 14% increase in sales this year.
However, average working capital days reached minus 15 days, one day better than last year.
Speaker 4: However, average working capital days reached minus 15 days, one day better than last year.
We aim to continue improving our discipline in working capital management for example on the collections front, we are working on reducing the risk profile of our receivables by partnering with third parties that are using artificial intelligence and cognitive analytics to improve the sales to collection process.
Speaker 4: We aim to continue improving our discipline in working capital management.
Speaker 4: For example, on the collections front, we are working on reducing the risk profile of our receivables by partnering with third parties that are using artificial intelligence and cognitive analytics to improve the sales to collection process.
As a result, the credit quality and the turnover efficiency of our receivables are at record levels.
Speaker 4: As a result, the credit quality and the turnover efficiency of our receivables are at record level.
Finally for our strategic Capex, we invested $380 million in highly accretive growth projects.
Speaker 4: Finally, for Strategic CapEx, we invested $380 million in highly appretive growth pricing.
We are currently undertaking the biggest and most comprehensive adoption of digital technologies ever to transform the way business services are provided at some X. We're calling it working smarter working smarter will fundamentally change the current shared services model into a fully digital virtual and agile way of delivering.
Speaker 4: We are currently undertaking the biggest and most comprehensive adoption of digital technologies ever to transform the way business services are provided at CEMEX. We're calling it Working Smarter. Working Smarter will fundamentally change the current shared services model into a fully digital, virtual, and agile way of delivering business management services across our company that will create a unique competitive advantage.
<unk> business management services across our company and will create a unique competitive advantage.
With advanced platforms analytics, and automation services, we will deliver digital workplace solutions and collaboration frameworks to enhance the employee and workforce experience working smarter with leverage remote work and virtual centers of excellence to allow business services to be provided seamlessly with the best talent anywhere in the world.
Speaker 4: With advanced platforms, analytics and automation services, we will deliver digital workplace solutions and collaboration frameworks to enhance the employee and workforce experience. Working smarter will leverage remote work and virtual centers of excellence to allow business services to be provided seamlessly with the best talent anywhere in the world.
To accelerate innovation, we have signed separate multiyear contracts, but in the aggregate are totaling $500 million with six leading service providers in the fields of finance and accounting information technology and human resources, replacing current expenditures with new supplier services.
Speaker 4: To accelerate innovation, we have signed separate multi-year contracts that in the aggregate are totaling $500 million with six leading service providers in the fields of finance and accounting, information technology, and human resources, replacing current expenditures with new supplier services at an optimized cost, effectively continuing to reduce our operating expenses.
At an optimized cost effectively continuing to reduce our operating expenses.
In addition, having access to our partners' collective research and development capabilities ensures that working smarter will remain at the forefront of technology and innovation for years to come.
Speaker 4: In addition, having access to our partners' collective research and development capabilities ensures that working smarter will remain at the forefront of technology and innovation for years to come.
Beyond all of these benefits I just discussed we expect to capture accumulated savings up to $100 million per year. Once working smarter is fully implemented.
Speaker 4: Beyond all of these benefits I just discussed, we expect to capture accumulated savings up to $100 million per year once working smarter is fully implemented and achieve a return on investment of about four times with short payback periods.
And achieve a return on investment of about four times with short payback periods of course as we go through the implementation of these various initiatives, we will fine tune the timing scope and magnitude of these savings for more details about this initiative I invite you to take a look at the press release, we issued earlier this week and now back.
Speaker 4: Of course, as we go through the implementation of these various initiatives, we will fine-tune the timing, scope, and magnitude of these savings. For more details about this initiative, I invite you to take a look at the press release we issued earlier this week. And now, back to you, Fernando.
To you Fernando.
2022 we expect they'd be back row of mid single digits.
Speaker 3: In 2022, we expected that growth of mid-singled digits.
This growth will be driven primarily by pricing with flat to low single digit volume increases.
Speaker 3: This road will be driven primarily by pricing with flat to low single-digit volume increases.
Cost headwinds will continue to be with us in the first half of the year.
Speaker 3: cost headwinds will continue to be with us in the first half of the year due to more difficult countries.
Due to more difficult comps as.
As we only began to experience inflationary pressures in the water of 2021 .
Speaker 3: as we only begin to experience inflationary pressures in the third quarter of 2021.
But we expect these pressures to eat on a year over year basis in.
Speaker 3: we as peg this pressure to eat on a year or a year basis in the back half.
In the back half.
We expect energy to remain the largest cost headwind and we estimate our energy for the production of some met with increased by 19%.
Speaker 3: We expect energy to remain the largest cost headwind and we estimate that energy for the production of cement will increase by 19% on a per ton of cement consumed basis. We expect...
So that's consolidated.
We expect capex of $1 3 million butter.
With 600 million Barnes going through strategic Capex.
Speaker 3: with 600 million dollars going to strategic...
We drive sales, we anticipate an investment in working capital of $150 million.
Speaker 3: We drive in sales, we anticipate an investment in working capital of $150 million.
Cash taxes are expected to be 250 million Bucks.
Speaker 3: Cash taxes are expected to be $250 in the number of...
They are not one that's what we expect.
Speaker 3: Based on our full debt portfolio, we expect the cost of debt to decline by $10 million.
Awesome, that's declined by $10 million.
All week.
We'll continue to look for market windows for refinancing opportunities.
Speaker 3: will continue to look for market windows for prefinancing
Overall in 2022 we anticipate a favorable environment with more moderate growth in most markets.
Speaker 3: On our all, in 2022, we anticipate a favor about the environment with more moderate bottom growth in most markets.
Strong rising by not makes that reflect high capacity utilization.
Speaker 3: strong pricing dynamics that reflect high capacity utilization and input cost integration.
Cost inflation.
Finally, we aim to recover margins in line with our operational procedures to go with our pricing strategy.
Speaker 3: Finally, we aim to recover margins in line with our Operation Precisions goal with our pricing strategy.
What's the urgency.
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 could change in the future G to a variety of factors beyond our control.
Speaker 2: 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 could change in 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 refers to prices for our products.
Speaker 2: In addition, unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases, refers to prices for our products.
And now we'll be happy to take your questions in the interest of time and to get other people an opportunity to participate we kindly ask that you limit yourself to one question. If you wish to ask a question. Please press star followed by one on your Touchtone telephone.
Speaker 2: And now we will be happy to take your questions. In the interest of time and to give other people an opportunity to participate, we kindly ask that you limit yourself to one question. If you wish to ask a question, please press star followed by one on your touchstone telephone. If your question has been answered or you wish to withdraw the question, press star followed by two.
If your question has been answered or you wish to withdraw the question Press star followed by chip.
Press Star one to begin.
Yeah.
And our first question comes from Vanessa Quiroga from Credit Suisse. Vanessa. Please go ahead.
Speaker 2: And the first question comes from Vanessa Carroga from Credit Suisse. Vanessa, please go ahead.
Hi, Thank you Lucy siphoned learned okay. Okay.
Speaker 5: Hi, thank you Lucy, hi Fernando, hi, marker. Hi, Vanessa. Taking my question. Hi, it's the following. So, continuing your indications of double digit pricing growth in key markets.
I've been taking my question Hi, it's Stefan Louise So considering your indications so double digit pricing growth in key markets and investments contributing to $100 million to beat that and really that guidance of mid single digit EBITDA growth.
Speaker 5: and the investments contributing to $100 million to be debt.
Speaker 5: Really, the guidance of mid-single-digit EBITDA growth seems low, in my view, even against the energy cost increase that you're indicating of 19 percent. So I'm wondering if there's another factor affecting margins. I mean, is something happening with the PEM expected volumes, or are you expecting to having to import a clinker at much higher cost?
So in my view, even against that energy cost increase that you're indicating up 19%. So I'm wondering is there. Some other factor I think the margins are is I mean, if something is happening with the Pemex pet coke volumes or are you expecting to having to import.
Clinker at much higher cost.
Speaker 5: Because, yeah, the EBIDTA guidance seems low given the pricing indication. Thank you.
Because yeah, the EBITDA guidance seems low and even given the pricing indications. Thank you.
And how would you like me to take a stab at that.
Please go ahead.
Thank you.
Speaker 4: Vanessa, I think that, you know, you put your finger on the pulse there. I think that, you know, certainly we're coming into 2022.
And that's how I I I I think that.
You put your finger on the on the pulse there I think that you know certainly we're coming into 2022 assuming and expecting a lot of volatility.
Speaker 4: assuming and expecting a lot of volatility.
You know, particularly on the on the cost side and and of course, we are planning for the inflation that we've seen to be you know fairly structural for the foreseeable future and I'm sure you saw the CPI numbers. This morning that really throw a curve ball due to.
Speaker 4: you know, particularly on the cost side. And of course, we are planning.
Speaker 4: for the inflation that we've seen to be you know fairly uh... structural for the foreseeable future and i'm sure you saw the cp i numbers this morning that really through a curve ball to
To the market. So so we are being cautious I mean, we are expecting.
Speaker 4: to the market so so we are being cautious. I mean we are expecting You know things to be volatile. It's just a reminder for everybody. You know if we take
You know things can be volatile it's not just a reminder for everybody you know it.
If we take.
The the energy price increases that we saw in the fourth quarter and hold them flat to the whole year that would give us about a 15% increase so we're guiding 19% we could be I don't know who knows we could be better we could be worse of course, we are accelerating our efforts to to switch to alternative fuels and lesser cost.
Speaker 4: uh... the the energy price increases that we saw in the fourth quarter and hold them flat to the whole year
Speaker 4: you know, that would give us about a 15% increase. So we're guiding 19%. We could be, I don't know, who knows, we could be better, we could be worse. Of course, we're accelerating our efforts to switch to alternative fuels and lesser costly and more effective fuels. So that's one big challenge.
Lee and more effective.
And so that's one big challenge you.
Speaker 4: You mentioned the possibility of more imported cement and clinker and the answer is yes. I mean, we are expecting growth in some markets that are sold out and we do expect
You mentioned the possibility of.
It more imported cement and clinker in the answers is yes, I mean, we are expecting growth in some markets that are sold out and we do expect.
Some growth in that and of course, the costs are higher because of transportation and so forth and so on now it's very important that.
Speaker 4: You know some growth in that and of course the the cost
Speaker 4: are higher because of transportation and so forth and so on. Now, it's very important that going into this year, we're expecting a bigger percentage of the amount of cement that we trade to be coming out of our own facilities, in particular in Mexico, which on a consolidated basis should be more beneficial, right?
Going into this year, we're expecting a bigger percentage of the amount of cement that we tried to be coming out of our own facilities in particular in Mexico, which on a consolidated basis should be should be more should be more beneficial right.
So I think that our bottom line on the you know you heard our guidance on the volume side, we're expecting flattish volumes in cement low single digits in a in a in aggregates and a low to mid single digits and Oh, sorry, low to mid single digits in aggregates and low single digit in ready mix.
Speaker 4: So, I think that the bottom line on the, you know, you heard our guidance on the volume side. We're expecting flattish volumes in cement, low single digits in aggregates and low to mid-single digits in, sorry, low to mid-single digits in aggregates and low single digits in ready mix.
Now very importantly, as pricing. This is a year that is about pricing that is very important and we are aiming to reach our operational resilience margins of 20% and also recovering the cost cap from 2021.
Speaker 4: This is a year that is about pricing, that is very important, and we are aiming to reach our operation resilience margins of 20% and also, you know, recovering the cost gap from 2021.
So so you know coming into the year of course, where we have a little bit of a tailwind if we take a look at the end to end sorry, our.
Speaker 4: Coming into the year, of course, we have a little bit of a tailwind. If we take a look at the end-to-end, sorry, December to December 20 to 21 point-to-point pricing increase for the year was 10% versus the year-over-year pricing increase of 5%.
December to December 'twenty to 'twenty, one point to point pricing increase for the year was 10%.
And and versus the.
The year over year pricing increase of 5%. So we think that we're coming in with a a good tailwind and as you said, we've definitely made announcements.
Speaker 4: So we think that we're coming in with a good tailwind. And as you said, we've definitely made announcements in pricing of double digits in, I would say most of our markets for January and April , and we're getting good traction on that. Now, additionally, we are quite hopeful on the results from the growth.
In in pricing up double digits in in you know I would say most of our markets for January and April and we're getting good traction on that now. Additionally.
You know we are quite you know quite hopeful on the results from the growth portfolio and as you've as Fernando said you know we are expecting about $100 million from that now the other thing that is also important that we we remarked on peripheral you I mean I talked about it a little bit is working smarter I mean that that is.
Speaker 4: portfolio and as you as Fernando said, you know, we are expecting about a hundred million dollars from that now
Speaker 4: The other thing that is also important that we remarked on peripherally, I mean I talked about it a little bit, is working smarter. That has actually started paying off in 2021 and we're expecting it to continue to deliver in terms of cost reduction. So bottom line, I would say that we're being cautious, commensurate with the expected volatility and high inflation going into 2022.
I actually started paying off in a in 'twenty, one and we're expecting it to continue to deliver in terms of cost reduction. So bottom line I would say that we're being cautious commensurate with the expected volatility and high inflation going into 'twenty two.
And Andy I don't know if you want to add.
Speaker 4: Fernando, I don't know if you want to add anything to that. No, I think it is a very complete.
Anything to that.
No I think it's a very complete explanation later.
Thank you.
I might just add one point and that's why I think that you're well aware of this but you know we saw inflation begin to spike in June . So you know what that means is that in the first half we're going to because we had very low cost inflation in the first half of last year in the first half will be a very difficult comp.
Speaker 2: I might just add one point, and Vanessa, I think that you're well aware of this, but you know, we saw inflation begin to spike in June , so you know, what that means is that in the first half, we're going to, because we had very low cost inflation in the first half of last year, the first half will be a very difficult comp, and then things should normalize towards the back of the year.
And then things should normalize towards the back of the year.
Hum.
Speaker 2: And the next question comes from the web, and it's Paul Roger from Exsame BNP.
And the next question comes from comes from the wind and it's Paul Roger from Exane BNP.
With a 4% reduction E C O two per ton or per ton of cement produced basis.
Speaker 2: on the 4% reduction on CO2 on a per ton of cement produced basis.
At this rate given what you accomplished in 2021, you would easily achieve the 2030 target how conservative is the 475 kilo goal in could you consider revising it.
Speaker 2: At this rate, given what you accomplished in 2021, you would easily achieve the 2030 target. How conservative is the 475 kilo goal, and could you consider revising it?
Okay.
Okay, well, let me.
Let me start by by saying that love here what's.
Speaker 3: Let me start by saying that last year was for us kind of a special year regarding our transition towards a low-carbon economy.
Kind of a special year, they've got a big order.
Fusion towards a low carbon economy.
So I want that if these four 4% percentage points of its adoption.
Speaker 3: So I wonder if this 4.4% percentage points reduction will be repeated every year. But anyhow, I think.
Every year, but anyhow I think.
What we are showing less yet from salt someday I will briefly explain what is it that's happened last year.
Speaker 3: what we are showing with my field results and I will briefly explain what is happening.
I think we're showing that our industry is capable of its transition effective and fast fred's teach them twice.
Speaker 3: I think we are showing that our industry is capable of its transition, effective and fast transition towards a low-carbon economy while increasing profitability of the economy.
A low carbon economy, while increasing profitability of the industry.
Now what happened last year as you know we started adjusting our ambition of what AME a line to the the the most of the.
Speaker 3: Now, what happened last year? As you know, we started adjusting our ambition, our aim, aligned to the most assessed scenarios, and we adjusted our objectives. We broke our former 2030 objectives to 2025, and we include new ones.
Scenarios and we adjusted our objectives, if we broke it out.
But I can tell you your objectives.
And we need some new ones.
But what we did at the same time that thing getting fuzzy, but we've developed a very comprehensive roadmap.
Speaker 3: But what we did at the same time, starting in 2020, is we developed a very comprehensive road map, a CO2 reduction road map.
Tier two production drove my parents cement block.
For the first time was executed last year all over the 12 months, so that tool out of that process, they allow us to not sure but.
Speaker 3: And for the first time, it was executed last year all over the 12 months. So that tool or that process did allow us to assure that the intent, the ambition could be executed in an almost impeccable manner.
Do you have.
The ambition.
He will be executing in a almost in.
I need to pick a couple matter so.
We continue with the same.
Speaker 3: So, we continue with the same idea, meaning of the execution on this reduction. We are very...
Idea of meaning on the execution on this reduction we are betting.
Yeah.
Speaker 3: positive that we will continue making the reductions needed to comply with our objective.
Positive, but we will continue making them and don't just needed to complete our objectives.
And you're not but.
Speaker 3: 2030 is still not too close, but yes, it seems like we might be able to achieve those targets before that date.
You say, you're still not too close, but but yes. It seems like we might be able to achieve those targets before that date.
No.
We continue monitoring and observing.
Speaker 3: We continue monitoring and observing.
How are these movement or process toward a low carbon economy.
Speaker 3: how this movement or process towards a low-carbon economy evolves.
My expectations.
Speaker 3: My expectation is that through time, there will be more stringent demands from society, from different stakeholders, investors, customers, employees, everybody. And we will continue adjusting our...
Drill pipe.
It will be more strength in the months from site.
Our stakeholders investors customers employees everybody.
We will continue adjusting our work.
Pardon me.
So they basically the fact, especially one risk.
Speaker 3: So, based on the 3031 results, very positive that we will continue with reductions. Again, I cannot promise 4.4 every year, but we now, I think we have really...
So very positive.
Continue with reductions again, I cannot promise for going forward every year, but but oh wait.
Now I think we have really.
What about each other out of control.
Speaker 3: Whatever is under control is under control to assure that our objectives will be met.
The control to assure that our objectives will be met.
Yeah.
And I can't.
Speaker 3: And again, it's just a simple stratification because you know...
Is it painful stratification, because you know.
So many so many negative interpretations regarding that what even the street.
Speaker 3: So many negative interpretations regarding our industry, regarding our possibility or capability of...
Got it.
The possibility of capability of <unk>.
You shouldn't toward a low carbon economy on them and you know the the potential reduction in mind against the potential increase.
Speaker 3: into a low-carbon economy and you know that the potential reduction in margins, the potential increases of capex without returns, I think that through time we will be demonstrating that that's the old wisdom and there is a new wisdom which calls for a cement industry in a circular green economy, serving better society and being as profitable or even more profitable than it has been.
Increases of Capex without returns.
That's what we'd be demonstrating that that's the old wisdom and that is the new wisdom, which calls for a cement industry in particular, the green economy, instead of being better society, and being as profitable or even more profitable company.
Thank you Fernando.
And the next question comes from Carlos very long from Bank of America. Carlos. Please go ahead.
Speaker 2: And the next question comes from Carlos Parylon from Bank of America. Carlos, please go ahead.
Thank you Lucy and good morning, Fernando him or her.
Speaker 6: Thank you, Lucy. Good morning, Fernando, Maher, and Lucy. My question is related to pricing. If you could comment a little bit on the traction you've gotten so far. You've announced important price increases in most of your geography, so it would be interesting to see what type of traction you're getting. I understand that at least in Mexico, the traction is very solid, so it would be great to hear your comments on this issue of traction. Thank you.
My question was a.
Good morning.
My question is related to the pricing, maybe you could comment a little bit on the traction you've gotten so far you've announced important price increases in most of your geography. So it would be interesting to see what type of traction you're getting I understand at least in Mexico. The traction is very solid so it would be great to hear you.
Commentary on this issue of obstruction. Thank you.
Let me, let me make a general comment and then that would last month had a little system to complement them some more specifics.
Speaker 3: Let me make a general comment, and then I will ask Mahir to do it.
Speaker 3: complement on some more specific
Yes.
I think it is clear that what happened last year is that we start it with a fine I started and executed our pricing strategy, considering a much lower inflation, meaning.
Speaker 3: I think it is clear that what happened last year is that we started, we defined and started and executed our pricing strategies considering a much lower inflation, meaning.
Normally the last quarter of the year, we plan for what our pricing strategy for the first four months of the next.
Speaker 3: Normally, the last quarter of the year, we planned for our practice strategy for the first four months of the next year.
Next year and that's what we did.
Nationstar it.
Speaker 3: Inflation started really going up materially in June .
Really.
Going up.
Materially in June July are more or less.
So most of our pricing strategy.
Speaker 3: So most of our trip is strategy by then. It was already executed. So what we did is...
Let somebody executed so what we do.
Jackie monitoring realizing them.
Speaker 3: check-in, monitoring, realising and reacting with additional price increases in the second half when possible.
Mhm.
With additional price increases in the second half when.
When when possible.
Yeah.
Speaker 3: And as we have commented in the case of ready-mix and aggregates, we managed to maintain margins in the case of cement. It was not the case. It is the problem that has been most affected. But when we saw that happening on top of, you know, trying to increase taxes from the second hand side.
It indicates ready mix and aggregate.
We managed to maintain a.
In the case of cement what it was not the case he says he's.
That has been most affected but when we saw this happening on top of you know trying to increase.
The second time.
In the year.
We develop our strategy for 2020 considering it.
Speaker 3: We develop our practice strategy for 2022, considering a two-in-half levels of inflation.
We're in the high levels of inflation.
Clarification, Luciano resume we we didn't buy.
Speaker 3: clarification that I think Lucy already made. We didn't buy or we didn't take the idea of inflation in Europe at some point some of the year.
Didn't he.
The idea of inflation.
And Laurie.
Some of the year I would've.
That was nothing can.
Convenient batesville our strategy, so we start executing our pricing.
Speaker 3: being based on our strategy. So we start executing our pricing, our 2022 pricing strategy already with the idea of recovering.
Plenty to pricing, but you're already with the idea.
Recall that in March and small.
Love to do more to mic in student lending.
Speaker 3: not to lose more migrants during 2022 and to achieve our operational resilience margin of 20%
But our operational resilience marketing.
<unk>.
Got it.
Now what is it that we've seen lately and I would like to go to market.
Speaker 3: Now, what it is that we've seen lately, and I would like for either Maher or Luce to comment, but we are very, very pleased and positive on what we have seen in January .
But we are very very pleased and positive on what we have seen in January .
Terry just a month.
Speaker 3: Kerry is just a month, but again, what we see is very positive.
But again, what we see is very positive so if the government.
It wants to complement.
Yeah.
Thank you Fernando.
Speaker 4: Thank you, Fernando. I'll jump in. I mean, Carlos, first, I mean, as Fernando said, I mean, we see some very good response for the January pricing increases. I mean, they're going well. I think you saw in Mexico in particular, I think yesterday, INEGI came out announcing prices.
I'll jump in I mean, Carlos I first I mean, as Fernando said I mean the.
We see some very good response from the January pricing increases I mean, theyre going well.
I think you saw in Mexico in particular, I think yesterday, you know he came out announcing prices.
Sequentially going up.
Speaker 4: sequentially going up by a little bit over 8 percent. This is, you know, from December .
By a little bit over 8%. This is from December .
And you know, we're we're obviously an important part of the market so without kind of saying what we did I think you can pretty much extrapolate from that in.
Speaker 4: We're obviously an important part of the market, so without saying what we did, I think you can pretty much extrapolate from that.
In the case of our U S and Europe , which are more seasonally pricing increases or more seasonally affected you know for those markets, where we're we announced pricing increases for January and for those customers.
Speaker 4: In the case of U.S. and Europe , which are more seasonally, the pricing increases are more seasonally affected.
Speaker 4: For those markets where we announced pricing increases for January , and for those customers, the prices sequentially were up in the mid-single-digit to low-double-digit area. So we've gotten some very good traction.
Uh huh.
The prices sequentially were up in the mid single digit to low double digit area. So we've gotten some very good traction in.
In those markets that are and to those customers that had been affected now obviously as you know the U S because of seasonality pricing most of the pricing happens in the spring in April and and so that's that is going to be impacting the biggest part of the of our sale.
Speaker 4: in those markets and to those customers that have been affected. Now, obviously, as you know, the U.S., because of seasonality, pricing, most of the pricing happens in the spring, in April . And so that is going to be impacting the biggest part of our sales there. In the U.S., the January pricing increased.
They're in the in the U S. The January pricing increase is affecting about 40% of our sales versus the April one will be more 60% Europe is along the same the same lines and are in the <unk> region. We also got some very good traction versus the fourth.
Speaker 4: is affecting about 40% of our sales versus the April one will be more 60%. Europe is along the same lines.
Speaker 4: And in the SCAC region, we also got some very good traction versus the fourth quarter, we got around a mid-single digit.
Quarter, we got around a mid single mid single digit.
Increase now too.
Speaker 4: increase. Now, to summarize, I mean, we're going into January with somewhere between 50 to 60 percent of our markets with pricing increases starting as of January , and we're expecting the balance
To summarize I mean, we're going into January with somewhere between 50% to 60% of our markets with pricing increases starting as of January and we're expecting the balance to come in.
Speaker 4: to come in in April , in the spring.
In in April in the spring now.
Something very important that we need to mention here is that you know we have communicated with our customers in many of our markets.
Speaker 4: Something very important that we need to mention here is that, you know, we have communicated with our customers in many of our markets, particularly markets that are sold out, that they should expect a second round of pricing increases in the summer and fall. And this is based on our expectations of the structural nature of inflation, which, you know, which we expect.
Particularly markets that are sold out that they should expect a second round of pricing increases in the summer and fall and this is based on our expectations of the structural nature of inflation, which you know, which we expect to to continue now.
Speaker 4: to continue. Now, you know, at the same time, as I said earlier, I mean, you know, on the cost side, we're not sitting on our hands. You know, we're taking actions to make sure that we're disciplined on the cost side. We're making sure that we're, you know, investing more and executing more to switch to alternative fuels, which are 60 percent.
At the same time as I said earlier I mean, you know on the cost side, where we're not sitting on our hands.
We're taking actions to make sure that we're disciplined on the cost side, we're making sure that we're investing more and executing more to switch to alternative fuels, which are 60%.
Less expensive on a giga calorie.
Speaker 4: less expensive on a giga calorie per ton basis than fossil fuels so so I think that we're pushing on all you know on all fronts frankly on the pricing side and on the cost side and and and and on the on the pricing side it's looking good so you know Lucy I don't know if you want to add
For ton basis than fossil fuels. So so I think that we're pushing on all you know on all fronts, frankly on the pricing side and on the cost side, and and and and on the on the pricing side.
It's looking good so you know what.
See I know if you want to add anything to that.
No I think you did a great job covering it [laughter] that's it for me, let's move on to the next question Ben Theurer from Barclays. Please go ahead.
Speaker 2: No, I think you did a great job covering it. That's it for me. Let's move on to the next question. Ben Thorv from Barclays, Ben, please go ahead.
Perfect. Thank you very much Louis good morning, as Wal Mart her Fernando.
Speaker 7: Perfect. Thank you very much, Lucy. Good morning as well, Maher, Fernando. So, just to understand a little bit the dynamic in Mexico, what happened in the quarter. I suspect the margin under 30% is not precisely what you're looking for. Was it maybe shift-driven, lower cement, more aggregates and ready mix? And how do you think about the level of profitability looking into 2022, also given the guidance for likely declining cement volumes, but growing ready mix and aggregates? That would be my question. Thank you.
I want to understand a little bit the dynamic in Mexico, what happened in the quarter I suspect the margin on the 30% is not precisely what you're looking for was.
Was it maybe shift driven lower cement more aggregates and ready mix and how do you think about the level of profitability looking into 2022 also had given the guidance for likely declining cement volumes, but growing ready mix and aggregates that would be my question. Thank you.
Yeah.
Well, if if I may.
Speaker 3: Well, if I make a comment...
Make comment.
Ben I think there is as you are suggesting that it's a mix effect you know ready mix.
Speaker 3: then I think there is, as you are suggesting, there is a mixed effect, you know, ready mix, volumes.
Volumes in aggregate volumes are.
You know stable or growing when compared to some bad debt.
Speaker 3: stable or growing when compared to some end, that these declines of it is to some extent a me.
So good stuff.
To some extent a mix.
So.
[noise] effect.
On margins I think in Mexico, we had the highest impact of energy costs when compared to other.
Speaker 3: On margins, I think in Mexico we have the highest impact of energy costs when compared
Oh perfect.
And for 'twenty two.
Speaker 3: And for 2022, in Mexico, our team in Mexico is following exactly the same criteria that we define for the whole company.
In Mexico our.
The team in Mexico is what can we affect.
In fact the thing.
You bet.
We define.
The whole company you know we.
<unk> got to Pittsburgh.
The what.
So from last year.
It allows them to execute price increases of 11 off.
Speaker 3: announce and to execute presentations at the level of.
We are estimating a more full of inflation outward inflation for it.
Speaker 3: what we are estimating as the most total inflation outward.
For the for the year, that's not that's it.
Speaker 3: for the year, and that is big.
You know they have already started executing on that.
Speaker 3: They have already started executing, and as Mark had mentioned, and using the data from Ineqi in the net of this equation.
As Mark had mentioned.
You've seen that from Nicky.
The sequential increase of cement prices in Mexico, it's 8%.
Speaker 3: And that is not covering 100% of our customers, so, you know, it's...
But it's not cause any concerns of our customers. So you know it.
I think it will improve.
I think Mike mentioned also our aim with our stress easy easier it used to be the quarter Mark.
Speaker 3: I think Matt mentioned also our aim with our practice strategy this year is to be quarter marked, achieve our 20% margin, if we're close to it, our 20% margin.
Achieve a 20% margin.
We work closely with them in a 50% margin.
Stoppage in our operational resilience.
All the initiatives.
Oh.
Speaker 3: So, on top of what we are already executing, executing, we will continue monitoring how inflation develops and we will...
What we are already executing.
Executing executing we will continue monitoring how inflation that they love and we will be.
Increasing prices again on us to be the basis.
Speaker 3: increasing prices again on a smoothed basis to complexities.
With these objectives.
Fernando can I, maybe also add up to Ben just a couple of things I mean this is I mean this is just a complement what Fernando was saying I mean, I think it's very important also to take a look at the comparison right I mean.
Speaker 4: Fernando, can I maybe also add to Ben, just a couple of things. I mean, this is just to complement what Fernando was saying. I mean, I think it's very important also to take a look at the comparison, right? I mean.
The fourth quarter of 'twenty 'twenty.
Speaker 4: the fourth quarter of 2020.
Cement volumes grew 17% and and and within that bag cement grew like almost 22%. So and we had like the highest I think about them, but growth since 2014, probably and so the comparison is very tough.
Speaker 4: cement volumes grew by like 17% and within that, bag cement grew like almost 22%. And we had like the highest, I think, amount of growth since 2014 probably. And so the comparison is very tough.
And and and you had really kind of and in the quarter coming into people, probably becoming more back to normalized life and focusing less on renovation and all of that that kind of accelerated quite a bit. So that's what's kind of driving this specific quarter I would say more than more than anything else.
Speaker 4: And you had really kind of, in the quarter coming into people probably becoming more back to normalized life and focusing less on renovation and all of that that kind of accelerated quite a bit. So that's what was kind of driving the specific quarter I would say more than anything else.
Thank you.
And the next question comes from Gordon Lee from BTG Pactual Gordon. Please go ahead hi, good.
Speaker 4: And the next question comes from Gordon Lee from BTG Pexual. Gordon, please go ahead. Hi, good morning. Thank you for the call. Just a quick question. You know, at some point last year and admittedly this was before the inflation spike.
Good morning. Thank you for the call just a quick question yeah at some point last year and admittedly this was before the inflation spike.
But at some point last year, you were contemplating the possibility of maybe introducing a dividend in 2022.
Speaker 7: But at some point last year, you were contemplating the possibility of maybe introducing a dividend in 2022, which you decided not to do. So I was wondering what the thinking was behind that and what you would need to see to either implement an ordinary dividend policy or a more systematic share buyback given where the stock price is trading.
Which you decided not to do so I was wondering what the thinking was behind that and what you would need to see to either implemented an ordinary dividend policy or a more systematic share buyback given where the stock prices trading.
Given how much your balance sheet has improved and how even in the face of the cost inflation, you're still generating significant amounts of.
Speaker 7: given how much your balance sheet has improved and how even in the face of the cost of inflation you're still generating significant amounts of
What time can we when could we expect something more let's say.
Speaker 4: what time can we have what when could we expect something more uh... let's say a more sort of forceful decision on starting to return capital to share orders thank you
Is it more sort of forceful decision on starting to return capital to shareholders. Thank you.
Yes.
Speaker 3: Yes, well, what I can say is that perhaps more than one is under which conditions we are willing to proceed with a systematic dividend.
What I can say is that right.
Perhaps more of them to win is under which conditions. We are willing to proceed with a systematic deep today.
We want to do that I think is the right thing to do.
Speaker 3: We want to do that. I think it's the right thing to do. We were planning.
Bonnie.
Right for that.
But with some of the the way things are evolving in the second half of last year.
Speaker 3: But when we saw the way things started evolving in the second half of last year, we decided to postpone it.
We decided to postpone.
But we'll see.
We want to be sure that we consolidated our positive.
Speaker 3: We want to be sure that we constantly date our courses and positive average infrastructure.
Sure.
Sure.
Because I wouldn't want to go back.
Speaker 3: Because we don't want to go back to the idea of giving a dividend one year and then suspending again.
Even though they visit one theater and then suspended.
So.
You can expect that in the future.
Speaker 3: You can expect that in the future, in the near future, but again, depending on the conditions rather than timing, that is going to be...
You sure, but I guess, depending on conditions rather than signing.
That is going to be happening.
Yeah.
Thank you Fernando.
The next question comes from and they'll need from Bank of America and please go ahead.
Speaker 2: The next question comes from Anne Milne from Bank of America. Anne, please go ahead.
Oh, Hi, good morning, Thank you very much for the call them. The question is on your refinancing My Heart I think you said you have a target of 50% under your.
Speaker 8: Hi, good morning. Thank you very much for the call. The question is on your refinancing. Mahard, I think you said you have a target of 50% under your, I guess your green targets by 2025, is that correct?
E.
Under your I guess your green targets by 2025 is that correct.
Yes, and yes, exactly yeah, I mean, we by 2025, yes.
Speaker 4: Yes, and yeah, exactly. Yeah. I mean, we by 2025. Yes.
Okay, and just because you don't have a lot of our bonds that have called in the short term I think one in euros and that'd be $1 next year are there is there any other plan on the liability management side, where nothing I assume it'll be the same targets you'll put in your bonds that you have in your financial agreement.
Speaker 8: Okay, and just because you don't have a lot of bonds that have calls in the short term, I think one in euros and maybe one in dollars next year, is there any other plan on the liability management side where in essence, I assume it will be the same targets you'll put in your bonds as you have in your financial agreement?
That is correct, yeah, I mean, I I mean, we're obviously there are I mean, there's about seven and three eights that are that something could happen in 'twenty three there I believed in 'twenty four and Theres. Another bond that is callable there as the.
Speaker 4: That is correct. Obviously, there's the 7 and 3 eighths that something could happen in 2023. I believe in 2024, there's another bond that is callable. There's the 400 million euro bond that is callable already.
The 400 million Euro bond that is callable already.
So I think there's sufficient refinancing opportunities.
Speaker 4: So, I think there's sufficient refinancing opportunities, plus as we de-leverage, I mean, you know, what's going to happen is that the amount that will be refied that will be sustainably linked will become more important as a percentage of the total debt stack. But, you know, we're seeing a lot of demand, frankly, for sustainably linked bonds.
Plus as we deleverage I mean, you know what's going to happen is that the the amounts that that will be refi that will be sustainable linked will become more important as a percentage of the total debt stack, but but you know we're seeing a lot of demand frankly for sustainability linked bonds and as you know our debt is.
Speaker 4: And as you know, our debt is, you know, the bank debt is all sustainably linked, including, you know, recently we secured a FESO denominator.
As a you know the the bank debt is all sustainable linked including you know recently, we secured a a M.
Peso denominated.
Speaker 4: a loan that is close to about $250 million that is in addition to the
Loan that is close to about $250 million that is in addition to the.
Speaker 4: the bank facility, the credit agreement that we have, that's also sustainability linked. So I think we're slowly putting in slices that we feel reasonably comfortable that by 2025 should get us.
The bank facility the credit agreement that we have that's also sustainability.
So I think we're slowly putting in slices that are like that we feel reasonably comfortable that by 2025 should get us to a level of 50%.
Speaker 4: to a level of 50% or more.
Or more.
Okay, Okay, and you think well I guess, you don't know yet if the if the penalties are premiums would be similar.
Speaker 8: Okay, and you think, well, I guess you don't know yet if the penalties or premiums would be similar.
I mean, you know for F. N B's, we're gonna be using the sustainably linked framework, but of course, the debt that the green <unk> as they call them are are subject of negotiation at the time that we structure. Our bond as you know you know and we will make sure that we're very market driven and and.
Speaker 4: I mean, you know, for SLBs, we're going to be using the sustainably linked framework. But of course, the greeniums, as they call them, are our subject of negotiation at the time that we structure a bond, as you know. You know, and we will make sure that we're very market driven and, and, you know, making sure that the greeniums are meaningful to the market, that they're not just, you know,
You know, making sure that the green <unk> are meaningful.
To the market that they're not just you know and so unlike some of the some other issuers that have come to the market that had been criticized frankly, I mean, we're very tuned into that and we want to make sure. Whatever we do is viewed favorably by the market that is looking at that type of financing.
Speaker 4: unlike some other issuers that have come to the market that have been criticized, frankly. I mean, we're very tuned into that and we want to make sure whatever we do is viewed favorably by the market that is looking at that type of finance.
Okay. Thank you very much and thank you for reading my mind on that last point.
Speaker 8: Okay, thank you very much and thank you for reading my mind on that last point. Thank you very much, Anne. Okay, and the next question comes from Paco Suarez from Scotiabank.
Very much Anne.
Yes.
Okay and the next question comes from Tycho Suarez from Scotiabank.
Thank you and thank you for the less covenants.
Speaker 3: Thank you, and thank you for the last comments. I can't agree more with that. The question that I had is precisely on your overall targets for this year and EBITDA projections, your guidance related on the cost side. Basically...
To connect more without that the the question that I had is precisely on your overall.
Dockets support this year.
EBITDA predict so still guidance related with on the coast sites are basically what you are assuming all fuel substitution rates this year and then.
Speaker 3: What are you assuming on fuel substitution rates this year? And can we see, actually, an upside risk on the cost side from the initiatives of rolling out your capabilities to inject hydrogen and the like?
And we see actually it looks like risk on the cost side from the initiatives so of rolling out your Georgia dock.
Capabilities to inject hydrogen and until like two two your cement plants are across all.
Speaker 9: to your cement plants across all regions.
All regions.
Yeah.
I'm not sure. We are we are sharing that inform that specific default, but but let.
Speaker 3: I'm not sure we are sharing that info, that specific info, but let me start by commenting that we continue our strategy on increasing the use of alternative fuels with high content of biomass. That's our specific preference.
Let me start by by commencing the we continue our strategy.
Increasing the use of alternative fuels with high confidence of biomass that's somewhat specific.
Reference an objective.
Hum on US up some example of what can happen here.
Speaker 3: And as an example of what can happen this year.
You know the the there are two.
Speaker 3: You know, there are two projects that will increase even more, even further, the use of alternative fuels of two of our largest plants in Europe , that's Rugby and Rulon.
Projects that we increase even more even further there.
Alternative fuels.
I wasn't quite up to sponsor the noodle that's.
Unbelievable.
We are finishing as we speak.
Speaker 3: We are finishing as we speak.
Months of them last month.
Speaker 3: month, or last month, and one of the funds, and in March, the other one, so starting in April , April , May, we will increase the
One of the Bond Sunday March one so I think in April April may.
We will increase the use of alternative fuels since it's plus 90 plus 90%.
Speaker 3: plans to 90 plus, 90 percent plus.
And we continue developing these fields.
Speaker 3: And we continue developing these alternative fuels projects every year.
Thanks Eddie.
Sure.
So what you can expect is that mean.
Speaker 3: So what you can expect is that we will, from 29 percent, you know, we will continue increasing.
From 29%.
Continue.
The increase in that proportion.
Speaker 3: A while ago, I made a comment about how profitable could be the transition towards a problem
I made a comment about.
Bob Hau.
The hope would be the transition towards.
But the problem economy.
I think these elements specifically all of the fields.
Roof.
I thought with investments in order to reduce here too.
Speaker 3: that our investments in order to reduce CO2 are profitable.
Profitable.
Very profitable.
So far.
Speaker 3: in the case of Europe in particular.
Zero.
Uh huh.
So this is what you kind of expect that.
Speaker 3: So, this is what you can expect. I'm not sure we are disclosing more specific info on our proportion, Lucy, and...
I'm not sure we're disclosing more specific and Paul will not work.
The proportion.
Our marketing themselves.
No I think youre correct at the moment, we arent disclosing here by your targets.
Speaker 2: No, I think you're correct at the moment. We aren't disclosing year-by-year targets, so. Yeah. Okay.
Mm gotcha.
Thank you Pekka.
And I think we have time for two more questions. The next question comes from Adrien Wester from J P. Morgan. Please go ahead.
Speaker 2: And I think we have time for two more questions. The next question comes from Adrián Huerta from JP Morgan. Adrián, please go ahead.
And you're Gonna you there.
Yeah.
Yeah.
A DRAM we can't hear you. So I think I will move to it to the last question. Then please let me know if you are available. The next question comes from Y'all seem to worry from Unfilled research. It seems please go ahead.
Speaker 2: Adriane, we can't hear you, so I think I will move to the last question, then. Please let me know if you are available. The next question comes from Yassine Touiri from Onfield Research. Yassine, please go ahead.
Oh, yes, good morning, ladies and gentlemen, so I would have just one question could you tell.
Speaker 10: Yes, good morning, ladies and gentlemen. I would have just one question. Could you tell us how much of your fuel bill and electricity bill for 2022 is hedged and how much is not hedged?
Tell us how much of your <unk>.
Sure.
And it appears to be in the post 2022 is hedged and how much is not hedged.
Right.
Yeah.
I mean on the.
On the electricity I mean, I don't think.
Speaker 4: On the electricity, I mean, I don't think.
You know, we don't we have some fixing on the electricity side.
Speaker 4: You know, we have some fixing on the electricity side. I'm trying to see here what...
I'm trying to see here what.
What's the percentage what I can tell you is that in terms of the transportation Bill for instance, diesel a big chunk of our diesel is hedged for 'twenty 275 close to 75%.
Speaker 4: What's the percentage? What I can tell you is that in terms of the transportation bill, for instance, diesel, a big chunk of our diesel is hedged for 22%, close to 75%.
And in terms of the fossil fuels I mean it.
Speaker 4: Um, and, um, in terms of the fossil fuels, I mean, it, I wouldn't, I don't want to call them hedges, but I would say that probably more than half of our fuels are fixed cost based fuels, whether they're fossil fuels or alternative fuels. Um, and then.
I don't want to call them hedges, but I would say that probably more than half of our fuels, our fixed cost base fuels, whether they're fossil fuels with alternative fuels.
And then in.
On the power side boutique.
Speaker 2: On the power side, Lucy, can you help me out on the power side? Yeah, I can help you out here. I think roughly about 60% of power is under some type of fixed contract. Now, of course, some of these are regulated. There can be provisions that under extraordinary situations, they can petition for a hike, but roughly 60% is under contract, I believe, for this year.
Uzi can you help me out on the power Yeah, I can't help you out here I think roughly about 16% of power is under some type of fixed contract and of course. Some of these are regulated there can be provisions that under extraordinary situation.
They can petition for a hike, but roughly 60% is under contract I believe for this year.
That's very clear thank you very much.
Thank you yes.
Okay, I am sorry, I'm forgetting my job here [laughter], well I think that kind of wraps. It up we appreciate you joining us today for our fourth quarter webcast and conference call. If you do have any additional questions.
Speaker 2: Okay, sorry, I'm forgetting my job here. Well, I think that kind of wraps it up. We appreciate you joining us today for our fourth quarter webcast and conference call. If you do have any additional questions, please feel free to contact Investor Relations and we look forward to seeing you next quarter. Thank you very much.
Please feel free to contact Investor Relations and we look forward to seeing you next quarter. Thank you very much.
Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a good day.
Speaker 1: Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a good day.
Okay.
Yeah.
Speaker 11: Thank you.
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Hum.
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