Q1 2024 Cemex SAB De CV Earnings Call

If at any time you require operator assistance. Please press star followed by zero and we will.

Operator: Now I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

We will be happy to assist you.

And now I will turn the conference over to Alicia Rodriguez Chief Communications Officer. Please proceed.

Good morning, Thank you for joining us today for our first quarter 2024 conference call and webcast. We hope this call finds you are in good health.

Lucy Rodriguez: Good morning. Thank you for joining us today for our Q1 2024 conference call and webcast. We hope this call finds you in good health. I am joined today by Fernando González, our CEO, and Maher Al-Haffar, our CFO. As always, we will spend a few minutes reviewing the business, then we will be happy to take your questions. Now I will hand it over to Fernando.

Joined today by Fernando Gonzalez, our CEO and Margaret I'll have our CFO as always we will spend a few minutes reviewing the business and then we will be happy to take your questions.

And now I will hand, it over to Fernando.

Thank you Lucy and good day to everyone.

I am pleased with our first quarter results, which outperformed our expectations underlying our 2020 guidance in <unk>.

Fernando González: Thanks, Lucy. Good day to everyone. I'm pleased with our Q1 results, which outperformed our expectations underlying our 2024 guidance. In fact, EBITDA represents a Q1 record for the company. Despite fewer working days and difficult weather conditions in many markets, EBITDA grew 5%. Three of our four regions, markets accounting for 90% of consolidated EBITDA, experienced a combined growth rate of 15%. Mexico deserves special mention, setting a record in terms of quarterly EBITDA generation. EBITDA margin expanded year over year and sequentially, driven by a favorable price-cost dynamic. Our prices rose mid-single digits, while input cost inflation slowed. Growth investments and Urbanization Solutions continued to materially support EBITDA growth. Net income grew 13%. Our return on capital, 12.4%, was slightly higher relative to the same period last year, despite the impact of the Spanish tax fine that we recognized in Q4 2023.

Fact, maybe.

<unk> represents a first quarter record for the company.

Despite the fewer working days and difficult weather conditions in many markets EBITDA grew 5%.

Three of our four regions markets accounting for 90% of consolidated EBITDA.

Periods of combined growth rate of 15%.

Mexico, The Serbs special mentioned setting a record in terms of quarterly EBITDA generation.

EBITDA margin expanded year over year and sequentially driven by a favorable price cost dynamic.

Our prices rose mid single digits, while input cost inflation slowed.

Growth investments and organization solutions continue to materially support EBITDA growth.

Net income grew 13%.

Our return on capital plus 4%.

Slightly higher relative to the same period last year, despite the impact of the Spanish tax fine that we recognized in fourth quarter 2023.

In other highlights last month, we achieved an important milestone with the receipt of an investment grade rating of Triple B minus from standard <unk> Poor's.

Fernando González: In other highlights, last month, we achieved an important milestone with the receipt of an investment-grade rating of triple B minus from Standard & Poor's. This rating action was recognition of our medium-term financial strategy as well as consistent financial performance. In late March, we hosted our 2024 CEMEX Day, presenting additional insights into our regions, decarbonization progress and goals, capital allocation, and strategy. I would encourage you to access the replay on our website. This month, we refinanced our Euro bank facility, further improving our maturity schedule and liquidity position. In March, we published our eighth integrated report as we continue to set the pace for our industry towards a profitable climate action transition. As part of our portfolio rebalancing efforts, we have announced an agreement to divest our interests, assets, and operations in the Philippines for a total enterprise value of $800 million.

This rating action was its recognition of our medium term financial strategy as well as consistent financial performance.

In late March we hosted our 2020 <unk> today, presenting additional insights into our regions there.

Carbonization progress and goals capital allocation strategy.

I would encourage you to access the replay on our website.

This month.

We refinanced our Euro bank facility.

Further improving our maturity schedule and liquidity position.

In March we.

Publish our eighth integrated report.

As we continue to set the pace for our industry towards a profitable climate action transition.

As part of our portfolio rebalancing efforts.

We have announced an agreement to divest our interest assets and operations in the Philippines for a total enterprise value of $800 million.

We currently expect to finalize this transaction before the end of year.

Fernando González: We currently expect to finalize this transaction before the end of year. Aligned to our strategy, the majority of divestment proceeds would be repurposed to fund our growth strategy in the US market. Net sales rose 3% with increases in Mexico and SCA&C, partially offset by volume declines in the US and EMEA. EBITDA rose mid-single digits, reflecting growth in Mexico, SCA&C, and the US. We estimate that the impact of fewer working days in the quarter amounted to an additional $20 million in EBITDA or 3% in year-over-year growth. EBITDA margin increased half a percentage point as our pricing strategy effectively outpaced input cost inflation. Free cash flow after maintenance CapEx was negatively impacted by higher taxes, maintenance, as well as lower fixed asset sales.

Aligned to our strategy. The majority of divestment proceeds would be repurposed to fund our growth strategy in the U S market.

Net sales rose, 3% with increases in Mexico, and <unk>, partially offset by volume declines in the U S and EMEA.

EBITDA rose mid single digits, reflecting growth in Mexico, and the U S.

We estimate that the impact of fewer working days in the quarter amounted to an additional $20 million in EBITDA or 3% in year over year growth.

EBITDA margin increased half a percentage point.

Our pricing strategy effectively outpaced input cost inflation.

Free cash flow after maintenance Capex was negatively impacted by higher taxes maintenance as well as lower fixed asset sales.

The decline in consolidated volumes results from difficult weather conditions in the U S and Europe.

Fernando González: The decline in consolidated volumes results from difficult weather conditions in the US and Europe, fewer working days, and slowing economic growth in several EMEA countries. In the case of the US, we have seen volumes improve with better weather conditions in March and year to date April. In Europe, we also have seen volumes pick up over the last 6 weeks, and we expect volumes to continue to improve over the next few quarters. With better economic conditions, the possibility of interest rate cuts, and easier year-over-year comparisons. Mexico stood out in the quarter with strong volume performance, driven by improved bag cement activity and continued strength in the infrastructure and industrial segments. Despite the challenging volume backdrop, our consolidated prices were up year over year and sequentially. Sequential pricing was up in all markets and for all products, except for cement in the US.

Fewer working days on slowing economic growth in several countries.

In the case of the U S. We have seen volumes improve with better weather conditions in March and year to date April.

In Europe, we also have seen volumes pick up over the last six weeks.

We expect volumes to continue to improve over the next few quarters.

With better economic conditions, the possibility of interest rate cuts and easier year over year comparisons met.

Mexico stood out in the quarter with strong volume performance driven by improved back cement activity and continued strength in the infrastructure and industrial segments.

Despite the challenging volume backdrop, our consolidated prices were up year over year and sequentially.

Sequential pricing was up in all markets and for all products is set for cement in the U S.

In the U S on a like to like basis, excluding a yearend adjustment cement prices rose 1% sequentially.

Fernando González: In the US, on a like-to-like basis, excluding a year-end adjustment, cement prices rose 1% sequentially. The sequential pricing achievement results from successful execution of Q1 pricing increases, reflecting the ongoing but decelerating input cost inflation. We continue to execute on our commercial strategy designed to reflect input cost inflation in our prices, recalibrating always to current inflation levels with the goal of maintaining or improving margins. Our commercial strategy, along with our growth investments and Urbanization Solutions, were instrumental in driving EBITDA growth in the quarter. The effectiveness of our pricing strategy is visible in the favorable price cost dynamics in the quarter, where the ratio of our pricing contribution to cost increased to two times, about 0.3 times higher than in 2023. Decelerating costs are also supported with cost of goods sold as a percentage of sales declining 1.6 percentage points.

The sequential pricing achievement results from successful execution of first quarter pricing increases.

Selecting the ongoing but decelerating input cost inflation.

We continued to execute on our commercial strategy designed to reflect the input cost inflation in our prices.

Calibrating always to current inflation levels with the goal of maintaining or improving margins.

Our commercial strategy, along with our growth investments and organization solutions were instrumental in driving EBITDA growth in the quarter.

The effectiveness of our pricing strategy is visible in the favorable price cost dynamics in the quarter, where.

The ratio of our pricing contribution to cost increased to two times about three times higher than in 2023.

Decelerating cost that also supported with cost of goods sold as a percentage of sales declining one six percentage points.

Margin increase on a year over year on sequential basis in a quarter, where the trends behavior. It is for a decline in margins from fourth to first quarter.

Fernando González: Margin increased on a year-over-year and sequential basis in a quarter where the trend behavior is for a decline in margins from Q4 to Q1. Our bolt-on investments continue to be an important component of growth, accounting for 10% of total EBITDA and 26% of incremental. EBITDA was impacted by lower volumes as a result of bad weather, fewer working days, and difficult demand conditions in EMEA. We expect better overall volume performance in the following quarters. In March, we published our eighth annual integrated report covering 2023, which details how our strategy, governance, sustainability, and financial performance intersect to create value for our stakeholders.

Our bolt on investments continue to be an important component of growth.

Accounting for 10% of total EBITDA and 26% of incremental.

EBITDA was impacted by lower volumes as a result of bad weather.

We're working days and difficult demand conditions in EMEA.

We expect better overall volume performance in the following quarters.

In March we published our eighth annual integrated report covering 2023, which details how our strategy governance and sustainability and financial performance intersect to create value for our stakeholders.

Some of our main accomplishments presented in this report related to climate action are.

Fernando González: Some of our main accomplishments presented in this report related to climate action are, since the creation of our Future in Action program in 2020, we have reduced Scope 1 and 2 CO2 emissions by 13% and 12% respectively, a pace that previously would have taken 15 years to accomplish. We repurposed close to 28 million tons of waste and byproducts through the Regenera business line. We increased alternative fuel substitution rate to 37% and reduced clinker factor to 72%, both at record levels and contributing to the profitability of our business. In 2023, we increased the adoption of our low carbon Vertua brand, currently a more than $7 billion brand, to 56% for cement and 48% for concrete. I encourage you to access our integrated report on our website. Urbanization Solutions, our fastest growing business, continued its double-digit EBITDA growth rate with important margin expansion in the quarter.

Since the creation of our future and action program in 2020, we have reduced scope, one and two C O two emissions by 13% and 12% respectively.

Pace that previously would have taken 15 years to accomplish.

We report post close to 28 million tons of waste and byproducts through the regenerative business line.

We increase alternative fuel substitution rate to 37%.

And reduce clinker factor to 72%.

Both at record levels and contributing to the profitability of our business.

In 2023, we increase the adoption of our low carbon bed to our brand.

<unk>, a more than $7 billion brand to 56% for cement and 48% for concrete.

I encourage you to access our integrated report on our website.

Organization solutions, our fastest growing business continue its double digit EBITDA growth rate with.

We had important margin expansion in the quarter.

Now accounting for 12% of consolidated EBITDA. This business is now reaching scale as a core segment for the company.

Fernando González: Now accounting for 12% of consolidated EBITDA, this business is now reaching scale as a core segment for the company and material contributor to growth. Mexico, with its dominant Regenera waste management business, is currently the largest regional contributor. Main drivers of growth in the quarter were pavement services and admixtures related to the high level of formal construction activity in Mexico. Additionally, EMEA is leading the development of our construction, demolition, and excavation materials vertical. Now back to you, Lucy.

Material contributor to growth.

Mexico with its dominant regenerative waste management business is currently the largest regional contributor.

Main drivers of growth in the quarter were payment services and admissions related to the high level of former construction activity in Mexico.

Additionally, EMEA is leading the development of our construction demolition and excavation materials vertical.

Now back to <unk>.

Thank you Fernando our Mexican operations once again delivered strong results with EBITDA growing tobacco levels supported by higher prices for our products strong volumes and decelerating input cost inflation. Despite.

Lucy Rodriguez: Thank you, Fernando. Our Mexican operations once again delivered strong results, with EBITDA growing to record levels supported by higher prices for our products, strong volumes, and decelerating input cost inflation. Despite 2 fewer working days, volume performance was strong. bulk cement and aggregates volumes grew double digits on an average daily sales basis, while ready-mix volumes rose mid-single digits, reflecting the dynamism of formal construction in the country. Infrastructure and nearshoring, with particular strength in the north and southeast, remain the principal growth drivers. We continue to see improvement in bagged cement volumes, with mid-single digit growth resulting from increased social spending, lower inflation, and a favorable comparison base. Based on our Q1 performance, we are raising our cement and ready-mix volume guidance from low single digits to low to mid single digit growth for the full year.

Despite two fewer working days volume performance was strong.

Oximetry aggregate volumes grew double digit average daily sales basis, while ready mix volumes spreads mid single digits, reflecting the dynamism of formal construction in the country.

Infrastructure and near shoring with particular strength in the north and South East remain the principle growth drivers.

We continue to see improvement in bag cement volumes with mid single digit growth, resulting from increased social spending lower inflation and a favorable comparison base.

Based on our first quarter performance, we are raising our cement and ready mix volume guidance from low single digits to low to mid single digit growth for the full year.

Sequential prices for cement ready mix and aggregates rose low single digits, reflecting the traction of our January price increases implemented to offset the ongoing cost inflation at the business.

Lucy Rodriguez: Sequential prices for our cement, ready-mix, and aggregates rose low single digits, reflecting the traction of our January price increases implemented to offset the ongoing cost inflation of the business. On a year-over-year basis, our double-digit ready-mix and aggregate price increases and a mid-single digit cement increase, as well as decelerating energy costs, led to an expansion in EBITDA margin of half a percentage point. In the US, quarterly performance was significantly affected by bad weather in much of our portfolio. Despite these weather challenges, EBITDA rose 3%, while EBITDA margins expanded almost one percentage point. Margin growth was driven by higher prices and lower cost inflation, largely in the form of fuel, freight, and imports. In aggregates, where volumes are less impacted by weather conditions, volumes grew 9% on the back of increased base material sales for infrastructure work.

On a year over year basis, or double check ready mix and aggregate price increases in the mid single digit net increase as well as decelerating energy costs led to an expansion in EBITDA margin as a.

Percentage of course.

In the U S quarterly performance was significantly affected by bad weather in much of our portfolio.

Despite these weather challenges EBITDA rose, 3%, while EBIT margins expanded almost one percentage point.

Margin growth was driven by higher pricing and lower cost inflation largely in the form of fuel freight and imports.

In aggregates, where volumes are less impacted by weather conditions volumes grew 9% on the back of increased based material sales for infrastructure work.

I think next volumes declined high single digit and mid teen percentage, respectively. Due to heavy precipitation deep cleans conditions in much of our portfolio.

Lucy Rodriguez: Cement and ready-mix volumes declined high single digit and mid-teen percentage, respectively, due to heavy precipitation or deep freeze conditions in much of our portfolio. We estimate the impact of weather conditions on cement volumes explain approximately half of the volume decline. Over the last two months, with better weather, we have seen cement and ready-mix volumes recover sequentially. The difficult weather conditions, however, delayed cement and ready-mix pricing increases in several of our markets to April. We implemented pricing increases in Florida in Q1, and cement pricing in the state is up 2% sequentially, excluding freight to customers. In aggregates, sequential prices increased 6% on the back of price actions in Florida, Texas, and California, as well as favorable geographic volume mix. We expect to implement our pricing strategy in the rest of our aggregate markets over the next few months.

Estimate the impact of weather conditions on cement volumes explain approximately half of the volume decline.

Over the last two months with better weather, we have seen cement and ready mix volumes recover sequentially.

The difficult weather conditions, however, delayed.

The next pricing increases in several of our markets to April.

We implemented pricing increases in Florida in the first quarter and cement pricing and the state is up 2% sequentially, excluding freight to customers.

In aggregate sequential prices increased 6% on the back of price actions in Florida, Texas, and California, as well as favorable geographic mix.

We expect to implement our pricing strategy and the rest of our aggregate markets over the next few months.

Going forward, we remain optimistic on the underlying demand for our products supported by strong contract awards for highways streets.

Lucy Rodriguez: Going forward, we remain optimistic on the underlying demand for our products, supported by strong contract awards for highways and streets, announced industrial projects related to onshoring and clean energy, and residential market recovery. In EMEA, EBITDA declined 41%, driven by a challenging demand backdrop in Europe and geopolitical events in Asia, Middle East, and Africa. EBITDA in Europe experienced the largest decline, 44%, due to a significant drop in volumes, while our prices for cement, ready-mix, and aggregates rose low to mid-single digits sequentially. Volumes were down between high single and double digits for cement, ready-mix, and aggregates due to fewer working days, bad weather, and a strong prior year comparison base. Demand conditions were very much a mixed bag, with volume declines in the UK, Germany, and France, while the rest of our European portfolio showed a positive volume performance.

<unk> industrial projects related to onshoring in clean energy and residential market recovery.

In EMEA EBITA declined 41% driven by a challenging demand backdrop in Europe, and geopolitical events in Asia Middle East and Africa.

EBITDA in Europe experienced the largest decline 44% due to a significant drop in volumes, while our prices for cement ready mix and aggregates led is low to mid single digits sequentially.

Volumes were down between high single and double digit for cement ready mix and aggregates due to fewer working days bad weather and a strong prior year comparison base.

Demand conditions were very much a mixed bag with volume declines in the UK, Germany, and France, while the rest of our European portfolio showed a positive volume performance.

We recognize that first quarter in Europe, typically represents approximately 12% of full year European EBITDA and can be significantly disrupted by weather it should not be seen as an indicator of full year performance.

Lucy Rodriguez: We recognize that Q1 in Europe typically represents approximately 12% of full-year European EBITDA and can be significantly disrupted by weather. It should not be seen as an indicator of full-year performance. In fact, our European results actually outperformed our expectations for the quarter. As a result, given an easier comp phase going forward, as well as an expected improvement in demand outlook driven by lower inflation and prospects for a more benign interest rate environment, we are upgrading our cement volume guidance slightly to a flat to low single-digit increase. On climate action, we continue our reduce before capture CO2 strategy in Europe with sales of our lower carbon Vertua cement products increasing by 1 percentage point, reaching 93% of sales in Q1. Finally, EMEA also experienced a large decline in EBITDA of 35% due to ongoing tensions from the conflict in the Middle East.

In fact, our European results actually outperformed our expectations this quarter.

As a result, given the easier comp base going forward as well as an expected improvement in demand outlook, driven by lower inflation and prospects for a more benign interest rate environment.

We are upgrading our cement volume guidance slightly to a flat to low single digit increase.

On climate action, we continue our reduced or capture CRT strategy in Europe with sales of our lower carbon virtual cement products, increasing by one percentage point, reaching 93% of sales in first quarter.

Finally, EMEA also experienced a large decline in EBITDA of 35% due to ongoing tensions from the conflict in the middle East.

Our stack operations once again delivered solid results with its fourth consecutive year over year growth in EBITDA led by strong pricing performance and decelerating input cost inflation.

Lucy Rodriguez: Our SCA&C operations once again delivered solid results with its fourth consecutive year-over-year growth in EBITDA, led by strong pricing performance and decelerating input cost inflation. Pricing led top-line growth, with our cement prices increasing mid-single digit, more than compensating for input cost inflation. Regional cement volumes were pressured by two fewer working days in the quarter, as well as continued weak bag cement demand. EBITDA margin increased 3.8 percentage points, largely explained by the strong pricing contribution, lower energy and raw material cost, as well as the timing of kiln maintenance. In the Dominican Republic, while weak demand in the informal segment continues to weigh on demand, formal construction remains robust, fueled by projects in the tourism and infrastructure sectors. In Jamaica, volumes were supported by strong growth in the tourism sector.

Pricing in that topline growth with our cement prices, increasing mid single digits more than compensating for input cost inflation.

Regional cement volumes were pressured by two fewer working days in the quarter as well as continued weak bagged cement demand.

EBITDA margin increased three eight percentage points largely explained by the strong pricing contribution lower energy and raw material cost as well as the timing of kiln maintenance.

In the Dominican Republic, while weak demand in the informal segment continues to weigh on demand formal construction remains robust fueled by projects in the tourism infrastructure sectors.

In Jamaica volumes were supported by strong growth in the tourism sector.

And in Panama cement volumes increased high single digits, mainly driven by infrastructure projects such as the Metro the fourth bridge after the canal and highway expansion.

Lucy Rodriguez: In Panama, cement volumes increased high single digits, mainly driven by infrastructure projects such as the metro, the fourth bridge over the canal, and highway expansions. Now I will pass the call to Maher to review our financial development.

And now I'll pass the call to review our financial development.

Thank you Lucy and good day to everyone.

Maher Al-Haffar: Thank you, Lucy, and good day to everyone. As Fernando mentioned, we are pleased with our Q1 performance with growth in sales, EBITDA, and EBITDA margin. This was a record Q1 for CEMEX and a record for our operations in Mexico. As we noted earlier, this Q1 had fewer working days than last year. Adjusting for this difference, our EBITDA would be higher by approximately $20 million, or an additional 3 percentage points on both a reported and like-to-like basis. The half a percentage point increase in EBITDA margin was driven primarily by pricing, easing inflation, and disciplined cost management. Our improved performance speaks to the success of our pricing strategy, cost containment efforts, and the result of our growth investment in Urbanization Solutions business.

As Fernando mentioned, we are pleased with our first quarter performance with growth in sales EBITDA and EBITDA margin.

This was a record first quarter for <unk> and a record for our operations in Mexico.

As we noted earlier this quarter had fewer working days than last year.

Adjusting for this difference our EBITDA would be higher by approximately $20 million or an additional three percentage points on both a reported and like for like basis.

The half a percentage point increase in EBITDA margin was driven primarily by pricing easing inflation and disciplined cost management.

Our improved performance speaks to the success of our pricing strategy cost containment efforts and the result of our growth investment in urbanization solutions business.

On the cost side, we saw a 20% decline in fuel cost per ton of cement driven by a decline in the market price of fuels as well as our efforts to increase the proportion of lower cost and lower carbon fuels.

Maher Al-Haffar: On the cost side, we saw a 20% decline in fuel cost per ton of cement, driven by a decline in the market price of fuels, as well as our efforts to increase the proportion of lower cost and lower carbon fuels. On a sequential basis, consolidated fuel cost per ton declined 11%. Free cash flow after maintenance CapEx was about $160 million lower than prior year. This is due primarily to higher taxes paid in Mexico and currency tax gains from a strong Mexican peso. Due to the seasonality of our working capital cycle, Q1 free cash flow is typically negative and turns around in subsequent quarters. Last year, we started implementing targeted actions to improve working capital, optimize our inventories, and terms of trade throughout the company.

On a sequential basis consolidated fuel cost per ton declined 11%.

Free cash flow after maintenance Capex was about $160 million lower than prior year. This was due primarily to higher taxes paid in Mexico and currency tax gains from a strong Mexican peso due to the seasonality of our working capital cycle first quarter free cash flow is typically negative in turns.

Around in subsequent quarters.

Last year, we started implementing targeted actions to improve working capital optimize our inventories in terms of trade throughout the company.

While first quarter working capital investment was substantially similar to the prior year, we expect to see a positive trend throughout the remainder of the year and remain on track to achieve our previously stated guidance of reducing more than $300 million in.

Maher Al-Haffar: While Q1 working capital investment was substantially similar to the prior year, we expect to see a positive trend throughout the remainder of the year and remain on track to achieve our previously stated guidance of reducing more than $300 million in working capital this year. Net income increased 13%, due primarily to better operational results and lower taxes. We are quite pleased with achieving our investment-grade rating from S&P. This should translate into significant value for all of our stakeholders and is a testament to the success of our financial strategy. As we have said before, we intend not only to reach investment-grade, but to maintain investment-grade rating through our business cycle. During the quarter, we executed a series of transactions that further strengthened our financial position.

In working capital this year.

Net income increased 13% due primarily to better operational results and lower taxes.

We are quite pleased with achieving our investment grade rating from S&P.

This should translate into significant value for all of our stakeholders and is a testament to the success of our financial strategy.

As we have said before we intend not only to reach investment grade, but to maintain investment grade ratings through our business cycle.

During the quarter, we executed a series of transactions that further strengthened our financial position.

First we reopened our sustainability linked long term notes in Mexico, and Mexican peso for an equivalent amount of approximately $320 million and swap them into U S dollars.

Maher Al-Haffar: First, we reopened our sustainability-linked long-term notes in Mexico, in Mexican pesos, for an equivalent amount of approximately $320 million, and swapped them into USD. We started tapping this source of funds last year for the first time in over 15 years at an attractive cost compared to our USD curve. Second, we upsized and extended the maturity of our EUR 500 million sustainability-linked loan facility. The new facility consists of a EUR 450 million term loan maturing in 2029, and a new EUR 300 million committed revolving credit facility. This brings our total committed revolving facilities to slightly over $2.3 billion, which puts us in the best liquidity position we've had in recent years. Our leverage ratio stood at 2.18 times, up 0.12 times versus December.

We started tapping the source of funds last year for the first time in over 15 years at an attractive cost compared to our U S dollar curves.

And second we Upsized and extended the maturity of our 500 million euros sustainability linked loan facility.

The new facility consists of a 450 million euro term loan maturing in 2029, and a new $300 million euro committed revolving credit facility.

This brings our total committed revolving facilities to slightly over $2 3 billion, which puts us in the best liquidity position we've had in recent years.

Our leverage ratio stood at two eight times up 0.12 times versus December.

Typically we see a sequential increase in leverage in the first quarter due to the seasonally negative free cash flow that reverses as we go through the year.

Maher Al-Haffar: Typically, we see a sequential increase in leverage in the first quarter due to the seasonally negative free cash flow that reverses as we go through the year. As mentioned in our recent CEMEX Day, we are committed to reducing our leverage ratio by half a turn in the next 24 to 36 months. Now back to you, Fernando.

As mentioned in our recent <unk> next day, we're committed to reducing our leverage ratio by half a turn in the next 24 months to 36 months and now back to you Fernando.

I am happy with our performance in first quarter and believe it sets us up well for the rest of the year.

Fernando González: I'm happy with our performance in Q1 and believe it sets us up well for the rest of the year. Our full year guidance has always assumed more EBITDA growth in H2 of the year. As I said previously, Q1 outperformed our expectations. In Europe, the biggest headwind in the quarter, we do expect better performance going forward. We continue to expect favorable price to cost dynamics for the rest of the year. We also are expecting, and already seeing, volumes recovering in the US with better weather. In addition, we expect more pricing traction from Q2 pricing increases. Despite better performance to date, as this is only the Q1, we are maintaining our full year guidance for EBITDA of a low to mid-single digit increase, as well as maintaining guidance for all free cash flow items.

Our full year guidance has always assume more EBITDA growth in the second half of the year.

And as I said previously first quarter outperformed our expectations in.

In Europe.

The biggest headwind in the quarter, we do expect better performance going forward.

We continue to expect favorable price cost dynamics for the rest of the year.

We also are expecting and already seeing volumes recovering in the U S with better weather.

In addition.

We expect more pricing traction from second quarter pricing increases.

Despite better performance to date.

This is only the first quarter.

We are maintaining our full year guidance for EBITDA of a low to mid single digit increase.

As well as maintaining guidance for all free cash flow items.

This assumes FX rates.

31 levels for the remaining of the year.

Fernando González: This assumes FX rates as of 31 March levels for the remaining of the year. Now, back to you, Lucy.

And now back to <unk>.

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.

Lucy Rodriguez: 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, refer to prices for our products. 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 touchtone telephone. If your question has already been answered or you wish to withdraw your question, press star followed by two. Press star one to begin.

In addition, unless the context indicates otherwise all references to pricing initiatives price increases or decreases will further prices for our products.

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 the England get yourself to one question.

If you wish to ask a question. Please press star followed by one on your Touchtone telephone.

If your question has already been answered or you wish to withdraw your question Press Star followed by two.

Press Star one to begin.

And our first question comes from Alejandro <unk> from Morgan Stanley.

Lucy Rodriguez: The first question comes from Alejandra Obregón from Morgan Stanley. Ale?

Hi, Good morning. So next time, thank you for taking my question and congratulations on the record quarter.

Alejandra Obregón: Hi. Good morning, CEMEX team. Thank you for taking my question, and congratulations on the record quarter. I guess my question is on the Philippines asset sale. That's very positive for your free cash flow. I was just wondering if you can help us understand what this transaction, of course, if approved, means for you in terms of cash inflows. How much of your debt is in your balance sheet from this operation today? Maybe if there's some details with regards to what it means for working capital and CapEx. Anything that can help us assess the positive impact for free cash flow here, and anything on the timing. You mentioned year-end. Would it be fair to assume Q4, or is that something potentially before that? Any color here would be very helpful. Thank you.

I guess my question is on the Philippines asset sale.

A very positive for your free cash flow.

So I was just wondering if you can help us understand with this transaction of course, if approved means for you in terms of cash inflows.

How much of your debt and your balance sheet from these from these operation today and maybe there's some details with regards to what it means for working capital and Capex I mean anything that can help us assess the positives.

<unk> for free cash flow here and anything on the timing you mentioned year end, but I mean would it be fair to assume fourth quarter or is that something potentially before that anything any color here would be very helpful. Thank you.

Yeah.

Thank you Alejandro.

Would you like me to take.

Maher Al-Haffar: Thank you, Alejandra. Fernando, would you like me to take a stab at that?

I'll take a stab at that.

Thank you yeah, we're very pleased with announcing the transaction.

Fernando González: Please.

Maher Al-Haffar: Thank you. Yeah, Alejandra, we're very pleased with announcing the transaction, and we're expecting closing by the end of the year. In terms of the impact, of course, you saw in the press release that we issued, the implied enterprise value is about $800 million. If we take a look at based on last year's valuation, we're talking about, in terms of multiples, a little bit over 20 times, 21, 22 times. In terms of impact on us, we have debt that will be assumed around $345 million, $350 million. Then cash of about $360 million, $365 million. You're talking about a total amount about $708 million. Again, we don't know what the impact on leverage is going to be by the end of the year.

<unk> closing by the end of the year.

The impact I mean of course, you saw in the press release that we issued the implied enterprise value is about $800 million and.

If we take a look at based on last year's VAT.

<unk>, we're talking about a little bit over in terms of multiples a little bit over 20 times 21 22 times.

And in terms of impact.

On us I mean, we have.

That that will be assumed.

Round 345 $350 million.

And and then cash of about 360 $365 million.

And so you are talking about the total amount of about 708.

Again, we don't know what the impact on leverage is going to be by the end of the year, but <unk> kind of conditions by the end of the year. This should have about <unk> of a turn positive impact assuming everything is impacting leverage of course without taking into consideration what use of proceeds would be in all of that.

Maher Al-Haffar: ceteris paribus kind of conditions by the end of the year, this should have about 0.2 of a turn positive impact, assuming everything is impacting leverage, of course, without taking into consideration what use of proceeds would be and all of that. In terms of working capital from a trading perspective, it should be fairly limited because of the relatively low operational level that the business has at this point. Of course, closing is subject to customary regulatory approvals by the end of the year.

In terms of working capital from a trading perspective, it should be fairly fairly limited because of the relatively low.

Operational level that the business has at this point and of course closing is subject to customary.

Inventory approvals by the end of the year.

Perfect My head just to make sure I got it right what was the impact of potential impact on leverage you mentioned point to turns out how much of that I'm sorry.

Alejandra Obregón: Perfect, Maher. Just to make sure I got it right, what was the potential impact on leverage? You mentioned 0.2 turns. How much was that? I'm sorry.

Yes, again cetera experiments conditions, meaning everything is being applied to either cash or reduction in debt.

Maher Al-Haffar: Yeah. Again, ceteris paribus conditions, meaning everything is being applied to either cash or reduction in debt, the impact on leverage would be around 0.2 of a turn.

The impact on leverage would be around <unk> two of a turn.

Got it perfect. That's very clear thank you very much and congratulations again.

Alejandra Obregón: Got you. Perfect. That's very clear. Thank you very much, and congratulations again.

Thank you all have a great to hear from you.

Okay.

Maher Al-Haffar: Thank you, Alejandra. Great to hear from you.

Okay.

And the next question comes from Pablo recall day from Santander Pablo.

Lucy Rodriguez: Thanks, Alejandra.

Operator: The next question comes from Pablo Ricalde from Santander. Pablo?

Hello, Lucie Fernando Maher. Thanks for taking my question I don't know if you can provide more color on the U S volume for four months was on the quarter.

Pablo Ricalde: Hello, Lucy, Fernando, Maher. Thanks for taking my question. I don't know if you could provide more color on the US volume performance within the quarter. I know you explained there were less working days in the quarter, but maybe talking a little bit about market share or regional performance, that would be super useful.

You explained there were like less working days in the quarter, but maybe talking a little bit about market share or our regional performance that would be super useful.

Thanks, Pablo yes.

We did have a reduction in the decline in volumes in both cement and ready mix, while we had an increase in volumes in aggregates.

Lucy Rodriguez: Thanks, Pablo. Yes. We did have a reduction, a decline in volumes in both cement and ready-mix, while we had an increase in volumes in aggregates. The weakness in cement and ready-mix is, why the difference in product? It's primarily because, first of all, footprint. The footprint that we have in ready-mix was heavier hit by precipitation in those markets, and the same in cement. It really reflects our footprint. Aggregates, the reason why we're seeing growth there is because, first of all, it's less vulnerable to weather because, of course, you can inventory aggregates. You can also even lay them without much impact if it's raining. Also in terms of the actual geography. The growth in agg that we're seeing came from infrastructure. Particularly, it's primarily base material.

Weakness in cement and ready mix is wider.

Why the difference in product, it's primarily because first of all footprint.

The footprint that we have been ready mix was heavier hit five precipitation in those markets.

And the same in cement it really reflects our footprint.

Aggregate. The reason why we're seeing growth there is because first of all it's less vulnerable to weather because of course, you can inventory aggregates. You can also even lay them without much impact if the training.

And also in terms of the actual geography growth in AG that were seeing came from infrastructure, particularly it's primarily based on material.

Now in terms of whats responsible for the volume decline, it's not an exact science, but we do believe that about 50% of the decline relates to weather.

Lucy Rodriguez: In terms of what's responsible for the volume decline, it's not an exact science, but we do believe that about 50% of the decline relates to weather. In states that represented 75% of our cement volumes, we saw an average 35% increase in precipitation in the quarter. I'm going to highlight Texas in particular, where we're exposed in the south, in the Houston area. In Texas, it was a 45% increase in precipitation year over year. If you look at just January in the Houston market for ready-mix, there were only eight days in that entire month that weren't affected by weather. To your point, we did see probably about 30% of the volume decline that came from a market softening, primarily in commercial and residential. In places like San Francisco and in Arizona, we have seen some softening in terms of market demand.

States that represented 75% of our cement volumes, we saw on average 35% increase in precipitation in the quarter.

I'm going to highlight Texas in particular, where we're exposed in the south in the Houston area in Texas that was a 45% increase in precipitation year over year and if you look at your January in the Houston market for ready mix. There were only eight days and that entire months werent affected by weather.

And then to your point, we did see probably about 30% of the volume decline came from the market softening primarily in commercial and residential.

In places like San Francisco and in Arizona, We have seen some softening in terms of market demand.

And of course, we also did have market share loss that we highlighted last year that has pretty much stabilized, but we're still seeing the year over year impact and of course, we have said that we will we are aiming to responsibly recover that marketshare.

Lucy Rodriguez: Of course, we also did have market share loss that we highlighted last year. That has pretty much stabilized, but we're still seeing the year-over-year impact. Of course, we have said that we are aiming to responsibly recover that market share. Finally, we also had some projects that were ending for about 20% of the volume decline. Arizona in particular, there were two semiconductor chip manufacturing facility projects that have paused there. As Maher mentioned, or no, I guess as Fernando mentioned in the call, since February, we have seen an improvement. Volumes have been recovering both on a sequential and a year-over-year basis. In fact, March was actually positive year-over-year. We are optimistic going forward in terms of demand. Hopefully, that covers it for you, Pablo.

And finally, we also had some projects that were ending for about 20% of the volume decline, Arizona in particular, if there were two chip manufacturing semiconductor chip manufacturing facility projects that have pause there.

As Mark mentioned our mill.

I guess, that's Fernando mentioned in the call since February we have seen an improvement volumes had been recovering both on a sequential and a year over year basis and in fact March was actually positive year over year. So we are optimistic going forward in terms of demand.

Hopefully hopefully that covers it for you.

Perfect. Thanks.

Okay great.

Pablo Ricalde: Perfect, Lucy. Thanks.

And the next question then comes from the web.

Lucy Rodriguez: Okay, great. The next question comes from the web. It's from Paul Roger from Exane. CEMEX has previously said carbon capture is a 2030 story. Is that still the view, despite some big peers now suggesting it will come earlier this decade?

It's from Paul Roger from Exane.

<unk> has previously said carbon capture is a 2030 story is that still the view despite some big peers now, suggesting it will come earlier this decade.

Well.

Fernando González: Well, Paul, thanks for your question. Let me clarify our position on carbon capture. Maybe the reason why you are saying it is a 2030 story is because the way we have defined our roadmap to net zero, and the emphasis that we are making in different steps in the process. Since we started our newer strategy, the Future in Action strategy launch in 2020, we have been focused on reducing our carbon emissions, three scopes, at a much faster speed than we used to do it before.

Paul Thanks for your question.

Let me, let me clarify our.

A decision on carbon capture.

Maybe the reason why.

You are saying is has been to 30 stories because the way we have defined.

Our roadmap two two net zero.

And the emphasis that we are making in different steps in the process.

We've been since we started our.

Newer strategy future inaction strategy launched in 2020.

We've been focused on reducing.

Our carbon emissions.

Cogs.

At <unk>.

Much faster speed than we used to do it.

Before.

The reduction that we.

Fernando González: The reduction that we have done is about 13%. Every year, it continues reducing, or we've been reducing 3 and a fraction, close to 4 percentage points. We are highly focused on traditional levers to comply with our 2030 commitment. Commitment that is aligned with the scenario of the 1 and a half degree, already certified by SBTi. Meaning our target by 2030, for the time being, is not assuming a contribution from carbon capture. At the same time, we've been developing carbon capture and storage or use projects. We have already announced 6 projects, 4 in Europe and 2 in the US, at an industrial level, with proven technologies, and with the already, or in most of the cases already, with the concessions needed to capture, to transport, and to store or use.

We have.

Don.

Is about.

13%.

And.

And every year, it continues reducing or with introducing like tree on the fraction close to four.

Percentage points.

We are highly focused on traditional levers.

To comply with our 2030 commitment.

Commitment that is aligned with the scenario of the one five degree.

Already certified by <unk>, meaning our target by 2030.

For the time being is not assuming a contribution.

From carbon capture.

Now at the same time.

With the developing carbon capture.

Yeah.

On startups or reuse projects.

Projects.

We have.

Publicly announcing we have already announced six projects forward in Europe and two in the U S.

Or an industrial level.

With proven technologies.

And with the already on and most of the cases already with the consumptions needed to capture.

Two.

Transport and to start.

Or use.

Yeah.

If we can do or develop or put in place. These projects before 2030 on we are trying to do that it would be much better.

Fernando González: If we can do or develop or put in place these projects before 2030, and we are trying to do that, it will be much better. Again, regarding our commitments, as of right now, we are not including this carbon capture contribution. Now, at least the way we see it, all over the world, the traditional levers can be applied in the cement industry. There might be some rules and regulations to be improved in Global South, but it can be done. What we see, and in your question, you are referring to big peers suggesting that it's coming earlier, and it's coming earlier. Seems like that is coming in Europe and the US. That's about 10% of total cement capacity all over the world. We are all interested in reducing carbon capture, reducing even more, and reducing it faster.

But again regarding our commitments.

So right now.

We don't we are not including these carbon capture contribution.

Yeah.

And now the.

At least the way we see it.

All over the world.

The traditional levers can be applied.

In the cement industry.

There might be some rules and regulations to be improve.

And global South.

But it can be done.

But what we see.

And in your question, you're referring to big peers.

Suggesting that is coming earlier and it's coming earlier.

But it seems like.

That is coming in Europe, and the U S.

And that's about 10%.

Of our total.

Cement capacity all over the world.

So we are all.

Interested.

In reducing carbon capture.

Producing even more.

And reducing it faster.

But we are ready.

Pleased with the strategy of reducing.

Fernando González: We are very pleased with the strategy of reducing almost 50% using 1990 base by 2030 without those contributions. Reduction is extremely important. As you can imagine, if you reduce up to 50%, the projects needed to capture the rest should be smaller and more convenient. We are one of the ones developing these type of projects as fast as possible. Again, but this is a European and US proposition for the time being. Canada, maybe three or four countries. We need to find a solution for our company in other geographies and for our industry in other geographies. That's what I can comment on your question.

<unk> almost 50%.

Using 1990 base by 2030.

Without those contributions so reduction these are extremely.

Importantly, you can imagine if you reduce up up to 50%.

The projects needed to capture the risks.

Should be.

Smaller.

And the more.

Convenience.

So we are one of the ones that are developing these type of project SaaS fastest possible and again, but this is a European.

On U S proposition for the time being.

Canada, maybe three or four countries.

But we need to find a solution for.

For our company in order geographies afforded our industry.

The yogurt fees.

So that's what I can comment on.

On your question.

Thank you Fernando.

The next question comes from Adrian Huerta from Jpmorgan again.

Lucy Rodriguez: Thank you, Fernando. The next question comes from Adrian Huerta from J.P. Morgan. Adrian?

Dan.

Alright, Thank you Latanya and hi, everyone.

My question has to do with Mexico, both on volumes and on prices.

Adrian Huerta: Hi. Thank you, Lucia, and hi, everyone. My question has to do with Mexico, both on volumes and on prices. In the case of prices, you tried to increase prices in January in Mexico, but it seems that prices were flat sequentially in local currency. Appears actually didn't had a 4% increase in the quarter. If you can make any comments on that, and if we should expect even that you did not have a price increase in the Q1, expect one in the coming quarters. Regarding volumes, how March was? I mean, the first two months of the year started to be strong. We don't have data yet for March volumes. In the new guidance that you have, what type of deceleration are you assuming for the H2 of the year on, especially from infrastructure?

In the case of in the case of prices.

Tried to increase prices in January in Mexico, but it seems that prices were flat sequentially in local currency.

But the peers actually didn't cut up 4% increase in the world and of course, you can make any comments on that and if we should expect given that you did not have a price increase in the first quarter.

But I expect one in the coming quarters and regarding volumes.

How how March was in the first two months of the year started to be strong.

Don't have data yet for four months volumes.

And in the new guidance that you have what type of deceleration are you.

Are you assuming for the second half of the year on especially from infrastructure.

Would you like me to.

Yeah.

Lucy Rodriguez: Okay-

Maher Al-Haffar: Fernando, would you like me to.

Thanks and have a better.

Lucy Rodriguez: Yeah

Maher Al-Haffar: expand on that or?

Yes go ahead, yes, I guess.

Yeah go ahead yeah.

Lucy Rodriguez: Yeah, go ahead.

Maher Al-Haffar: Yeah. Yeah.

Yeah again.

Fernando González: Go ahead.

Maher Al-Haffar: Yeah. Adrian, I think if we were to take a look at sequential pricing in local currency terms for Mexico, it's actually up 3%. We did announce in January a national pricing increase for bags, 12%, for bulk, 15%. It was, we believe, quite successful, given the demand dynamics that we've had. As you saw, volumes in Q1 for cement, we're up 7%, and that's before you start adjusting for the two less working days. If we take a look at average daily sales, volumes in cement are up 10%. This was, of course, between that and decelerating inflation is what drove the record performance. Definitely, volumes did get better towards March, and we think certainly the first part of April continued to be doing quite well as well. We're happy about that.

I think if we would take a look at sequential pricing in local currency terms.

For Mexico, it's actually like up 3%.

So we did we did put a announced in January a national pricing increase for bags, 12% for bulk 15% and it was.

No.

We believe quite successful.

Given the demand dynamics that we've had as you saw volumes in the first quarter for cement were up 7% and that's before you start adjusting for the two less working days.

We take a look at average daily sales volumes and the demands are up.

10%.

And this one is of course what.

Tweak that and decelerating inflation is what drove the record performance and definitely volumes did get better towards margin and we think so.

Certainly the first part of April continued to be doing quite well as well.

So we're happy we're happy about that and so we we believe that the success of our pricing strategy in Mexico should should continue.

Maher Al-Haffar: We believe that the success of our pricing strategy in Mexico should continue. If we take a look at margins, as you saw, we had a very positive expansion in margins because of the pricing and because of the cost deceleration. Bagged cement grew by 5% on an average daily sales basis. On back of lower inflation, easier comp, more remittances. The formal sector was what was really driving growth enormously. We saw the formal segment, Bulk cement demand up 16%. If we take a look at Ready-mix and Ags, we were up 5%, and it's almost more than double that on an average daily sales basis. I think the demand dynamics are very positive. The cost dynamics are quite positive. We're expecting them, frankly, to continue to do that.

And then if we take a look at.

Margins as you saw we had a very positive expansion in margins because of the pricing and because of the.

Cost of deceleration.

<unk> cement grew by 5% on an average daily sales basis on.

On backup lower inflation easier comp.

More remittances.

The formal sector was really was what was really driving growth enormously I mean, we saw the hormone segment bump.

Bulk cement demand up 16%.

And then if we take a look at ready mixed in <unk>, we were up 5% and it's.

Almost more than double that on an average daily sales.

Basis so.

I think the demand dynamics are very positive the cost dynamics are quite positive.

And we're expecting and frankly to continue to do that and as we see.

Some conclude potential conclusion of some of the large infrastructure projects by the middle of the year. We continued to see other projects that are actually.

Maher Al-Haffar: As we see some potential conclusion of some of the large infrastructure projects by the middle of the year, we continue to see other projects that are actually starting and should continue to give us very good momentum into H2 of the year. Right now, we're not looking at any major deceleration during the rest of the year. Bagged cement, in the rest of the year, we're expecting it to be actually a little bit better. Of course, coming from a much higher level because of the disproportionate growth in infrastructure and industrial and commercial. That's the other segment that also continues to do extremely well, because of the onshoring and nearshoring. If we take a look at industrial, it's roughly 60% of our demand. Infrastructure, I didn't mention, but it's about 15% of our demand.

Starting and should continue to give us very good momentum into the back half of the year. So right now we're not looking at any major deceleration during the rest of the the rest of the year and bagged cement should continue to.

With.

And the rest of the year, we're expecting it to be actually a little bit better of course coming coming from a much higher level because of because of the disproportionate growth in infrastructure and industrial and commercial that's the other segment that also continues to do extremely well because of the onshoring.

Our near shoring I mean, if we take a look at.

Industrial it's roughly 60% of our demand infrastructure I didn't mention but it's about 15% of our of our demand and those two businesses continued to do extremely extremely well and that's why we.

Maher Al-Haffar: Those two businesses continue to do extremely well. If you take a look at our implied volumes for the rest of the year, it's significantly higher than what we saw, what the total guidance is.

And if you take a look at our implied volumes for the rest of the year, it's significantly higher than what we saw what the the total.

Total guidance is.

Having significantly I mean, our implied guidance for the rest of the year is $1 four per song right versus the 7% just to be clear.

Lucy Rodriguez: Significantly, our implied guidance for the rest of the year is 1% to 4%, right? Versus the 7%, just to be clear. Okay. Adrian, does that-

Okay.

And does that I don't know.

Your question is yes.

Yeah, that's fine thank you.

Maher Al-Haffar: I don't know, Adrian.

Lucy Rodriguez: Does that answer your question?

Maher Al-Haffar: That-

Lucy Rodriguez: Yeah.

Adrian Huerta: Yeah. That's fine. Yeah. Thank you.

Thanks, a lot okay.

And the next question comes from Alberto Valerio from UBS Alberto.

Maher Al-Haffar: Thanks a lot, Adrian.

Lucy Rodriguez: Okay. The next question comes from Alberto Valerio from UBS. Alberto?

Okay. Thank you Lucy and Simex team.

Alberto Valerio: Yeah. Thank you, Lucy and CEMEX team. My question is about the Philippine divestment. You mentioned that you would leverage the company, did you have any other options for the use of proceeds of this transaction? You can see the similar movement for the Colombia assets where you made an offer for the shares, and we made the best for following the strategy that you mentioned in CEMEX Day of 2021. You cannot mistake when you say that you want to be more focused on developing world and actually the emerging markets.

My question is about.

Best meant.

I would like some at least you have.

You mentioned that.

Leverage the pump, but did you have other options for the use of proceeds of this transaction and you can see the similar movements or the Columbia assets, where you made all peripheral.

Sure.

We made the best following big strikers that you mentioned.

Your 2021 come up on stage when you say that one of the more focus on developing world in emerging markets.

I'm not sure I.

Listen to the whole question, but let me.

Maher Al-Haffar: Um-

Fernando González: I'm not sure I listened to the whole question, but let me try and let me know. I think, as you mentioned in our CEMEX Day recently, we reaffirmed our strategy that we started developing in 2020, and we have been communicating it. Meaning with the idea of making up, let's say, adjustments or changes to our portfolio, willing to growth, mainly our first priority in the US. We also mentioned Europe and to some extent Mexico. That's what we've been doing. This divestment in the Philippines, we see it pretty aligned to that strategy in the same way when we did other divestments from 2000 to 2003. All or most of the proceeds of those divestments have been used in our bolt-on growth strategy.

Let me try and literally I think.

As Jim mentioned in our mix.

<unk> recently, we.

Reaffirm our strategy a strategy that we started.

Developing in 2020, we have been communicating meaning with the idea of it.

Making.

Let's see.

<unk>.

Adjustments or changes to our portfolio.

Willing to.

The growth.

Mainly or the first priority in the U S. We also mentioned Europe and to some extent in Mexico.

And that's what.

We've been doing.

So these this.

Divestment in the Philippines, we see it.

Your line.

Our strategy the same way.

Yeah.

When we did order.

Divestments from 2002.

2000 and country.

And and all the or most of the proceeds of those divestments have being used.

In our bolt on growth.

Our strategy.

Little by little but this.

Three years, and a half, let's say or.

Fernando González: Little by little, in this 3 years and a half, let's say, or 2 years and a quarter, we have divested already about $2.5 billion. All of it or most of it have been repurposed to investments. Again, US first priority, and also part of it to reduce our leverage ratio. Again, this divestment is aligned with that strategy. This is the last piece that we used to have in Southeast Asia. Our Asian chapter has been closed, or is going to be closed once we perfect or execute the transaction by year-end. Again, maybe there is another part of the question that I didn't get. I don't know if Mark or Lucy have a comment on it.

Two years in the corner.

We have divested already about $2 5 billion.

And all of it or most of it have been repurposed.

Two <unk>.

Investments.

Again.

U S first priority and also part of it too.

To reduce our leverage ratio.

So again this divestment.

<unk> is aligned with that.

Strategy.

This is the last piece that we used to have in southeast Asia.

So our Asian Asian Chapter has been.

Uh huh.

It also is going to be.

Close once we.

Okay.

Perfect or execute the transaction by year end.

Again, maybe there is another part of the question that I didn't get I don't know if market or Lucy.

Have a comment on it.

Yes.

It does.

Maher Al-Haffar: I-

Alberto Valerio: Fernando, exactly that. Yeah, no, I will just say that the other part of the question was about Colombia, that we see the same way that we see Philippines.

No no I would just say that the other part of the question was about the Columbus that we see the same way that we.

Seafood agreements.

I. Thank you Fernando.

Hi.

Maher Al-Haffar: I think, Fernando.

Lucy Rodriguez: Fernando, the question.

Go ahead Scott.

Thinking about Colombia, it's about Colombia and big.

Maher Al-Haffar: Alberto is asking us about Colombia and because we've delisted the company there.

We've got delisted the company there and was wondering if that.

Something the same Philippines would occur am I correct.

Maher Al-Haffar: something the same as Philippines would occur. Am I correct, Alberto, that was your question?

That was your question.

Exactly that Myers, Thank you very much.

Alberto Valerio: Exactly that, Mark. Thank you very much.

Okay, sorry, I didn't understood well.

Fernando González: Okay. Sorry, I didn't understood it. Well, again, as I said, we have a clear strategy, properly communicated, and we are executing. We do not comment on potential future, either acquisitions or divestments. What you can expect in the future is that we will continue with the same note. Even in our CEMEX Day, we share a new piece of info, let's say, on our strategy with the target of the US to be up to 40% of CEMEX portfolio, currently being around 30%. Again, as you can see, all pieces are moving forward according to that idea. What you can expect in the future is that we will continue with the same process.

We again as I said, we have a clear strategy properly communicated and we are executing.

Do not comment on potential future.

Either acquisitions or divestments.

But what you can expect interfere should is that we will continue.

With the same node.

Even in our <unk>.

We sure a new piece of even for let's say on our strategy with the target of the U S too.

To be up to 40% of some export portfolio.

Currently being around.

30%.

So again as you can see all pieces are moving forward according to that.

So that idea and what you can expect in the future is that we will continue with the same process.

Fernanda fantastic and that makes sense.

Lucy Rodriguez: Thank you, Fernando.

Okay. Thank you Paul.

Alberto Valerio: Fantastic. Makes total sense.

Thank you Ghansham.

Lucy Rodriguez: Okay.

Alberto Valerio: Thank you for.

Lucy Rodriguez: Thanks, Alberto.

Fernando González: Thank you.

The next question comes from the Athene Tilbury from on field Research Justine.

Alberto Valerio: answers.

Lucy Rodriguez: Okay. The next question comes from Yassine Touahri from Onfield Research. Yassine?

Yeah.

Just a question on the on your volume outlook for Europe do increase the literal mutual volume forecasts.

Yassine Touahri: Yes. Thank you. Just a question on your volume outlook for Europe. You increased a little bit your volume forecast, but the cement demand was quite weak in Q1. Can you comment a little bit about the trends in March and maybe at the beginning of April? Do you start to see a recovery in volume in Europe? Then maybe a second question on the 9% volume growth that you delivered in aggregate in the US. It's exceptional compared to what many other companies have reported. Is it something which is specific to CEMEX? Is it some specific infrastructure project, or is it something which is a one-off, or do you see this strong growth continuing for the rest of the year?

The cement demand was quite weak in Q1 can you comment a little bit about the trends in March and maybe at the beginning of a prisoner you'll start to see a recovery in volume in Europe.

And then maybe some push out on the on the 90% of the volume growth that should reverse in aggregates in the U S. It's exceptional compared to what the money was all companies have reported.

Something which is specific to some exits are your is it some specific infrastructure project.

Is it something which is a one off or do you see as you saw the strong growth continuing for the rest of the year.

Yeah.

Sure I would say.

The second one.

Lucy Rodriguez: Sure.

I'll take the second one just seeing the specifically the case of the <unk>.

Fernando González: I will take the second one. Yassine, specifically the case of the volume growth in aggregates in the US, it is specific to CEMEX. Well, there might be a similar effect in other places, but in our case, it's a product mix effect. We are selling more base material. That means infrastructure is playing a role in that volume. It is not referred to all volumes, I mean, to all products, but very specific on base materials, which we interpret as good news because it calls or it suggests an activity in infrastructure already in development. It's product specific.

Volume growth in the can.

Aggregates in the U S is.

It is specific to <unk>.

While it might there might be a similar effect in other places, but in our case is.

Product mix effect.

We are selling more base material.

That means infrastructure is.

They are playing a role in that volume.

It is not referred to all volumes I mean to all products about very specific on based materials, which we interpret as good news because it call sort of suggest.

And activity in infrastructure already.

Yes.

In development, but it's.

It's product specific.

Great and maybe just on Europe, Yes, guessing Europe, obviously, there was a drop in EBITDA year over year in first quarter I think it's important just to remind everyone. What I know you know that first quarter typically is the most seasonally impacted quarter.

Lucy Rodriguez: Great. Maybe just on Europe. Yes, Yassine, Europe, obviously there was a drop in EBITDA year over year in Q1. I think it's important just to remind everyone what I know you know, that Q1 typically is the most seasonally impacted quarter, and Europe is the region where we see that most. Typically, Q1 is about 11% to 12% of full year EBITDA for Europe. We shouldn't read a lot into what we saw. The Q1 was impacted by two fewer working days in Europe, which explains about 10% of the EBITDA drop. We had bad weather in a number of geographies, particularly the UK, which is our largest market in Europe and where we saw quite a bit of precipitation. Germany also was impacted primarily from the economic slowdown.

And Europe is the region, where we see that most typically first quarter is about 11% to 12% of full year EBITDA for Europe.

So we shouldn't read a lot into what we saw the first quarter was impacted by two fewer working days in Europe.

Explains about 10% of the EBITDA drop.

We had bad weather in a number of geographies, particularly the UK, which is our largest market in Europe, where we saw.

Quite a bit of precipitation.

Germany also was impacted primarily from the economic slowdown, but on the other hand, we saw great growth in places like Poland, where we're seeing increased confidence coming out of the elections.

Lucy Rodriguez: On the other hand, we saw great growth in places like Poland, where we're seeing increased confidence coming out of the elections, and the expectation of EU funding going forward. France also has been an important source of the decline. As you know, we're only ready-mix in France. Of course, because of the Olympics, there's been a ban on large projects that's going to go through early summer, early midsummer. We are expecting that that will get better as, of course, construction opens up again post-Olympics. In the quarter, I think it's important to note that even with the decline in volumes that we saw, which was anywhere between 8% to 15% on our products, we actually saw very resilient pricing sequentially. Local currency prices were up between 1% to 5%, depending on the product.

And the expectation of EU funding going forward.

France also has been an important source of the decline.

As you know, we're only ready mix in France.

But of course because of the Olympics theres been a ban on large project that's going to go through kind of early summer early mid summer.

But we are expecting that that will get better as of course construction opens up again.

Olympics.

In the quarter I think it's important to note that even with the decline in volumes that we saw which was anywhere between 8% to 15% on our products.

Actually saw very resilient pricing sequentially. So local currency prices were up between one 5% depending on the product.

Another headwind that we had in the quarter was obviously with volumes down we had higher fixed cost as well, we expect that will turn around as we go through the year.

Lucy Rodriguez: Another headwind that we had in the quarter was obviously with volumes down, we had higher fixed costs as well. We expect that will turn around as we go through the year. We have seen a seasonal pickup in terms of volume in the case of Europe, and April has been looking quite good, as well as we saw sequentially, the normal seasonal pickup that occurs. I think that as we look at Europe going forward, we have better comps as we move into the back three quarters of the year because the declines we experienced in Europe really started in Q2. We believe we'll have improving fixed cost dynamics. The Olympics, that will be behind us, and we'll have a more supportive economic environment as well going forward, we believe, and the promise of infrastructure picking up in Poland. That is it in terms of Europe.

We have seen a seasonal pick up in terms of volumes.

In the case of Europe and April has been looking quite good as well as we saw sequentially. The normal seasonal pickup that occurs so I think that where as we look at Europe going forward, we have better comps as we moved into the back three quarters of the year because of the declines we.

<unk> in Europe really started in second quarter, we believe we will have improving fixed cost dynamics.

The Olympics will be that will be behind us and we will have a more supportive economic environment as well as going forward. We believe in the promise and infrastructure is picking up in Poland. So that is.

That is kind of it in terms of Europe, hopefully that answered your question.

Lucy Rodriguez: Hopefully that answered your question.

It does thank you so much.

Okay. Thank you Justin.

Yassine Touahri: It does. Thank you so much.

And the next question comes from Ann Millner from Bank of America.

Lucy Rodriguez: Okay. Thank you, Yassine. The next question comes from Anne Milne from Bank of America. Anne?

Ann.

Yes, good morning, Fernando and Maher Lucy Thank you for the call.

Anne Milne: Yes, good morning, Fernando, Maher, Lucy. Thank you for the call.

Note that we've talked about this and its good morning in previous calls by the next quarterly conference call.

Fernando González: Morning.

Anne Milne: Good morning. I know that we've talked about this in previous calls. By the next quarterly conference call, Mexico will have had presidential elections, and you will know who the new president is, even though the polls do give us some good suggestions. I know we've talked about the impact on business and volumes in Mexico that maybe will tend to decline. Given some of the dynamics that are going on right now, both the nearshoring and right now an increase in bag cement, could you just give us an idea of some of your thoughts, if anything, if nothing more, on how this time might be different and what you might expect post-elections in H2 2024?

Nicole will have had presidential elections, and you all know who the net new precedent is even though the pulse do give us some suggestions I know we've talked about the impact on business and volumes in Mexico that maybe 12 tend to decline.

But given some of the dynamics that are going on right now both the near shoring and right now an increase in bag cement could.

Could you just give us an idea of some of your thoughts if anything if nothing more on how this time might be different than what you might expect post elections in the second half of 'twenty four.

Yes, well, let me, let me start and then market Olusegun complement that I think I think you know this year is an election year.

Fernando González: Yes. Well, let me start, and then Maher or Lucy can complement. I think this year is an election year. What we see is, let's say, a good performance in different sectors in our industry. Perhaps the one impacted is formal housing because of high interest rates, although, at least in the case of Mexico, seems like the first adjustment was made. Let's see how that continues moving forward. I think the informal economy is doing well. Mexico is growing. On that side, growth in the market could be reasonable and stable for the rest of the year. On the other hand, industrial and commercial, impacted by the nearshoring effect, is also evolving in an attractive manner, particularly in the north of the country.

Hmm.

What we see is.

Let's say a good performance in different sectors.

Sure.

Sure.

Uh huh.

The industry.

Hum.

Perhaps the one.

The impact that these affordable housing because of high interest rates.

Although.

At least in the case of Mexico. It seems like the first adjustment was made let's see let's see how would that.

Continues moving forward.

But I think.

The informal economy is doing well Mexico is growing.

So on that side.

Growth in the in the market could be.

It will be some level of stable for the rest of the year.

On the other hand.

Industrial and commercial.

Impacted.

By the near shoring the effect is also evolving.

In an attractive manner, particularly in the north of the.

Of the country.

And.

The other piece.

Fernando González: The other piece that is going on that is positive, which is infrastructure in public works, meaning public infrastructure, everything that is going on in the central part of the country and in the southeast, meaning the trains, the rural roads, the airports. With some exceptions, like the airport in Mexico City, the projects are not finished yet, and they're not going to finish in election time. They're going to continue being developed for the rest of the year. Who knows, maybe also early next year. That shouldn't be, let's say, a material factor or a reason why demand can't suffer materially. We see stable volumes for Mexico during the whole year, despite the election in mid-year.

The.

He is going on that is positive which is infrastructure.

In in public works, meaning public infrastructure everything that is going on in the central part of the country and the South East Dominion.

The trains that rural roads airports.

Most of the.

Got it.

With some exceptions like the airport in Mexico City.

The the projects are not finished yet and they're not going to finish.

In election time, so they are going to continue being develop for the rest of the year and who knows maybe you know.

Also early next year, so that that shouldn't be a.

Let's see.

The real factor.

Or.

Yeah.

The reason why the month sulfur materially.

So.

We see stable.

Volumes for Mexico during the whole year.

Despite the election in midyear.

Yeah.

And if I can if I can add.

Maybe just some more granular color and I'm sure you know.

Maher Al-Haffar: If I can add maybe just some more granular color, I am sure if you visited Monterrey or Mexico recently, you would see a lot of these projects that are just beginning. We think there is a very strong project pipeline for H2 that is likely to substitute or, let us say, ease the demand situation in H2. You have the cross-border terminal in Tijuana. There is a very extensive metro expansion in Monterrey. On the way from the airport, you can see enormous amount of concrete being poured and expected to continue to be poured for quite a bit of the year, major highway construction in Guanajuato, and there are many others, right?

If you visited Monterey, our Mexico recently, you would see a lot of these projects that are just beginning.

We think theres a very strong.

<unk> pipeline for the second half of the year that is likely to kind of substitute or let's say.

He's the demand situation in the second half of the year. You know you have the cross border terminal Andy why don't you have.

There is a very extensive metro expansion in Monterey I mean on the way to the from the airport. You can you can see enormous amount of concrete being poured and expect it to continue to be important for quite a bit of.

The year major highway construction and when a plateau and there are many many others right and then and then on the housing side I mean, we do expect as Fernando said, you know as that as rates get a little bit better.

Maher Al-Haffar: On the housing side, we do expect, as Fernando said, as rates get a little bit better, inflation gets to be easing in H2 of the year. We do expect some improvement in demand there. Remittances continue to be very positive and impacted. Mexico as a whole, frankly, continued to benefit from the fiscal stimulus from the US through the remittances and through others. Of course, the nearshoring process also continues to happen, especially in the northern part of the country, and it's starting to make its way further south. Supply-demand dynamics continue to be fairly favorable. H2 of the year is looking reasonably good, I would say.

<unk> gets to be easing in the second half of the year, we do expect some improvement in demand there.

<unk> continues to be.

Very positive and impact that in Mexico, as a whole frankly continue to benefit from the fiscal stimulus from the U S through.

Through the remittances into others and of course, the near shoring process also continues to happen, especially in the northern part of the country and it's starting to make its way further south and.

So supply demand dynamics continue to be fairly favorable so second half of the year is looking reasonably good I would say.

Okay. That's very good color. Thank you very much.

Lucy Rodriguez: Okay. That's very good color. Thank you very much.

Thank you thank you Ann.

Yeah.

And then next question comes from Gordon Lee from BTG.

Maher Al-Haffar: Thank you, Anne.

Fernando González: Thank you, Anne.

Lucy Rodriguez: Next question comes from Gordon Lee from BTG.

Hi, good morning, Thanks, very much for the call.

Gordon Lee: Hi. Good morning.

Yes, Hi can you hear me.

Lucy Rodriguez: Gordon?

Gordon Lee: Thanks very much for the call. Yes, hi, can you hear me?

Yes, yes, Gordon how are you doing well.

Lucy Rodriguez: Yes.

Hey, how are you Hey, this is a question I guess really for you, but just.

Maher Al-Haffar: Yes, Gordon. How are you doing?

Gordon Lee: Hello? Hey, how are you? Maher, this is a question, I guess, really for you, but just sort of thinking about capital allocation in the context of your sort of continuous enhancement in financial flexibility. I know obviously priority number 1 you stated is to reduce the leverage ratio by half a turn of EBITDA. I wonder how you feel about the subordinated perpetual notes. Because if you look at the coupon, that's sort of not quite a cost of equity type of coupon, but not far from it, and particularly considering that you're now an investment-grade company. I know that those don't impact the leverage ratio. Do you see them as a permanent feature of your capital structure? How would that stack up, let's say, versus buying back shares or increasing the dividend going forward?

Sort of thinking about.

Capital allocation in the context of your.

Continuous enhancement and financial flexibility I mean, I know, obviously priority number one you stated is to reduce the leverage ratio by half a turn of EBITDA, but I wonder how you feel about the subordinated perpetual notes whether you because if you look at the coupon that sort of almost not quite a cost of equity type of coupon, but not far from it and particularly considering that you are now.

We're an investment grade company and I know that.

Those don't impact the leverage ratio.

But how do you see them as a permanent feature of your capital structure, and how would that stack up let's say versus buying back shares or increasing the dividend going forward.

Yeah no. Thank you very much Gordon on that question I mean first.

Maher Al-Haffar: Thank you very much, Gordon, on that question. First, in addition to the way that those two instruments, we've got $2 billion just for the listeners of subordinated notes. One is on the high side of coupon, one is on the lower side of coupon. The one that was issued earlier is on the lower side because rates spiked when we issued the second one. Very importantly, Gordon, on both of those instruments, when we issued them, we were internally comparing them on a cash cost basis after tax. We believe that the after-tax cost of those instruments is actually very comparable to our senior debt. From a cost perspective, I don't see them costing us more.

In addition to be the way that those two instruments are being we've got $2 billion just for the listeners.

Subordinated notes one is on the high side of coupon one is on a lower side of coupon. The one that was issued earlier.

On the lower side as rates spiked when we issued the second one very importantly, Gordon on both of those instruments when we issued them.

We were internally comparing them on a on a cash cost basis after tax and <unk>.

We believe that the after tax cost of those instruments is actually very comparable to our senior debt so from a cost perspective.

I don't see them.

I don't see them costing us more they just happened to also have the additional attribute of.

Maher Al-Haffar: They just happen to also have the additional attribute of accounting for equity, both on a total consolidated basis for CEMEX from leverage ratio calculation, but also half of those are considered as equity by the rating agencies for 5 years. The next call, I shouldn't say call dates, but reset dates are in 2026 and 2028. The rates will go up materially. We need to kind of think about what we would do with them for 2026 or 2028. Not any time sooner than that. I don't see us doing anything sooner than that. Do I see them as part of our permanent capital structure? I don't think so. I think as our EBITDA grows and our stock of debt goes down, leverage gets more and more comfortable.

The accounting for equity both on a total consolidated basis for <unk> from leverage ratio calculation, but also half of those are considered as equity by the rating agencies for for five years.

Now.

The next call I, Shouldnt say call dates, but reset dates are in 26 and 28.

And the rates will go up materially so we need to kind of think about what we would do with them for 26 or 28, not anytime sooner than that I don't see us doing anything sooner than that do I see them as you know as.

As part of our permanent capital structure I I don't think so I mean, I think as our EBITDA grows and our stock of debt.

It goes down leverage gifts.

More and more comfortable.

Entirely possible that to the extent that we don't need those that we would slowly blend them into our senior debt stack.

Maher Al-Haffar: It is entirely possible that to the extent that we don't need those, that we would slowly blend them into our senior debt stack. Of course, if we need to reissue them or whatever at that time, we would do that because upon reissuance, they would receive, again, the equity treatment from both the rating agencies and from the leverage ratio. That's how we think about them, frankly, in terms of capital allocation.

Of course, you know it.

If we need to reissue them or whatever at that time, we would do that because our bond re issuance they would receive again the equity treatment.

On both the rating agencies and from the leverage ratio. So so that's how that's how I think that's how we think about them I mean, frankly in terms of capital allocation.

Perfect. Thank you very much.

Thank you very much Gordon okay. Thanks Gordon.

Gordon Lee: Perfect. Thank you very much.

Maher Al-Haffar: Thank you very much, Gordon.

And the last question comes from Danielle <unk> from Bank of America Danielle.

Lucy Rodriguez: Okay. Thanks, Gordon. The last question comes from Daniel Rojas from Bank of America. Daniel?

Hi, Lucy Fernando and Maher, Thanks for taking my call.

Daniel Rojas: Hi, Lucy, Fernando González, Maher. Thanks for taking my call. My question. I wanted to jump back to the US and maybe discuss pricing. I understand that back in January, you were able to reprice around 20% of the market, with the 80% remaining sometime in April. Could you give us some feedback on how you're seeing pricing evolving into April and May? Given volumes going down the Q1, a second potential increase is still on the table?

Sure.

I wanted to jump back to the U S and maybe discuss pricing I understand them back in January you were able to reprice around 20% of the market with the 80% remaining sometime in April.

Could you give us some feedback on how you see pricing evolving into April and May and Dave given price volumes going down in the first quarter our.

Our second potential increase is still in the table.

Sure.

How do you want to handle that and do you want do you want to look at or ahead of it.

Lucy Rodriguez: Sure. Fernando, how do you want to handle that? Do you want to take it or?

Okay. Okay.

Fernando González: Go ahead, Lucy. Go ahead.

Yes, well first of all we did increase prices in Florida in January and we saw good traction in terms of pricing on that increase.

Lucy Rodriguez: Okay. Yes. Well, first of all, we did increase prices in Florida in January, and we saw good traction in terms of pricing on that increase. We do have, for April, the kind of another, I think, 70% of our portfolio, more or less. In terms of pricing and the kind of pricing outlook bit, and what our achievements have been. I don't know, Maher, if you want to add anything to that?

We do have for April.

But kind of another I think 70% of our portfolio more or less.

In terms of pricing and the pricing outlook.

And what what are our achievements at them I don't know.

Sure if you want to add anything to that.

No Thats fine Lucy Thank you.

Alright, okay.

Maher Al-Haffar: No, that's fine, Lucy. Thank you.

Thank you very much Danielle.

Lucy Rodriguez: Great. Okay. Thank you very much, Danielle. Okay. That's it then. We appreciate you joining us today for our Q1 results, and we hope you will be back with us again for Q2 results on 25 July. Many thanks, and have a good end of week.

Okay.

So that's it and we appreciate you joining us today for our first quarter results and we hope you will be back with US again for second quarter results.

On July 20 <unk>.

Many thanks.

And have a good go to end of week.

Yes.

Thank you for your participation on today's conference call. This concludes the presentation you may now disconnect good day.

Operator: Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Good day.