Cemex Sab De CV 6-K, filed Oct 29, 2020
Cemex Sab De CV (CX)
About this 6-K
Cemex Sab De CV filed this 6-K on October 29, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OFFOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October, 2020
Commission File Number: 001-14946
CEMEX, S.A.B. de C.V.
(Translation of Registrant’s name into English)
AvenidaRicardo Margáin Zozaya #325, Colonia Valle del Campestre,
San Pedro Garza García, Nuevo León 66265,México
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Contents
| 1. | Press release issued by CEMEX Holdings Philippines in the Philippines dated October 29, 2020 announcing third quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V.<br>(NYSE:CX). |
|---|---|
| 2. | Third quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). |
| 3. | Presentation regarding third quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, CEMEX, S.A.B. de C.V. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CEMEX, S.A.B. de C.V. | ||
|---|---|---|
| (Registrant) | ||
| Date: October 28, 2020 | By: | /s/ Rafael Garza Lozano |
| Name: Rafael Garza Lozano | ||
| Title: Chief Comptroller |
3
EXHIBIT INDEX
| EXHIBIT<br>NO. | DESCRIPTION |
|---|---|
| 1. | Press release issued by CEMEX Holdings Philippines in the Philippines dated October 29, 2020 announcing third quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V.<br>(NYSE:CX). |
| 2. | Third quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). |
| 3. | Presentation regarding third quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX). |
Press release for third quarter 2020 results for CEMEX Holdings Philippines
Exhibit 1
| Media Relations<br><br><br>Erlinda Lizardo<br> <br>+632 8849<br>3600<br> <br>erlinda.lizardo@cemex.com | Investor Relations<br><br><br>Pierre Co<br> <br>+632 8849 3600<br><br><br>pierre.co@cemex.com |
|---|
CHP REPORTS THIRD QUARTER 2020 RESULTS
MANILA, PHILIPPINES. OCTOBER 29, 2020 – CEMEX HOLDINGS PHILIPPINES, INC. (“CHP”) (PSE: CHP), announced today that its consolidated net sales decreased by 17%, reaching PHP 15.1 billion during the first nine months of 2020, versus the comparable period in 2019. Sales decreased by 6% year-over-year in the third quarter, reaching about PHP 5.5 billion.
CHP’s domestic cement volumes decreased by 12% during the first nine months of 2020 versus the same period in 2019. For the quarter, its domestic cement volumes declined by 3% year-over-year. CHP’s domestic cement prices during the first nine months of the 2020 were 5% lower year-over-year, reflecting declines which began in the second half of 2019.
CHP’s Operating EBITDA during the first nine months of 2020 was around PHP 3.3 billion, a decrease of 5% versus the same period in 2019, and its Operating EBITDA margin was at 22% for the first nine months of 2020. Lower volumes and prices were partially offset by lower costs and cost containment measures, including maintenance cost deferrals.
Net income for CHP was at PHP 758.1 million for the first nine months of 2020, versus PHP 874.7 million in the same period last year, due to the negative impact of the COVID-19 pandemic on operating earnings.
Ignacio Mijares, President and CEO of CHP, said: “As the country takes steps towards reopening the economy, the impact of the pandemic remains a concern. We must continue to adapt to the challenges and limitations brought about by COVID-19. Full execution of the government’s infrastructure plan can help accelerate economic recovery. Nevertheless, we continue to be optimistic on the long-term growth prospects of the Philippines.”
As of September 30, 2020, CHP’s total debt was at PHP 13,510 million, a decrease of around PHP 6.6 billion from December 31, 2019. The lower debt level is a result of the repayment of respective debts owed by Solid Cement Corporation and APO Cement Corporation to CEMEX ASIA, B.V. using a portion of the proceeds raised from CHP’s Stock Rights Offering during the first quarter of 2020.
CHP, a listed company at the Philippine Stock Exchange, is one of the leading cement producers in the Philippines, based on annualinstalled capacity. CHP produces and markets cement and cement products, such as ready-mix concrete and clinker, in the Philippines through direct sales using its extensive marine and land distributionnetwork. Moreover, CHP’s cement manufacturing subsidiaries have been operating in the Philippines with well-established brands, such as “APO,” “Island,” and “Rizal,” all having a multi-decade history in thecountry.
1
CHP is an indirect subsidiary of CEMEX, S.A.B. de C.V., one of the largest cement companies in the worldbased on annual installed cement production capacity. The shares of CEMEX, S.A.B. de C.V. are listed on the Mexican Stock Exchange and the New York Stock Exchange.
For more information on CHP, please visit website: www.cemexholdingsphilippines.com.
#
This press release may containforward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of CHP to be materially different from those expressed orimplied in this release, including, among others, changes in general economic, political, governmental and business conditions globally and in the countries in which CHP does business, changes in interest rates, changes in inflation rates, changesin exchange rates, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, changes in business strategy, changes derived from events affecting CEMEX, S.A.B de C.V. and subsidiaries(“CEMEX”) and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. CHP assumes noobligation to update or correct the information contained in this press release.
2
Third quarter 2020 results for CEMEX Holdings Philippines, Inc.
Exhibit 2
2020
THIRD QUARTER RESULTS
• Stock Listing Information
Philippine Stock Exchange
Ticker: CHP
• InvestorRelations
- 632 8849 3600
E-Mail:
chp.ir@cemex.com
| Operating and Financial Highlights | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| January - September | Third Quarter | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | % var | 2020 | 2019 | % var | |||||||||||||
| Net sales | 15,142 | 18,224 | (17 | %) | 5,519 | 5,868 | (6 | %) | ||||||||||
| Gross profit | 6,313 | 7,506 | (16 | %) | 2,529 | 2,424 | 4 | % | ||||||||||
| as % of net sales | 42 | % | 41 | % | 1pp | 46 | % | 41 | % | 5pp | ||||||||
| Operating earnings before other expenses, net | 1,492 | 2,085 | (28 | %) | 840 | 628 | 34 | % | ||||||||||
| as % of net sales | 10 | % | 11 | % | (2pp | ) | 15 | % | 11 | % | 5pp | |||||||
| Controlling Interest Net Income (Loss) | 758 | 875 | (13 | %) | 623 | 72 | 761 | % | ||||||||||
| Operating EBITDA | 3,281 | 3,446 | (5 | %) | 1,431 | 1,075 | 33 | % | ||||||||||
| as % of net sales | 21.7 | % | 18.9 | % | 2.8pp | 25.9 | % | 18.3 | % | 7.6pp | ||||||||
| Free cash flow after maintenance capital expenditures | 1,967 | 2,891 | (32 | %) | 1,922 | 1,204 | 60 | % | ||||||||||
| Free cash flow | (365 | ) | 851 | N/A | 1,543 | (437 | ) | N/A | ||||||||||
| Net debt^1^ | 6,843 | 17,643 | (61 | %) | 6,843 | 17,643 | (61 | %) | ||||||||||
| Total debt^1^ | 13,510 | 20,235 | (33 | %) | 13,510 | 20,235 | (33 | %) | ||||||||||
| Earnings per share^2^ | 0.06 | 0.17 | (62 | %) | 0.05 | 0.01 | 232 | % |
In millions of Philippine Pesos, except percentages and earnings per share
| ^1^ | U.S. dollar debt converted using<br>end-of-period exchange rate. See Debt Information on page 4 and Exchange Rates on page 8 for more detail. |
|---|---|
| ^2^ | In Philippine Pesos |
| --- | --- |
Net sales decreased, year-over-year, by 6% during the third quarter and by 17% during the first nine months of the year, due to lower volumes and prices.
Cost of sales was at 58% of sales during the first nine months of 2020 compared with 59% in the same period of 2019. The decrease was driven by lower costs and efforts to contain expenses, amidst the COVID-19 pandemic.
Total fuel cost was 5% lower year-over-year, while total power cost declined by 18% year-over-year during the first nine months of 2020 due to the temporary stoppage of Solid Cement Plant in the second quarter of the year due to lockdowns, production optimization initiatives, and lower energy prices.
Operating expenses, as a percentage of sales, was at 32% during the first nine months of 2020, compared with 30% in the same period of 2019.
Distribution expenses, as a percentage of sales, was at 18% during the first nine months of 2020, compared with 17% in the same period of 2019. Total distribution expenses were lower by 14% year-over-year for the first three quarters of 2020.
Selling and administrative expenses, as a percentage of sales, was at 14% during the first nine months of 2020, compared with 13% in the same period of 2019. Total selling and administrative expenses were lower by 8% year-over-year for the first three quarters of 2020.
Operating EBITDA for the first nine months of 2020 was around PHP 3.3 billion, a decrease of 5% year-over-year. Third quarter operating EBITDA benefitted from maintenance deferrals, lower costs, and controlling of expenses.
Operating EBITDA margin was at 22% for the first nine months of the 2020, as lower volumes and prices were partially offset by lower costs and cost containment measures, including maintenance cost deferrals.
Controlling interest net income was at PHP 758 million for the first nine months of 2020, 13% lower on a year-over-year basis, due to COVID-19 pandemic-related restrictions, and its negative impact on demand.
Income tax was a benefit for the first nine months of the year due to an increase in the company’s deferred tax assets related to Net Operating Loss Carry-Over (NOLCO) and Minimum Corporate Income Tax (MCIT) credits.
Total debt at the end of September 2020 was at PHP 13,510 million, of which PHP 11,322 million pertained to debt owed to BDO Unibank, Inc.
| 2020 Third Quarter Results | Page 2 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Operating Results | |||||||||
| --- | |||||||||
| Domestic Gray Cement | January - September | Third Quarter | Third Quarter 2020 | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 vs. 2019 | 2020 vs. 2019 | vs. Second Quarter 2020 | |||||||
| Volume | (12 | %) | (3 | %) | 38 | % | |||
| Price in PHP | (5 | %) | (3 | %) | 1 | % |
Our domestic cement volumes decreased by 3% year-over-year during the third quarter. We saw a reimposition of lockdown measures during the quarter, in areas including Metro Manila and nearby provinces, which returned to two-weeks of stricter quarantine classifications.
On a sequential basis, our domestic cement volumes increased by 38% for the quarter, in line with government efforts to reopen the economy.
During the first nine months of 2020, our domestic cement volumes decreased by 12% year-over-year due to the negative effects of the COVID-19 pandemic.
Our domestic cement prices during the first nine months of the 2020 were 5% lower year-over-year, reflecting declines that began in the second half of 2019.
The sequential change in our prices reflects product and geographic mix effects.
| 2020 Third Quarter Results | Page 3 |
|---|---|
| Operating EBITDA, Free Cash Flow and Debt Information | |
| --- |
Operating EBITDA and Free Cash Flow
| January - September | Third Quarter | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | % var | 2020 | 2019 | % var | |||||||||||||
| Operating earnings before other income, net | **** | 1,492 | **** | **** | 2,085 | **** | **** | (28 | %) | **** | 840 | **** | **** | 628 | **** | **** | 34 | % |
| + Depreciation and operating amortization | 1,789 | 1,362 | 592 | 447 | ||||||||||||||
| Operating EBITDA | **** | 3,281 | **** | **** | 3,446 | **** | **** | (5 | %) | **** | 1,431 | **** | **** | 1,075 | **** | **** | 33 | % |
| - Net financial expenses | 707 | 1,067 | 173 | 352 | ||||||||||||||
| - Maintenance capital expenditures | 167 | 386 | 121 | 28 | ||||||||||||||
| - Change in working capital | 131 | (1,258 | ) | (888 | ) | (621 | ) | |||||||||||
| - Income taxes paid | 305 | 391 | 100 | 132 | ||||||||||||||
| - Other cash items (net) | 4 | (32 | ) | 3 | (22 | ) | ||||||||||||
| Free cash flow after maintenance capital expenditures | **** | 1,967 | **** | **** | 2,891 | **** | **** | (32 | %) | **** | 1,922 | **** | **** | 1,204 | **** | **** | 60 | % |
| - Strategic capital expenditures | 2,331 | 2,040 | 379 | 1,641 | ||||||||||||||
| Free cash flow | **** | (365 | ) | **** | 851 | **** | **** | N/A | **** | **** | 1,543 | **** | **** | (437 | ) | **** | N/A | **** |
In millions of Philippine Pesos
Debt Information
| Third Quarter | Second Quarter | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | % var | 2020 | |||||||||
| Total debt^(1)(2)^ | **** | 13,510 | **** | **** | 20,235 | **** | **** | (33 | %) | **** | 13,681 | **** |
| Short term | 6 | % | 9 | % | 6 | % | ||||||
| Long term | 94 | % | 91 | % | 94 | % | ||||||
| Cash and cash equivalents | 6,667 | 2,592 | 157 | % | 5,272 | |||||||
| Net debt | **** | 6,843 | **** | **** | 17,643 | **** | **** | (61 | %) | **** | 8,409 | **** |
| Leverage Ratio^(3)^ | **** | 3.33 | **** | **** | 4.04 | **** | **** | 3.69 | **** | |||
| Coverage Ratio^(3)^ | **** | 5.21 | **** | **** | 3.40 | **** | **** | 4.16 | **** | |||
| Third Quarter | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| 2020 | 2019 | |||||||||||
| Currency denomination | ||||||||||||
| U.S. dollar | 5 | % | 28 | % | ||||||||
| Philippine peso | 95 | % | 72 | % | ||||||||
| Interest rate | ||||||||||||
| Fixed | 56 | % | 44 | % | ||||||||
| Variable | 44 | % | 56 | % |
In millions of Philippine Pesos, except percentages
| ^(1)^ | U.S. dollar debt converted using<br>end-of-period exchange rate. See Exchange Rates on page 8 for more detail. |
|---|---|
| ^(2)^ | Includes leases, in accordance with Philippine Financial Reporting Standards (PFRS). |
| --- | --- |
| ^(3)^ | Based on BDO Loan Facility financial covenants which we are required to comply commencing on June 30,<br>2021. |
| --- | --- |
| 2020 Third Quarter Results | Page 4 |
| --- | --- |
| Financial Results | |
| --- |
Income Statement & Balance Sheet Information
CEMEX Holdings Philippines, Inc.
(Thousands ofPhilippine Pesos in nominal terms, except per share amounts)
| January - September | Third Quarter | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| INCOME STATEMENT | 2020 | 2019 | % var | 2020 | 2019 | % var | ||||||||||||
| Net sales | 15,142,304 | 18,223,518 | (17 | %) | 5,519,262 | 5,867,591 | (6 | %) | ||||||||||
| Cost of sales | (8,829,342 | ) | (10,717,942 | ) | 18 | % | (2,990,621 | ) | (3,443,247 | ) | 13 | % | ||||||
| Gross profit | **** | 6,312,962 | **** | **** | 7,505,576 | **** | **** | (16 | %) | **** | 2,528,641 | **** | **** | 2,424,344 | **** | **** | 4 | % |
| Selling and Administrative expenses | (2,131,900 | ) | (2,307,000 | ) | 8 | % | (753,969 | ) | (760,793 | ) | 1 | % | ||||||
| Distribution expenses | (2,688,895 | ) | (3,113,928 | ) | 14 | % | (935,069 | ) | (1,035,832 | ) | 10 | % | ||||||
| Operating earnings before other expenses, net | **** | 1,492,167 | **** | **** | 2,084,648 | **** | **** | (28 | %) | **** | 839,603 | **** | **** | 627,719 | **** | **** | 34 | % |
| Other income (expenses), net | (4,309 | ) | 32,159 | N/A | (2,935 | ) | 21,681 | N/A | ||||||||||
| Operating earnings (loss) | **** | 1,487,858 | **** | **** | 2,116,807 | **** | **** | (30 | %) | **** | 836,668 | **** | **** | 649,400 | **** | **** | 29 | % |
| Financial expenses, net | (707,223 | ) | (1,067,235 | ) | 34 | % | (173,099 | ) | (352,432 | ) | 51 | % | ||||||
| Foreign exchange gain (loss), net | 133,009 | 127,921 | 4 | % | 133,314 | (146,480 | ) | N/A | ||||||||||
| Net income (loss) before income taxes | **** | 913,644 | **** | **** | 1,177,493 | **** | **** | (22 | %) | **** | 796,883 | **** | **** | 150,488 | **** | **** | 430 | % |
| Income tax benefit (expenses) | (155,512 | ) | (302,811 | ) | 49 | % | (173,768 | ) | (78,117 | ) | (122 | %) | ||||||
| Consolidated net income (loss) | **** | 758,132 | **** | **** | 874,682 | **** | **** | (13 | %) | **** | 623,115 | **** | **** | 72,371 | **** | **** | 761 | % |
| Non-controlling interest net income (loss) | 16 | 18 | (11 | %) | 4 | 6 | (33 | %) | ||||||||||
| Controlling Interest net income (loss) | **** | 758,148 | **** | **** | 874,700 | **** | **** | (13 | %) | **** | 623,119 | **** | **** | 72,377 | **** | **** | 761 | % |
| Operating EBITDA | **** | 3,281,154 | **** | **** | 3,446,204 | **** | **** | (5 | %) | **** | 1,431,247 | **** | **** | 1,074,502 | **** | **** | 33 | % |
| Earnings per share | **** | 0.06 | **** | **** | 0.17 | **** | **** | (62 | %) | **** | 0.05 | **** | **** | 0.01 | **** | **** | 232 | % |
| as of September 30 | as of December 31 | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| BALANCE SHEET | 2020 | 2019 | % Var | 2019 | % Var | |||||||||||||
| Total Assets | **** | 63,721,233 | **** | 58,150,371 | **** | 10 | % | **** | 58,806,177 | **** | 8 | % | ||||||
| Cash and Temporary Investments | 6,667,022 | 2,591,799 | 157 | % | 1,399,180 | 376 | % | |||||||||||
| Derivative Asset | 0 | 2,777 | (100 | %) | 0 | |||||||||||||
| Trade Accounts Receivables | 807,720 | 1,052,519 | (23 | %) | 892,951 | (10 | %) | |||||||||||
| Other Receivables | 41,077 | 73,410 | (44 | %) | 92,993 | (56 | %) | |||||||||||
| Insurance Claims and Premium Receivables | 175,285 | 518 | 33739 | % | 445,535 | (61 | %) | |||||||||||
| Inventories | 2,273,242 | 2,944,124 | (23 | %) | 3,013,444 | (25 | %) | |||||||||||
| Assets Held for Sale | 0 | 0 | 0 | |||||||||||||||
| Other Current Assets | 1,362,209 | 1,108,763 | 23 | % | 1,672,392 | (19 | %) | |||||||||||
| Current Assets | 11,326,555 | 7,773,910 | 46 | % | 7,516,495 | 51 | % | |||||||||||
| Fixed Assets | 21,246,158 | 19,076,228 | 11 | % | 19,937,723 | 7 | % | |||||||||||
| Investments in an Associate and Other Investments | 14,097 | 14,097 | 0 | % | 14,097 | 0 | % | |||||||||||
| Other Assets and Noncurrent Accounts Receivables | 799,317 | 887,865 | (10 | %) | 837,151 | (5 | %) | |||||||||||
| Advances to Contractors | 1,286,693 | 1,778,104 | (28 | %) | 1,606,397 | (20 | %) | |||||||||||
| Deferred Income Taxes - net | 1,188,719 | 760,473 | 56 | % | 1,034,620 | 15 | % | |||||||||||
| Goodwill | 27,859,694 | 27,859,694 | 0 | % | 27,859,694 | 0 | % | |||||||||||
| Other Assets | 31,148,520 | 31,300,233 | (0 | %) | 31,351,959 | (1 | %) | |||||||||||
| Total Liabilities | **** | 21,080,917 | **** | 28,724,703 | **** | (27 | %) | **** | 29,140,690 | **** | (28 | %) | ||||||
| Current Liabilities | 7,549,321 | 9,604,901 | (21 | %) | 10,136,812 | (26 | %) | |||||||||||
| Long-Term Liabilities | 11,095,900 | 16,511,763 | (33 | %) | 16,549,640 | (33 | %) | |||||||||||
| Deferred Tax Liability | 1,043 | 7,624 | (86 | %) | 1,587 | (34 | %) | |||||||||||
| Other Liabilities | 2,434,653 | 2,600,415 | (6 | %) | 2,452,651 | (1 | %) | |||||||||||
| Consolidated Stockholders’ Equity | **** | 42,640,316 | **** | 29,425,668 | **** | 45 | % | **** | 29,665,487 | **** | 44 | % | ||||||
| Non-controlling Interest | 151 | 175 | (14 | %) | 170 | (11 | %) | |||||||||||
| Stockholders’ Equity Attributable to Controlling Interest | 42,640,165 | 29,425,493 | 45 | % | 29,665,317 | 44 | % | |||||||||||
| 2020 Third Quarter Results | Page 5 | |||||||||||||||||
| --- | --- | |||||||||||||||||
| Financial Results | ||||||||||||||||||
| --- |
Income Statement & Balance Sheet Information
CEMEX Holdings Philippines, Inc.
(Thousands of U.S.Dollars, except per share amounts)
| January - September | Third Quarter | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| INCOME STATEMENT | 2020 | 2019 | % var | 2020 | 2019 | % var | ||||||||||||
| Net sales | 303,217 | 351,507 | (14 | %) | 113,309 | 113,735 | (0 | %) | ||||||||||
| Cost of sales | (176,803 | ) | (206,735 | ) | 14 | % | (61,396 | ) | (66,743 | ) | 8 | % | ||||||
| Gross profit | **** | 126,414 | **** | **** | 144,772 | **** | **** | (13 | %) | **** | 51,913 | **** | **** | 46,992 | **** | **** | 10 | % |
| Selling and Administrative expenses | (42,690 | ) | (44,500 | ) | 4 | % | (15,479 | ) | (14,748 | ) | (5 | %) | ||||||
| Distribution expenses | (53,844 | ) | (60,064 | ) | 10 | % | (19,197 | ) | (20,078 | ) | 4 | % | ||||||
| Operating earnings before other expenses, net | **** | 29,880 | **** | **** | 40,208 | **** | **** | (26 | %) | **** | 17,237 | **** | **** | 12,166 | **** | **** | 42 | % |
| Other income (expenses), net | (86 | ) | 620 | N/A | (60 | ) | 420 | N/A | ||||||||||
| Operating earnings (loss) | **** | 29,794 | **** | **** | 40,828 | **** | **** | (27 | %) | **** | 17,177 | **** | **** | 12,586 | **** | **** | 36 | % |
| Financial expenses, net | (14,162 | ) | (20,586 | ) | 31 | % | (3,554 | ) | (6,831 | ) | 48 | % | ||||||
| Foreign exchange gain (loss), net | 2,663 | 2,467 | 8 | % | 2,737 | (2,839 | ) | N/A | ||||||||||
| Net income (loss) before income taxes | **** | 18,295 | **** | **** | 22,709 | **** | **** | (19 | %) | **** | 16,360 | **** | **** | 2,916 | **** | **** | 461 | % |
| Income tax benefit (expenses) | (3,114 | ) | (5,841 | ) | 47 | % | (3,567 | ) | (1,514 | ) | (136 | %) | ||||||
| Consolidated net income (loss) | **** | 15,181 | **** | **** | 16,868 | **** | **** | (10 | %) | **** | 12,793 | **** | **** | 1,402 | **** | **** | 812 | % |
| Non-controlling interest net income (loss) | 0 | 0 | 0 | 0 | ||||||||||||||
| Controlling Interest net income (loss) | **** | 15,181 | **** | **** | 16,868 | **** | **** | (10 | %) | **** | 12,793 | **** | **** | 1,402 | **** | **** | 812 | % |
| Operating EBITDA | **** | 65,703 | **** | **** | 66,473 | **** | **** | (1 | %) | **** | 29,383 | **** | **** | 20,828 | **** | **** | 41 | % |
| as of September 30 | as of December 31 | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| BALANCE SHEET | 2020 | 2019 | % Var | 2019 | % Var | |||||||||||||
| Total Assets | **** | 1,313,975 | **** | 1,121,943 | **** | 17 | % | **** | 1,161,259 | **** | 13 | % | ||||||
| Cash and Temporary Investments | 137,479 | 50,006 | 175 | % | 27,630 | 398 | % | |||||||||||
| Derivative Asset | 0 | 54 | (100 | %) | 0 | |||||||||||||
| Trade Accounts Receivables | 16,656 | 20,307 | (18 | %) | 17,633 | (6 | %) | |||||||||||
| Other Receivables | 847 | 1,416 | (40 | %) | 1,836 | (54 | %) | |||||||||||
| Insurance Claims and Premium Receivables | 3,614 | 10 | 36040 | % | 8,798 | (59 | %) | |||||||||||
| Inventories | 46,876 | 56,803 | (17 | %) | 59,507 | (21 | %) | |||||||||||
| Assets Held for Sale | 0 | 0 | 0 | |||||||||||||||
| Other Current Assets | 28,090 | 21,392 | 31 | % | 33,025 | (15 | %) | |||||||||||
| Current Assets | 233,562 | 149,988 | 56 | % | 148,429 | 57 | % | |||||||||||
| Fixed Assets | 438,110 | 368,054 | 19 | % | 393,715 | 11 | % | |||||||||||
| Investments in an Associate and Other Investments | 291 | 272 | 7 | % | 278 | 5 | % | |||||||||||
| Other Assets and Noncurrent Accounts Receivables | 16,482 | 17,130 | (4 | %) | 16,532 | (0 | %) | |||||||||||
| Advances to Contractors | 26,532 | 34,306 | (23 | %) | 31,722 | (16 | %) | |||||||||||
| Deferred Income Taxes - net | 24,512 | 14,672 | 67 | % | 20,431 | 20 | % | |||||||||||
| Goodwill | 574,486 | 537,521 | 7 | % | 550,152 | 4 | % | |||||||||||
| Other Assets | 642,303 | 603,901 | 6 | % | 619,115 | 4 | % | |||||||||||
| Total Liabilities | **** | 434,702 | **** | 554,209 | **** | (22 | %) | **** | 575,448 | **** | (24 | %) | ||||||
| Current Liabilities | 155,671 | 185,315 | (16 | %) | 200,174 | (22 | %) | |||||||||||
| Long-Term Liabilities | 228,805 | 318,575 | (28 | %) | 326,810 | (30 | %) | |||||||||||
| Deferred Tax Liability | 22 | 147 | (85 | %) | 31 | (29 | %) | |||||||||||
| Other Liabilities | 50,204 | 50,172 | 0 | % | 48,433 | 4 | % | |||||||||||
| Consolidated Stockholders’ Equity | **** | 879,272 | **** | 567,734 | **** | 55 | % | **** | 585,811 | **** | 50 | % | ||||||
| Non-controlling Interest | 3 | 3 | 0 | % | 3 | 0 | % | |||||||||||
| Stockholders’ Equity Attributable to Controlling Interest | 879,269 | 567,731 | 55 | % | 585,808 | 50 | % | |||||||||||
| 2020 Third Quarter Results | Page 6 | |||||||||||||||||
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| Other Information | ||||||||||||||||||
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Newly issued PFRS effective in 2019
PFRS 16, Leases (“PFRS 16”)
In summary, beginning January 1, 2019, PFRS 16 introduces a single lessee accounting model and requires a lessee to recognize, for all leases, allowing exemptions in case of leases with a term of less than 12 months or when the underlying asset is of low value, assets for the right-of-use of the underlying asset against a corresponding financial liability, representing the net present value of estimated lease payments under the contract, with a single income statement model in which a lessee recognizes amortization of the right-of-use asset and interest on the lease liability. After concluding the inventory and measurement of its leases, CEMEX Holdings Philippines, Inc. and Subsidiaries adopted PFRS 16 using the full retrospective approach by means of which it determined an opening cumulative effect in its statement of financial position as of January 1, 2017 as follows:
| (Thousands of Philippine Pesos) | As of January 1, 2017 | ||
|---|---|---|---|
| Assets for the<br>right-of-use | 2,187,292 | ||
| Deferred income tax assets | 33,509 | ||
| Deferred income tax liability | (3,053 | ) | |
| Lease liabilities | 2,309,165 | ||
| Retained earnings^^^1^ | (85,311 | ) | |
| ^1^ | The initial effect in retained earnings refers to a temporary difference between thestraight-line amortization expense of the right-of-use asset and the amortization of the financial liability under the effective interest rate method since originationof the contracts. This difference will reverse over the remaining term of the contracts. | ||
| --- | --- |
As of September 30, 2020 and 2019, assets for the right-of-use amounted to PHP 1,966 million and PHP 2,121 million, respectively. In addition, financial liabilities related to lease contracts amounted to PHP 2,188 million as of September 30, 2020 and PHP 2,365 million as of September 30, 2019. These amounts of financial liabilities as of September 30, 2020 and 2019 are included in the “Debt Information” section appearing on page 4.
| 2020 Third Quarter Results | Page 7 |
|---|---|
| Definitions of Terms and Disclosures | |
| --- |
Methodology for translation, consolidation, and presentation of results
CEMEX Holdings Philippines, Inc. (“CHP”) reports its consolidated financial statements under Philippine Financial Reporting Standards (“PFRS”). When reference is made in 2020 and 2019 to consolidated financial statements, it means CHP financial information together with its subsidiaries.
For the purpose of presenting figures in U.S. dollars, the consolidated balance sheet as of September 30, 2020 has been converted at the end of period exchange rate of 48.50 Philippine pesos per US dollar while the consolidated income statement for the nine-month period ended September 30, 2020 has been converted at the January to September 2020 average exchange rate of 49.94 Philippine pesos per US dollar. On the other hand, the consolidated income statement for the three-month period ended September 30, 2020 has been converted at the July to September 2020 average exchange rate of 48.71 Philippine pesos per US dollar.
Definition of terms
PHP refers to Philippine Pesos.
pp equals percentage points.
Prices all references to pricing initiatives, price increases or decreases, refer to our prices for our products.
Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization.
Free cash flow equals operating EBITDA minus net interest expense, maintenance and strategic capital expenditures, change in working capital, taxes paid, and other cash items (net other expenses less proceeds from the disposal of obsolete and/or substantially depleted operating fixed assets that are no longer in operation).
Maintenance capital expenditures investments incurred for the purpose of ensuring the company’s operational continuity. These include capital expenditures on projects required to replace obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or company policies.
Strategic capital expenditures investments incurred with the purpose of increasing the company’s profitability. These include capital expenditures on projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs.
Change in Working capital in the Free cash flow statements only include trade receivables, trade payables, receivables and payables from and to related parties, other current receivables, inventories, other current assets, and other accounts payable and accrued expense.
Net debt equals total debt minus cash and cash equivalents.
| Exchange Rates | January - September | Third Quarter | January - September | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020average | 2019average | 2020average | 2019average | 2020End of period | 2019End of period | |||||||
| Philippine peso | 49.94 | 51.84 | 48.71 | 51.59 | 48.50 | 51.83 |
Amounts provided in units of local currency per US dollar
| 2020 Third Quarter Results | Page 8 |
|---|
Presentation regarding third quarter 2020 results for CEMEX Holdings Philippines
1Q19 Results 3Q 2020 Results October 29, 2020 Exhibit 3
This presentation contains forward-looking statements. In some cases, these statements can be identified by the use of forward-looking words such as “may,” “should,” “could,” “anticipate,” “estimate,” “expect,” “plan,” “believe,” “predict,” “potential” and “intend” or other similar words. These forward-looking statements reflect current expectations and projections about future events of CEMEX Holdings Philippines, Inc. ("CHP") based on CHP’s knowledge of present facts and circumstances and assumptions about future events. These statements necessarily involve, as of the date such statements are made, risks and uncertainties that could cause actual results to differ materially from CHP’s expectations. Some of the risks, uncertainties and other important factors that could cause results to differ, or that otherwise could have an impact on CHP or its subsidiaries, include, but are not limited to, the cyclical activity of the construction sector; CHP’s exposure to other sectors that impact CHP’s business, such as the energy sector; general political, economic, health and business conditions in the markets in which CHP operates; competition in the markets in which we offer our products and services; the regulatory environment, including environmental, tax, antitrust and acquisition-related rules and regulations; CHP’s ability to satisfy its debt obligations and the ability of CEMEX, S.A.B. de C.V. (“CEMEX”), the ultimate parent company of the major shareholder of CHP, to satisfy CEMEX’s obligations under its material debt agreements, the indentures that govern CEMEX’s senior secured notes and CEMEX’s other debt instruments; expected refinancing of CEMEX’s existing indebtedness; the impact of CEMEX’s below investment grade debt rating on CHP’s and CEMEX’s cost of capital; CEMEX’s ability to consummate asset sales and fully integrate newly acquired businesses; achieve cost-savings from CHP’s cost-reduction initiatives and implement CHP’s pricing initiatives for CHP’s products; the increasing reliance on information technology infrastructure for CHP’s invoicing, procurement, financial statements and other processes that can adversely affect operations in the event that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; changes in the economy that affect demand for consumer goods, consequently affecting demand for our products and services; the impact of pandemics, epidemics or outbreaks of infectious diseases and the response of governments and other third parties, including with respect to COVID-19, which have affected and may continue to adversely affect, among other matters, supply chains, international operations, availability of liquidity, investor confidence and consumer spending, as well as availability of, and demand for, our products and services; weather conditions, including but not limited to, excessive rain and snow, and disasters such as earthquakes and floods; weather conditions; natural disasters and other unforeseen events (including global health hazards such as COVID-19); and the other risks and uncertainties described in CHP’s public filings. Readers are urged to read these presentations and carefully consider the risks, uncertainties and other factors that affect CHP’s business. The information contained in these presentations is subject to change without notice, and CHP is not obligated to publicly update or revise forward-looking statements. Unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases, refer to CHP’s prices for products sold or distributed by CHP or its subsidiaries. Copyright CEMEX Holdings Philippines, Inc. and its subsidiaries
COVID-19 Pandemic Economy gradually reopening, as lockdown measures from the second quarter were eased and more sectors could operate. Temporary reversion to stricter community quarantine measures by the government during the quarter, depending on the area and impact of the virus. Both our plants, Solid and APO, remained operational throughout the third quarter, in compliance with the necessary protocols and safety measures set by the government.
Protect the health and safety of our employees and their families, customers, suppliers, and communities Promoting and implementing our “Behaviors that Save Lives”, which include wearing of face masks and PPEs, physical distancing, frequent hand washing and sanitation, regular health checks and monitoring, among others. In the local government units where we operate, we continue to identify opportunities to be of service and support the recovery of our surrounding communities.
Serve our customers safely and leverage CEMEX Go Our CEMEX Go platform enables digital construction solutions, with contactless ordering, billing, and real-time tracking. Dedicated customer service center and digitalization efforts further enhance our customers’ experience with us.
Prudently manage our costs and expenses Cost management has allowed us to partially mitigate the significant decline in our revenues during this time of pandemic. Included in these cost deferrals are maintenance expenses, some of which we are planning to spend in the fourth quarter. We continue to closely monitor our expenditures to ensure that spending is limited to those that are essential to our business.
Domestic Cement Volumes and Prices Domestic cement volumes decreased by 3% year-over-year during the third quarter due to the effects of the ongoing COVID-19 pandemic. Reimposition of stricter lockdown measures during the quarter, in areas including Metro Manila and nearby provinces, which returned to two weeks of Modified Enhanced Community Quarantine. Sequentially, our domestic cement volumes increased by 38% during the quarter, in line with government efforts to reopen the economy. On a year-to-date basis, domestic cement volumes decreased by 12% year-over-year. Domestic cement prices were 5% lower year-over-year during the first nine months of 2020, reflecting declines which began in the second half of 2019. Sequential change in price reflects product and geographic mix effects.
-6% Net Sales As a result of lower volumes and prices, net sales decreased, year-over-year, by 6% during the third quarter and by 17% during the first nine months of 2020. Net Sales1 1 Millions of Philippine Pesos -17%
Private Sector Activity in the residential sector was lower during the third quarter due to persisting COVID-19 risks and effects on the country. Some developers have revised expansion plans, likely to safeguard their balance sheets amid challenging market conditions. Improved remittances, together with supportive monetary policy and a controlled inflation environment, could help support the weak demand in the sector. The non-residential sector remained challenged during the quarter amidst uncertainties, especially in the retail, tourism, and hospitality segments. Rising interest in the logistics segment due to e-commerce, third-party logistics operations, and fast-moving consumer goods could help temper the weak demand in the sector. The Senate continues to review the proposed Corporate Recovery and Tax Incentives for Enterprise (CREATE) Act which would adjust the corporate income tax rate from 30% to 25%. Passing this into law is expected to further business confidence, and augment recovery of activity in the construction sector. Sources: Colliers, Department of Trade and Industry, Jones Lang LaSalle, Philippine Statistics Authority Employment in Construction (K Persons) -13% +66%
Public Sector Infrastructure disbursements during the first two months (July – August) of the third quarter declined by 28.2% YoY to Php 96.6 billion from Php 134.5 billion in the same period last year. The decline is mainly attributed to muted construction activity amid the pandemic, and as Mega Manila was returned to a two-week Modified Enhanced Community Quarantine (MECQ) in August. The government budget department expects a reduced level of spending for the year as some projects are discontinued pursuant to the Bayanihan to Heal as One Act. The government continues to prioritize infrastructure as major projects resume and as the Department of Public Works and Highways (DPWH) received one of the highest allocations in the proposed 2021 budget. Disbursements on Infrastructure and Capital Outlays (in PHP billion) Refers to year-over-year growth % Source: Department of Budget and Management
Cost of Sales Cost of sales was at 58% of sales during the first nine months of 2020, compared with 59% in the same period of 2019. Decrease was driven by lower costs and our efforts to contain expenses, amidst the pandemic. Planning to execute some major kiln maintenance works in the fourth quarter, which were previously delayed. Total fuel cost was 5% lower year-over-year, while total power cost declined by 18% year-over-year during the first nine months of 2020 due to the temporary stoppage of Solid Cement Plant in Q2 due to lockdowns, production optimization initiatives, and lower energy prices. Cost of Sales (% of net sales) Fuel and Power (% of cost of sales)
Operating Expenses Distribution expenses, as a percentage of sales, was at 18% for 9M20. Total distribution expenses decreased by 14% year-over-year for 9M20. Selling and administrative expenses, as a percentage of sales, was at 14% for 9M20. Total S&A expenses were 8% lower year-over-year for 9M20. Controlling operating expenses and improving asset productivity, to mitigate the impact of lower volumes. Distribution (% of net sales) Selling and Administrative (% of net sales)
Operating EBITDA and Operating EBITDA Margin Operating EBITDA for the first nine months of 2020 decreased by 5% year-over-year. 3Q20 benefitted from maintenance deferrals, lower costs, and controlling of expenses. Operating EBITDA margin was at 22% for the first nine months of 2020, as lower volumes and prices were partially offset by lower costs and cost containment measures, including maintenance cost deferrals. 1 Millions of Philippine Pesos Refers to operating EBITDA margin % Operating EBITDA Variation1 18% 26% 19% 22%
Net Income Net income was at PHP 758 million for the first nine months of 2020, lower by 13% year-over-year due to the impact of the COVID-19 pandemic on operating earnings. Income tax during the first nine months of the year was lower due to an increase in the company’s deferred tax assets related to Net Operating Loss Carry-Over (NOLCO) and Minimum Corporate Income Tax (MCIT) credits. 1 Millions of Philippine Pesos Net Income1
Free Cash Flow & Guidance 1q19 Free Cash Flow 3Q 2020
Free cash flow after maintenance CAPEX for the first nine months of 2020 was around PHP 1.97 billion. Working capital movement during the third quarter reflected a return to normal operations, with higher payables due to resumed purchases of production materials. Strategic CAPEX for the first nine months of the year was at PHP 2.3 billion due to our Solid Cement Plant Expansion project. Free Cash Flow
Works remained ongoing, with strict health and safety protocols, in line with government regulations. Our contractors continue to work on the different buildings and structures of the new line. We are coordinating with our contractors to optimize manpower and activities during this time of pandemic. Expected completion of the project in December 2021. Estimated total investment of US$235 million Solid Cement Plant Capacity Expansion
2020 Guidance Capital expenditures PHP 800 million PHP 2,875 million PHP 3,675 million Maintenance CAPEX Solid Cement Plant Expansion CAPEX Total CAPEX
Q&A SESSION 3Q 2020
1Q19 appendix APPENDIX 3Q 2020
Debt Maturity Profile Total Debt: PHP 13,510 Avg. life of debt1: 5.0 years Net Debt to EBITDA2: 1.7x All amounts in millions of Philippine Pesos 1 Based on weighted average life of debt 2 Last 12 months Consolidated EBITDA
Additional Debt Information Note: All amounts in millions of Philippine Pesos, except percentages and ratios 1 U.S. dollar debt converted using end-of-period exchange rates 2 Includes leases, in accordance with Philippine Financial Reporting Standards (PFRS) 3 Based on BDO Loan Facility financial covenants which we are required to comply commencing on June 30, 2021
Definitions 9M20 / 9M19 Results for the first nine months of the years 2020 and 2019, respectively PHP Philippine Pesos Pp Percentage points Prices All references to pricing initiatives, price increases or decreases, refer to our prices for our products. Operating EBITDA Operating earnings before other expenses, net, plus depreciation and operating amortization. Free Cash Flow Operating EBITDA minus net interest expense, maintenance and strategic capital expenditures, change in working capital, taxes paid, and other cash items (net other expenses less proceeds from the disposal of obsolete and/or substantially depleted operating fixed assets that are no longer in operation), Maintenance Capital Expenditures Investments incurred for the purpose of ensuring the company’s operational continuity. These include capital expenditures on projects required to replace obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or company policies, Strategic capital expenditures investments incurred with the purpose of increasing the company’s profitability. These include capital expenditures on projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs. Change in Working capital in the Free cash flow statements Only include trade receivables, trade payables, receivables and payables from and to related parties, other current receivables, inventories, other current assets, and other accounts payable and accrued expense. Net Debt Total debt (debt plus leases) minus cash and cash equivalents.
Contact Information Stock Information PSE: CHP Investor Relations In the Philippines +632 8849 3600 chp.ir@cemex.com