Cemex posts wider-than-expected Q3 loss; U.S. sales rise

Reuters

By Elinor Comlay and Gabriela Lopez

MEXICO CITY/MONTERREY, Oct 24 (Reuters) - Mexico's Cemex,one of the world's biggest cement companies, reported awider-than-expected quarterly loss on Thursday as taxesincreased, but sales picked up, especially in the United States,sparking a nearly 4 percent jump in its shares.

The company , which has struggled amid theglobal economic downturn and a heavy debt load from costlyacquisitions, said U.S. cement sales rose 8 percent, and werealso higher in Europe, Asia and most of Latin America.

Cemex shares rose nearly 4 percent to 14.23 pesos in localtrading and jumped 3.6 percent in U.S. trading.

Slower spending by the Mexican government on infrastructureprojects put a slight damper on the results, with Cemexreporting a double-digit drop in sales.

Still, the company said Mexico was starting to pick up.

"It will improve, it has already started improving and weexpect it will continue to improve in 2014," Fernando Gonzalez,executive vice president of finance and administration, said ona call with analysts.

Todd Vencil, an analyst at Sterne Agee, said the company missed his expectations due to a drop in Mexican sales.

"But given the recent pullback in the stock, we suspect that(the miss) was priced in," he said in an early report.

Through Wednesday's close, Cemex shares had fallen almost 10percent since the end of August.

MISSED EXPECTATIONS

Cemex posted a third-quarter loss of $155 million, comparedwith the average analyst estimate of a loss of $22 million,according to a Reuters survey.

The Monterrey-based company lost $203 million in theyear-earlier third quarter.

Cemex's income tax payment increased by 12 percent from ayear earlier, but executives told analysts on the call theyexpected tax payments for this year to be only slightly higherthan the previous year.

Net sales rose 3 percent to $4.02 billion, while analystsexpected $4.05 billion.

The residential sector drove the higher U.S. sales, Cemexsaid, adding it was "sustained by strong fundamentals such ashigh affordability, large pent-up demand and low levels ofinventories."

Sales in Northern Europe, dampened in recent quarters bysluggish economic growth, rose 6 percent, while results inSouthern Europe, Asia and the rest of Latin America were alsohigher.

Operating core profit, or earnings before interest, taxes,depreciation and amortization, increased 2 percent to $747million from $735 million a year earlier.

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