CEMEX (NYSE:CX) 2026 Investor Day February 26, 2026 09:00 AM ET Company ParticipantsAlejandra Obregon - Executive DirectorAnne Milne - Managing Director of Emerging Markets Corporate ResearchBen Theurer - Managing Director and Head of Equity Research for LatAmCarlos Peyrelongue - Head of Mexico Equity ResearchFrancisco Suarez - Global Director of Research for LatAm EquitiesGarrett Greenblatt - Equity Research Associate for US Construction MaterialsJaime Muguiro - CEOJeff Bobolts - SVP of US AggregatesJesús ...

Financial Data and Key Metrics Changes - The company achieved a free cash flow from operations of $1.4 billion in 2025, with a conversion rate of 46% after adjusting for one-off items [5][9][27] - Net income increased by 2% for the full year, with a significant impact from a goodwill impairment of $538 million [10][29] - EBITDA for the fourth quarter increased by 20% year-over-year, with a margin expansion of 5 percentage points [15] Business Line Data and Key Metrics Changes - Consolidated cement and aggregates volumes grew by 1% and 2% respectively in the fourth quarter, with notable growth in EMEA cement volumes [10][22] - The aggregates business contributed 39% to U.S. EBITDA, indicating a strong performance in this segment [20][83] - The Urbanization Solutions portfolio saw higher EBITDA in the admixtures business in EMEA, partially offsetting soft performance in Mexico and the U.S. [12] Market Data and Key Metrics Changes - In Mexico, average daily cement sales increased by 8% sequentially, reflecting improved demand conditions [15][16] - U.S. operations posted record fourth quarter EBITDA, driven by Project Cutting Edge and the consolidation of Couch Aggregates [17][20] - EMEA region achieved record EBITDA and EBITDA margin in 2025, supported by higher volumes and prices [22] Company Strategy and Development Direction - The company is focused on a multi-year strategic plan that includes cost efficiency measures under Project Cutting Edge, targeting $400 million in recurring savings by 2027 [4][13] - There is a clear emphasis on portfolio rebalancing, with divestments in non-core markets and investments in targeted businesses in the U.S. [5][6] - The company aims to enhance shareholder returns through increased dividends and share buybacks, proposing a 40% increase in annual cash dividends [7][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, anticipating improved market demand and operating leverage across most markets [8][34] - The company expects to achieve high single-digit EBITDA growth in 2026, supported by cost savings and volume recovery [34][36] - Management acknowledged geopolitical challenges but emphasized a focus on controllable factors to drive performance [56] Other Important Information - The company recognized a goodwill impairment of $538 million, which significantly impacted net income [10][29] - The consolidated gross CO2 emissions declined by 2% in 2025, with operations in Europe achieving emissions reduction targets ahead of schedule [6][24] - The company plans to activate a share buyback program of up to $500 million over the next three years, subject to shareholder approval [7][31] Q&A Session Summary Question: Impact of potential EU ETS target changes on pricing and profitability - Management indicated that potential changes to EU ETS targets would not significantly alter pricing strategies, maintaining mid-single digit price increase targets for the coming years [38][39] Question: Clarification on high single-digit EBITDA growth guidance - Management highlighted more upside than downside risks, with potential benefits from currency fluctuations and ongoing cost-saving measures [45][46] Question: Future capital allocation and divestments - The company is planning divestments to reinvest profits in the U.S. aggregates market, focusing on accretive acquisitions [80][83] Question: Pricing outlook for U.S. cement - Management noted soft demand in certain markets but expects pricing to stabilize and improve as demand recovers [69]

Financial Data and Key Metrics Changes - The company achieved a free cash flow from operations of $1.4 billion in 2025, with a conversion rate of 46% after adjusting for one-off items [5][9] - Net income increased by 2% for the full year, with a significant impact from goodwill impairment and asset write-downs [29] - EBITDA for the fourth quarter increased by 20% year-over-year, with a margin expansion of 5 percentage points [15] Business Line Data and Key Metrics Changes - Consolidated cement and aggregates volumes in the fourth quarter grew by 1% and 2%, respectively, with notable growth in EMEA cement volumes [10] - The aggregates business contributed 39% to U.S. EBITDA, nearly equal to that of cement, reflecting strong performance driven by Project Cutting Edge [20] - The Urbanization Solutions portfolio saw higher EBITDA in the admixtures business in EMEA, partially offsetting soft performance in Mexico and the U.S. [12] Market Data and Key Metrics Changes - In Mexico, average daily cement sales increased by 8% sequentially, indicating improved demand conditions [15] - U.S. operations posted record fourth quarter EBITDA, with margins near record highs, driven by higher operating efficiency and the consolidation of Couch Aggregates [17] - EMEA region achieved record EBITDA and EBITDA margin in 2025, supported by higher volumes and prices [22] Company Strategy and Development Direction - The company is focused on enhancing shareholder returns through improved free cash flow conversion and disciplined capital allocation, prioritizing aggregates and adjacent businesses [6][31] - Project Cutting Edge aims for recurring savings of $400 million by 2027, with $125 million expected in 2026 [13][34] - The company plans to continue seeking divestments in non-core markets to expand its presence in the U.S. [5][6] Management's Comments on Operating Environment and Future Outlook - Management expects a more favorable demand environment in 2026, particularly from Mexico and EMEA, with guidance for high single-digit EBITDA growth [34] - The company anticipates incremental savings of $165 million under Project Cutting Edge, contributing to improved free cash flow [34] - Management remains focused on operational excellence and shareholder return, emphasizing the importance of self-help measures for growth [36] Other Important Information - The board of directors will propose an annual cash dividend of $180 million, representing a nearly 40% increase compared to the previous year [31] - The company recognized a goodwill impairment of $538 million in 2025, which significantly impacted net income [10][29] - Energy costs per ton of cement declined by 12% for the full year, driven by lower fuel and power prices [29] Q&A Session Summary Question: Impact of potential EU ETS target changes on pricing and profitability - Management indicated that potential changes to EU ETS targets would not alter the pricing strategy in Europe, maintaining mid-single digit price increase targets for the coming years [38][39] Question: Clarification on high single-digit EBITDA growth guidance - Management expressed confidence in the guidance, highlighting more upside than downside risks, particularly from currency fluctuations and ongoing operational efficiencies [45][46] Question: Future capital allocation and divestments - Management confirmed plans for divestments, with proceeds aimed at reinvestment in the U.S. aggregates market, emphasizing a disciplined approach to acquisitions [81][83]

Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Views - The company's fundamentals are under pressure, compounded by increased management expenses, leading to a decline in profitability [4][5]. - In Q3 2025, the company reported revenue of 15.1 billion, a year-on-year decrease of 4.5%, while net profit was 330 million, a year-on-year increase of 7.3%. However, the estimated net profit attributable to the company for Q3 2025 is 24 million, down 83% from 143 million in the same period last year [2][4]. Summary by Sections Revenue and Profitability - The company achieved a revenue of 15.1 billion in Q3 2025, which is a 4.5% decrease year-on-year. The net profit for the same period was 330 million, reflecting a 7.3% increase year-on-year. However, the estimated net profit attributable to the company for Q3 2025 is 24 million, down 83% from 143 million in the same period last year [2][4][5]. Industry Analysis - The cement industry is expected to remain under pressure in 2025, with the company actively maintaining market order. The company's sales volume decreased more than the industry average, indicating a commitment to price stability. In the first three quarters of 2025, the national cement production was 1.259 billion tons, a year-on-year decrease of 5.2% [5]. - In the Guangdong and Guangxi markets, cement production growth rates for the first three quarters were -2.3% and -1.8%, respectively, performing better than the national average [5]. Financial Metrics - The company's overall gross margin for the first three quarters of 2025 was 16.9%, an increase of 1.7 percentage points compared to 15.2% in the same period of 2024. This increase was primarily due to a decrease in the cost of cement product sales compared to the previous year, although it was partially offset by a decline in the gross margin of aggregates and other segments [6]. - The gross margins for cement products, concrete, and aggregates in the first three quarters of 2025 were 17.1%, 14.7%, and 25.4%, respectively, compared to 12.6%, 12.4%, and 38.6% in the same period of 2024 [6]. Future Outlook - The company anticipates that supply-side governance will provide price recovery elasticity. The cement industry is focusing on overproduction governance, which may lead to the elimination of some production capacity. If production is strictly aligned with registered capacity, it could optimize production order and improve actual capacity utilization [6]. - The expected earnings for 2025 and 2026 are 510 million and 830 million, respectively, corresponding to price-to-earnings ratios of 21 and 13 times [6].

Financial Data and Key Metrics Changes - Consolidated EBITDA rose sharply, increasing at a double-digit rate, with significant margin gains driven by cost savings and higher prices [5][6][8] - EBITDA margin expanded by 2.5 percentage points, reaching its highest level for a third quarter since 2020 [7][11] - Free cash flow from operations improved significantly, reaching approximately $540 million, an increase of over $350 million year-over-year [25][26] Business Line Data and Key Metrics Changes - In Mexico, EBITDA grew by 11%, driven by a leaner cost base and higher prices despite lower volumes [16] - The U.S. operations achieved record third-quarter EBITDA and margins, supported by increased cost efficiencies and higher prices [18][19] - The EMEA region saw strong performance, with new records in EBITDA and margins, particularly in Eastern Europe and the Middle East [22][23] Market Data and Key Metrics Changes - Demand conditions in Mexico are showing signs of improvement, with average daily cement sales volume outperforming historical patterns [16] - In the U.S., infrastructure demand remains strong, while residential sector weakness persists [19][52] - The South Central America and Caribbean region posted impressive results, with EBITDA rising by 54% [24] Company Strategy and Development Direction - The company is focused on operational excellence and delivering industry-leading shareholder returns, with a strategic plan aimed at enhancing profitability and free cash flow conversion [4][13] - Project Cutting Edge aims for annualized recurring EBITDA savings of $400 million by 2027, with significant progress already made [11][12] - The company is prioritizing small to mid-size acquisitions in the U.S. and divesting non-core markets to strengthen its position [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in demand conditions, particularly in Mexico and the U.S., with expectations for volume growth in 2026 [18][39] - The company anticipates continued improvements in free cash flow conversion and operational efficiency as it progresses with its strategic initiatives [26][29] - Management highlighted the importance of maintaining a disciplined approach to capital allocation while pursuing growth opportunities [13][66] Other Important Information - The company completed the divestment of its operations in Panama and consolidated Couch Aggregates into its U.S. business [2][3][14] - The company is committed to decarbonization efforts, having surpassed the European Cement Association's 2030 CO2 emissions target [6][23] Q&A Session Summary Question: What should we expect for cash conversion next year and 2027? - Management targets around 45% free cash flow conversion from operations in 2026, with further improvements expected beyond that [32] Question: Can we expect a recovery in Mexico's demand volumes? - Management is confident that demand volumes in Mexico should grow by at least 2.5% to 3% next year, driven by infrastructure projects [38] Question: What contributed to the EBITDA margin expansion in Mexico? - The 500 basis points improvement was driven by price increases, reductions in SG&A, and lower variable costs, including energy [42] Question: How does the company view CCUS initiatives? - Management emphasized that CCUS remains a mid-term priority, but will only be pursued if it is accretive to value creation [45][46] Question: What is the outlook for U.S. M&A? - The company is actively looking at family-owned aggregate targets in the U.S. and is strengthening its team for bolt-on acquisitions [73]

Summary of Huaxin Cement Conference Call Industry and Company Overview - **Company**: Huaxin Cement - **Industry**: Cement and Aggregate Industry - **Key Focus**: Expansion into aggregate business and overseas markets, particularly in Africa, transitioning from a cyclical market to a growth-oriented model [2][5] Core Insights and Arguments - **Shift in Profit Sources**: Huaxin Cement is expected to see overseas business profits exceed 50% by 2025, marking a significant shift from reliance on domestic cement sales [2][5] - **Aggregate Demand Resilience**: Aggregate demand is more resilient than cement, less affected by real estate market fluctuations, with regional pricing creating market premiums [2][6] - **African Market Potential**: The African market is identified as a major growth area, with a demand of approximately 250 million tons and a stable growth rate of 3-4% annually [7][8] - **Competitive Landscape in Africa**: Huaxin Cement is the fourth largest player in the African cement market, competing with Dangote, Lafarge, and Heidelberg, with prices in Africa being 2 to 4 times higher than in China [9][12] Financial Performance and Projections - **Profit Growth in Nigeria**: The Nigerian project is projected to generate a profit of 1.6 billion yuan in 2025, significantly up from previous years due to effective price increases [12] - **Overall Profit Expectations**: The company anticipates total profits reaching 4 billion yuan by 2026, with a corresponding market capitalization target of over 60 billion yuan [3][14] Additional Important Insights - **Cost Advantages**: Huaxin Cement benefits from low raw material costs (2-3 yuan/ton) compared to competitors (7-8 yuan/ton), enhancing investment efficiency [6][10] - **Technological and Operational Strengths**: The company has established a strong supply chain and technological capabilities in Africa, supported by its major shareholder, Lafarge [11][10] - **Market Dynamics**: Domestic cement production has seen a decline of nearly 30% over three years, but policies aimed at reducing overproduction are expected to stabilize and potentially increase prices [13][14] Conclusion Huaxin Cement is strategically positioned for growth through its expansion into aggregates and international markets, particularly in Africa, with strong financial projections and competitive advantages in cost and technology. The company's shift in profit sources and resilience in demand present significant investment opportunities.

Summary of Huaxin Cement Conference Call Industry Overview - The cement industry is currently under pressure with overall profitability declining, but there is a strong willingness among companies to raise prices. The traditional peak season of "Golden September and Silver October" may lead to a short-term rebound in cement prices, although actual demand recovery needs to be monitored [2][3] Company Highlights - Huaxin Cement has a significant advantage in overseas operations, with an overseas capacity reaching 35 million tons by the end of 2025, ranking first among domestic companies venturing abroad. The medium to long-term target is 50 million tons, primarily distributed in Africa, where the market structure is relatively stable and competitive pressure is low. The profitability per ton of overseas cement is significantly higher than that of domestic operations [2][4] - The company recently completed the consolidation of its Indonesian capacity, exceeding 30 million tons in overseas capacity. It has launched a broad-based equity incentive plan and a core employee stock ownership plan, focusing on shareholder returns and earnings per share growth, which is expected to enhance management efficiency [2][6] - Huaxin Cement's domestic aggregate business is performing exceptionally well, ranking first in both capacity and profitability nationwide, serving as a major source of profit. Despite a decline in aggregate prices, the company maintains a competitive edge due to prior mining reserves and cost control [2][7] Financial Projections - Future profitability for Huaxin Cement is expected to improve, driven by stable growth in overseas demand, optimized internal incentive mechanisms, and international market expansion. However, attention should be paid to the impact of exchange rate fluctuations on overseas profits, which can affect net profit by approximately 30 yuan per ton [2][8][9] Market Conditions - The current market environment for the cement industry shows that leading companies are operating below safety lines, with many small to medium enterprises in East China facing losses. The industry is strongly advocating for price increases, especially with the arrival of the peak season [3][11] - The domestic cement market lacks significant demand growth, with companies focusing more on supply-side reforms. The capacity replacement progress in the first half of 2025 was below expectations, and the second half will require close attention to capacity replacement and overproduction policies [4][11] Stock Performance and Future Outlook - Huaxin Cement's stock price is highly sensitive to macroeconomic conditions and supply dynamics. The stock price is expected to respond positively to anticipated price increases in the fourth quarter. Following the consolidation of Huaxin's operations, the annual profit forecast has been slightly adjusted upwards, with expected net profits of 2.8 billion, 3.5 billion, and 3.7 billion yuan for 2025-2027, corresponding to growth rates of 17%, 24%, and 7% respectively [12][13] Key Considerations for the Second Half - In the second half of the year, attention should be paid to potential new policies and industry price increase expectations. The strong performance of overseas business and plans for the spin-off of overseas subsidiaries for listing, along with the new equity incentive plan, make the development in the second half of the year promising [13]

Investment Rating - The investment rating for China Resources Cement Technology (1313.HK) is "Buy" and is maintained [6]. Core Views - The company reported a revenue of 10.206 billion yuan for the first half of 2025, a year-on-year decrease of 1.0%, while the net profit attributable to shareholders was 307 million yuan, reflecting an increase of 85% year-on-year [2][4]. - The overall industry demand is under pressure, but the Guangdong and Guangxi regions are performing relatively better than the national average. National cement production decreased by 4.3% year-on-year to 820 million tons in the first half of 2025 [5]. - The company’s cement sales volume decreased by 13% year-on-year to 25.31 million tons, while concrete sales volume increased by 36% year-on-year to 68.77 million tons, and aggregate sales volume increased by 23% year-on-year to 36.34 million tons [5]. - The average price of cement products was 247 yuan per ton, an increase of 9 yuan per ton year-on-year, while the average price of commercial concrete was 303 yuan per ton, a decrease of 41 yuan per ton year-on-year [5]. Summary by Sections Company Overview - The company is primarily located in the Guangdong and Guangxi regions, which are expected to see better demand growth compared to the national average. The production line utilization rates for cement, concrete, and aggregates were 56.8%, 32.0%, and 80.2%, respectively, compared to 64.2%, 27.1%, and 75.1% in the same period of 2024 [5][7]. Market Dynamics - The mid-term outlook for the South China market is positive due to the construction momentum from the Greater Bay Area. The regional supply has stabilized, and the market is entering a rebalancing phase. The company, as a regional leader, has comprehensive advantages in scale and distribution [7]. Financial Projections - The industry is expected to gradually optimize its structure, with the company projected to achieve net profits of 700 million yuan and 1 billion yuan for 2025 and 2026, respectively, corresponding to price-earnings ratios of 17 and 12 times [7].

Summary of Huaxin Cement Conference Call Company Overview - Huaxin Cement is a long-established cement company founded in 1907, transitioning to a joint-stock system in 1993. The company began expanding into concrete, aggregates, and environmental businesses in 2005, and initiated its first overseas cement project in 2012, evolving into a global building materials group. As of the end of 2024, Huaxin Cement has a cement capacity of 126 million tons, a concrete capacity of 50,000 cubic meters per hour, and an aggregate capacity of 285 million tons [3][4][5]. Financial Performance - For the first half of 2025, Huaxin Cement expects a net profit attributable to shareholders of approximately 1 billion yuan, representing a year-on-year growth of 50% to 55%, driven by improved domestic cement profitability, increased overseas earnings, and reduced foreign exchange losses [2][4]. - The company forecasts net profits of 2.7 billion yuan, 3 billion yuan, and 3.3 billion yuan for 2025, 2026, and 2027, respectively, with growth rates of 13%, 11.5%, and 7.6% [4][16]. - The valuation is currently around 11 times, 10 times, and 9 times for the respective years, indicating attractiveness and maintaining a recommendation rating [4][16]. Business Segments Contribution - The cement business contributes approximately 50% to gross profit, the aggregate business about 30%, and the concrete business around 12% [2][5]. - The aggregate business has a gross profit margin of approximately 48%, with sales expected to reach 140 million tons in 2024, contributing 2.7 billion yuan in gross profit [2][15]. Domestic Market Dynamics - The domestic cement market is expected to improve due to policy-driven competition reduction and the Ministry of Industry and Information Technology's efforts to address overproduction, which may enhance supply-demand balance and boost prices [2][6]. - Despite weak demand leading to price fluctuations in the first half of the year, the construction peak season and policy support in the second half are anticipated to drive price recovery [6][8]. Overseas Market Expansion - Huaxin Cement is actively expanding in Southeast Asia and Africa, leveraging technical expertise and shareholder advantages. The overseas revenue share has increased from 10% in 2015 to 24% in 2024, with significantly higher gross margins compared to domestic operations [2][11][13]. - In 2024, overseas revenue is expected to grow by 40% to 8 billion yuan, with sales increasing by 37% to 16 million tons. The company plans to expand overseas capacity from 20 million tons to 50 million tons and is pursuing acquisitions, such as a project in Nigeria [2][13]. Challenges and Opportunities - The domestic market faces challenges from weak demand and price declines, but policy measures are expected to support recovery. The international market, particularly in Africa, presents growth opportunities due to economic and population growth potential [6][9][11]. - The cement industry must address overproduction and improve capacity utilization to restore supply-demand balance, with mergers and acquisitions suggested to enhance market concentration and maintain reasonable pricing [10][12]. Aggregate Industry Insights - The aggregate sector is closely tied to construction demand, which has seen a decline due to insufficient building starts. However, the high gross margin of approximately 40% and the ability to source aggregates from tailings without mining costs make it an attractive area for investment [12][15]. Shareholder Structure - Huaxin Cement has a dual background of state-owned and foreign investment, with its controlling shareholder being the globally renowned building materials group, Holcim Group, and another major shareholder being the Huangshi State-owned Assets Supervision and Administration Commission [7].

Group 1 - The company, Sichuan Shuangma (000935.SZ), has stated that it is currently not involved in the Yarlung Tsangpo River hydropower project [1] - The company focuses on the building materials sector, operating two cement production lines and two aggregate production lines [1] - The annual production capacity of the company is 2 million tons of cement and 5 million tons of aggregates, indicating sufficient supply capability [1] Group 2 - The building materials products are sold through a market-oriented sales model, allowing the company to quickly respond to diverse customer needs [1]