UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 or 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of July, 2020

Commission File Number: 001-14946

 

 

CEMEX, S.A.B. de C.V.

(Translation of Registrant’s name into English)

 

 

Avenida Ricardo 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 July 28, 2020 announcing second quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX).
2.    Second quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX).
3.    Presentation regarding second 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: July 27, 2020

    By:  

/s/ Rafael Garza Lozano

    Name:   Rafael Garza Lozano
    Title:   Chief Comptroller

 

3


EXHIBIT INDEX

 

EXHIBIT
    NO.    

  

DESCRIPTION

1.    Press release issued by CEMEX Holdings Philippines in the Philippines dated July 28, 2020 announcing second quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX).
2.    Second quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX).
3.    Presentation regarding second quarter 2020 results for CEMEX Holdings Philippines, Inc., an indirect subsidiary of CEMEX, S.A.B. de C.V. (NYSE:CX).

 

4

Exhibit 1 - Press Release

Exhibit 1

 

Media Relations

Erlinda Lizardo

+632 8849 3600

erlinda.lizardo@cemex.com

  

Investor Relations

Pierre Co

+632 8849 3600

pierre.co@cemex.com

 

 

CHP REPORTS SECOND QUARTER 2020 RESULTS

MANILA, PHILIPPINES. JULY 28, 2020 – CEMEX HOLDINGS PHILIPPINES, INC. (“CHP”) (PSE: CHP), announced today that consolidated net sales decreased by 22%, reaching PHP 9.6 billion during the first six months of 2020, versus the comparable period in 2019. Sales decreased by 35% year-over-year in the second quarter, reaching about PHP 4.0 billion.

Domestic cement volumes decreased by 17% during the first half of 2020 versus the same period in 2019. For the quarter, domestic cement volumes declined by 31% year-over-year. CHP’s domestic cement prices during the second quarter and first half of the 2020 were 6% lower year-over-year, reflecting declines during the second half of 2019.

Operating EBITDA during the first six months of 2020 was at PHP 1.8 billion, a decrease of 22% versus the same period in 2019.

Operating EBITDA margin was flat year-over-year at 19% for the first half of 2020, impacted by lower volumes and prices, which were partially offset by cost reduction initiatives and lower absolute distribution expenses.

Net income was at PHP 135 million for the first six months of 2020 versus PHP 802 million in the same period last year. Operating earnings were adversely affected by lower activity due to COVID-19 quarantine measures.

Ignacio Mijares, CHP President and CEO, said: “The second quarter was very challenging for our company, with our volumes adversely impacted by quarantine measures nationwide. But we have seen construction activity gradually return with the easing of restrictions, starting the second half of May.

We remain committed to supplying the Philippines with high quality cement to build the country for many years to come. By acting safely always, working together as one team, and focusing on the tasks at hand, I am encouraged that we will be able to surmount the challenges that lie ahead.”

On June 30, CHP reached an agreement with BDO Unibank, Inc. amending the Term Loan Facility Agreement dated February 1, 2017, entered into by and between CHP, as the Borrower, and BDO Unibank, Inc., as the Lender, so that CHP is required to comply with certain financial covenants commencing on June 30, 2021. No other new or revised terms and conditions to the Facility Agreement were made.

CHP, a listed company at the Philippine Stock Exchange, is one of the leading cement producers in the Philippines, based on annual installed 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 distribution network. 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 the country.

 

1


CHP is an indirect subsidiary of CEMEX, S.A.B. de C.V., one of the largest cement companies in the world based 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 contain forward-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 or implied 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, changes in 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 no obligation to update or correct the information contained in this press release.

 

2

Exhibit 2 - 2Q2020 Results

Exhibit 2

 

2020 SECOND QUARTER RESULTS Stock Listing Information Philippine Stock Exchange Ticker: CHP Investor Relations + 632 8849 3600 EMail: chp.ir@cemex.com


Operating and Financial Highlights   

 

 

 

     January - June     Second Quarter  
     2020     2019     % var     2020     2019     % var  

Net sales

     9,623       12,356       (22 %)      3,993       6,119       (35 %) 

Gross profit

     3,784       5,081       (26 %)      1,430       2,768       (48 %) 

as % of net sales

     39     41     (2pp     36     45     (9pp

Operating earnings before other expenses, net

     653       1,457       (55 %)      132       832       (84 %) 

as % of net sales

     7     12     (5pp     3     14     (10pp

Controlling Interest Net Income (Loss)

     135       802       (83 %)      46       634       (93 %) 

Operating EBITDA

     1,850       2,372       (22 %)      767       1,276       (40 %) 

as % of net sales

     19.2     19.2     0.0pp       19.2     20.9     (1.7pp

Free cash flow after maintenance capital expenditures

     45       1,687       (97 %)      (267     839       N/A  

Free cash flow

     (1,908     1,288       N/A       (768     505       N/A  

Net debt1

     8,409       16,887       (50 %)      8,409       16,887       (50 %) 

Total debt1

     13,681       21,162       (35 %)      13,681       21,162       (35 %) 

Earnings per share2

     0.01       0.15       (92 %)      0.00       0.12       (97 %) 

In millions of Philippine Pesos, except percentages and earnings per share

 

1 

U.S. dollar debt converted using 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 35% during the second quarter and by 22% during the first half of the year, due to lower volumes and prices.

Cost of sales was at 61% of sales during the first six months of 2020 compared with 59% in the same period of 2019.

Total fuel cost was 7% lower year-over-year, while total power cost declined by 24% year-over-year during the first half of 2020 mainly due to the temporary stoppage of Solid Cement Plant and kiln optimizations at APO Plant.

Power costs also benefitted from lower electricity prices and a one-off rebate from the wholesale electricity spot market in the first quarter of the year.

In line with efforts to reduce costs, CHP postponed all major kiln maintenance to the second half of the year.

Operating expenses, as a percentage of sales, was at 32.5% during the first half of 2020, compared with 29.3% in the same period of 2019.

Distribution expenses, as a percentage of sales, was at 18.2% during the first half of 2020, compared with 16.8% in the same period of 2019. Measures to control distribution expenses limited the increase in our cost to 1.4 percentage points of sales year-over-year despite significant reduction in sales volumes.

Selling and administrative expenses, as a percentage of sales, was at 14.3% during the first half of 2020, compared with 12.5% in the same period of 2019. Total selling and administrative expenses were lower by 11% year-over-year for the first half of 2020.

Operating EBITDA for the first six months of 2020 was at PHP 1.8 billion, a decrease of 22% year-over-year. Second quarter operating EBITDA was adversely affected by lower activity due to COVID-19 quarantine measures, decreasing by 40% year-over-year.

Operating EBITDA margin was flat year-over-year at 19% for the first half of the 2020, impacted by lower volumes and prices, which were partially offset by cost reduction initiatives and lower absolute distribution expenses.

Controlling interest net income was at PHP 135 million for the first six months of 2020.

Operating earnings were adversely affected by lower activity due to COVID-19 quarantine measures.

Income tax during the first half of the year reflects an increase in deferred tax assets related to Net Operating Loss Carry-Over (NOLCO) and Minimum Corporate Income Tax (MCIT) credits.

Total debt at the end of June 2020 was at PHP 13,681 million, of which PHP 11,357 million pertained to debt owed to BDO Unibank, Inc.

 

 

2020 Second Quarter Results    Page 2


Operating Results   

 

 

 

Domestic Gray Cement    January - June     Second Quarter     Second Quarter 2020  
     2020 vs. 2019     2020 vs. 2019     vs. First Quarter 2020  

Volume

     (17 %)      (31 %)      (30 %) 

Price in PHP

     (6 %)      (6 %)      1

The second quarter saw a significant slowdown in construction activity.

Our domestic cement volumes decreased by 31% year-over-year during the second quarter, and by 30% on a sequential basis. We have seen volume recovery month-on-month in May and June.

During the first six months of 2020, our domestic cement volumes decreased by 17% year-over-year. This decrease reflects the impact of quarantine measures nationwide and the Luzon Enhanced Community Quarantine from March 16 until May 31.

Our domestic cement prices during the second quarter and first half of the 2020 were 6% lower year-over-year, reflecting declines during the second half of 2019.

Sequentially, our prices remained stable, with the variation reflecting changes in geographic mix due to the temporary closure of Solid Plant.

 

2020 Second Quarter Results    Page 3


Operating EBITDA, Free Cash Flow and Debt Information   

 

 

 

Operating EBITDA and Free Cash Flow

 

     January - June     Second Quarter  
     2020     2019     % var     2020     2019     % var  

Operating earnings before other income, net

     653       1,457       (55 %)      132       832       (84 %) 

+ Depreciation and operating amortization

     1,197       915         636       443    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating EBITDA

     1,850       2,372       (22 %)      767       1,276       (40 %) 

- Net financial expenses

     534       715       255       360  

- Maintenance capital expenditures

     45       358       (4     268  

- Change in working capital

     1,019       (637       687       (324  

- Income taxes paid

     205       259       83       138  

- Other cash items (net)

     1       (10       13       (4  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow after maintenance capital expenditures

     45       1,687       (97 %)      (267     839       N/A  

- Strategic capital expenditures

     1,953       399       501       334  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

     (1,908     1,288       N/A       (768     505       N/A  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

In millions of Philippine Pesos

Debt Information

 

          

Second

Quarter

         

First

Quarter

 
     2020     2019     % var     2020  

Total debt(1)(2)

     13,681       21,162       (35 %)      13,481  

Short term

     6     8       5

Long term

     94     92       95
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents

     5,272       4,275       23     6,334  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net debt

     8,409       16,887       (50 %)      7,147  
  

 

 

   

 

 

   

 

 

   

 

 

 

Leverage Ratio(3)

     3.69           3.20  

Coverage Ratio(3)

     4.16           4.08  
  

 

 

       

 

 

 

 

    

    

Second Quarter

 
     2020     2019  

Currency denomination

    

U.S. dollar

     6     26

Philippine peso

     94     74
  

 

 

   

 

 

 

Interest rate

    

Fixed

     57     41

Variable

     43     59
  

 

 

   

 

 

 
 

 

In millions of Philippine Pesos, except percentages

 

(1) 

U.S. dollar debt converted using 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, 2021.

 

2020 Second Quarter Results    Page 4


Financial Results   

 

 

 

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

(Thousands of Philippine Pesos in nominal terms, except per share amounts)

 

     January – June     Second Quarter  
INCOME STATEMENT    2020     2019     % var     2020     2019     % var  

Net sales

     9,623,042       12,355,927       (22 %)      3,993,126       6,118,500       (35 %) 

Cost of sales

     (5,838,720     (7,274,695     20     (2,562,903     (3,350,450     24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     3,784,322       5,081,232       (26 %)      1,430,223       2,768,050       (48 %) 

Selling and Administrative expenses

     (1,377,933     (1,546,207     11     (610,478     (810,611     25

Distribution expenses

     (1,753,826     (2,078,096     16     (688,022     (1,125,146     39
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating earnings before other expenses, net

     652,563       1,456,929       (55 %)      131,723       832,293       (84 %) 

Other income (expenses), net

     (1,373     10,478       N/A       (13,467     4,086       N/A  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating earnings (loss)

     651,190       1,467,407       (56 %)      118,256       836,379       (86 %) 

Financial expenses, net

     (534,124     (714,803     25     (254,584     (359,567     29

Foreign exchange gain (loss), net

     (305     274,401       N/A       66,106       291,678       (77 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) before income taxes

     116,761       1,027,005       (89 %)      (70,222     768,490       N/A  

Income tax benefit (expenses)

     18,256       (224,694     N/A       116,117       (134,818     N/A  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net income (loss)

     135,017       802,311       (83 %)      45,895       633,672       (93 %) 

Non-controlling interest net income (loss)

     12       12       0     4       6       (33 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Controlling Interest net income (loss)

     135,029       802,323       (83 %)      45,899       633,678       (93 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating EBITDA

     1,849,907       2,371,702       (22 %)      767,471       1,275,767       (40 %) 

Earnings per share

     0.01       0.15       (92 %)      0.00       0.12       (97 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     as of June 30            as of December 31  
BALANCE SHEET    2020      2019      % Var     2019      % Var  

Total Assets

     63,348,718        59,446,204        7     58,806,177        8

Cash and Temporary Investments

     5,271,916        4,275,083        23     1,399,180        277

Derivative Asset

     0        10,946        (100 %)      0     

Trade Accounts Receivables

     883,519        1,080,257        (18 %)      892,951        (1 %) 

Other Receivables

     39,038        85,330        (54 %)      92,993        (58 %) 

Insurance Claims and Premium Receivables

     359,821        512        70178     445,535        (19 %) 

Inventories

     2,380,727        3,452,902        (31 %)      3,013,444        (21 %) 

Assets Held for Sale

     0        0          0     

Other Current Assets

     1,778,188        1,353,796        31     1,672,392        6

Current Assets

     10,713,209        10,258,826        4     7,516,495        43

Fixed Assets

     21,248,850        17,615,197        21     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

     873,674        985,872        (11 %)      837,151        4

Advances to Contractors

     1,378,280        1,988,045        (31 %)      1,606,397        (14 %) 

Deferred Income Taxes—net

     1,260,914        724,473        74     1,034,620        22

Goodwill

     27,859,694        27,859,694        0     27,859,694        0

Other Assets

     31,386,659        31,572,181        (1 %)      31,351,959        0
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total Liabilities

     21,131,517        30,188,770        (30 %)      29,140,690        (27 %) 

Current Liabilities

     7,511,370        9,887,544        (24 %)      10,136,812        (26 %) 

Long-Term Liabilities

     11,123,722        17,684,969        (37 %)      16,549,640        (33 %) 

Deferred Tax Liability

     1,453        13,954        (90 %)      1,587        (8 %) 

Other Liabilities

     2,494,972        2,602,303        (4 %)      2,452,651        2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Consolidated Stockholders’ Equity

     42,217,201        29,257,434        44     29,665,487        42

Non-controlling Interest

     158        181        (13 %)      170        (7 %) 

Stockholders’ Equity Attributable to Controlling Interest

     42,217,043        29,257,253        44     29,665,317        42
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

2020 Second 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 - June     Second Quarter  
INCOME STATEMENT    2020     2019     % var     2020     2019     % var  

Net sales

     190,354       237,747       (20 %)      79,418       118,038       (33 %) 

Cost of sales

     (115,496     (139,977     17     (50,973     (64,637     21
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     74,858       97,770       (23 %)      28,445       53,401       (47 %) 

Selling and Administrative expenses

     (27,257     (29,752     8     (12,142     (15,639     22

Distribution expenses

     (34,693     (39,986     13     (13,684     (21,706     37
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating earnings before other expenses, net

     12,908       28,032       (54 %)      2,619       16,056       (84 %) 

Other income (expenses), net

     (27     202       N/A       (268     79       N/A  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating earnings (loss)

     12,881       28,234       (54 %)      2,351       16,135       (85 %) 

Financial expenses, net

     (10,566     (13,754     23     (5,063     (6,937     27

Foreign exchange gain (loss), net

     (6     5,280       N/A       1,315       5,627       (77 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) before income taxes

     2,309       19,760       (88 %)      (1,397     14,825       N/A  

Income tax benefit (expenses)

     361       (4,323     N/A       2,309       (2,601     N/A  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net income (loss)

     2,670       15,437       (83 %)      912       12,224       (93 %) 

Non-controlling interest net income (loss)

     0       0         0       0    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Controlling Interest net income (loss)

     2,670       15,437       (83 %)      912       12,224       (93 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating EBITDA

     36,593       45,635       (20 %)      15,264       24,612       (38 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     as of June 30            as of December 31  
BALANCE SHEET    2020      2019      % Var     2019      % Var  

Total Assets

     1,271,297        1,160,153        10     1,161,259        9

Cash and Temporary Investments

     105,798        83,433        27     27,630        283

Derivative Asset

     0        214        (100 %)      0     

Trade Accounts Receivables

     17,731        21,082        (16 %)      17,633        1

Other Receivables

     783        1,665        (53 %)      1,836        (57 %) 

Insurance Claims and Premium Receivables

     7,221        10        72110     8,798        (18 %) 

Inventories

     47,777        67,387        (29 %)      59,507        (20 %) 

Assets Held for Sale

     0        0          0     

Other Current Assets

     35,685        26,421        35     33,025        8

Current Assets

     214,995        200,212        7     148,429        45

Fixed Assets

     426,427        343,778        24     393,715        8

Investments in an Associate and Other Investments

     283        275        3     278        2

Other Assets and Noncurrent Accounts Receivables

     17,533        19,240        (9 %)      16,532        6

Advances to Contractors

     27,660        38,799        (29 %)      31,722        (13 %) 

Deferred Income Taxes—net

     25,304        14,139        79     20,431        24

Goodwill

     559,095        543,710        3     550,152        2

Other Assets

     629,875        616,163        2     619,115        2
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Total Liabilities

     424,071        589,164        (28 %)      575,448        (26 %) 

Current Liabilities

     150,739        192,965        (22 %)      200,174        (25 %) 

Long-Term Liabilities

     223,233        345,140        (35 %)      326,810        (32 %) 

Deferred Tax Liability

     29        272        (89 %)      31        (6 %) 

Other Liabilities

     50,070        50,787        (1 %)      48,433        3
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Consolidated Stockholders’ Equity

     847,225        570,988        48     585,811        45

Non-controlling Interest

     3        4        (25 %)      3        0

Stockholders’ Equity Attributable to Controlling Interest

     847,222        570,984        48     585,808        45
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

2020 Second Quarter Results    Page 6


Other Information   

 

 

 

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 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 the straight-line amortization expense of the right-of-use asset and the amortization of the financial liability under the effective interest rate method since origination of the contracts. This difference will reverse over the remaining term of the contracts.

As of June 30, 2020 and 2019, assets for the right-of-use amounted to PHP 2,070 million and PHP 1,932 million, respectively. In addition, financial liabilities related to lease contracts amounted to PHP 2,324 million as of June 30, 2020 and PHP 2,112 million as of June 30, 2019. These amounts of financial liabilities as of June 30, 2020 and 2019 are included in the “Debt Information” section appearing on page 4.

 

2020 Second 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 June 30, 2020 has been converted at the end of period exchange rate of 49.83 Philippine pesos per US dollar while the consolidated income statement for the six-month period ended June 30, 2020 has been converted at the January to June 2020 average exchange rate of 50.55 Philippine pesos per US dollar. On the other hand, the consolidated income statement for the three-month period ended June 30, 2020 has been converted at the April to June 2020 average exchange rate of 50.28 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 - June      Second Quarter      January - June  
     2020
average
     2019
average
     2020
average
     2019
average
     2020
End of period
     2019
End of period
 

Philippine peso

     50.55        51.97        50.28        51.84        49.83        51.24  

Amounts provided in units of local currency per US dollar

 

2020 Second Quarter Results    Page 8
Exhibit 3 - 2Q2020 Results Presentation

1Q19 Results 2Q 2020 Results July 28, 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 Solid Cement Plant suspended production and delivery of cement products in the third week of March and resumed operations on May 20, in compliance with government regulations. APO Cement Plant remains operational, complying with all government regulations and the necessary hygiene and safety measures. Our second quarter volumes were adversely impacted by quarantine measures nationwide.


Protect the health and safety of our employees and their families, customers, suppliers, and communities We implemented new hygiene and safety protocols to minimize the risk of COVID-19 threats in our operations, in adherence to local health regulations. Intensified internal information campaigns, as the number of COVID-19 cases in the country continues to increase. We continue assisting local government units through manpower support, food, medical and sanitation supplies for front liners and community members.


Serve our customers safely and leverage CEMEX Go Our safety protocols apply not only within our facilities, but also to the trucks and vessels that deliver our products. Our CEMEX Go platform allows us to continue our sales and customer service in a virtual and safe manner. Enabled additional online channels to promote engagement, manage communications, and facilitate transactions with our customers amidst this “new normal”.


Prudently manage our costs and expenses Cost management remains an essential lever within our control during this time of pandemic. Reduce capital expenditures, and budgeted operating expenses for the remainder of 2020. On June 30, 2020, CHP reached an agreement with BDO Unibank, Inc. amending the Term Loan Facility Agreement dated February 1, 2017, entered by and between CHP, as the Borrower, and BDO Unibank, Inc., as the Lender, so that CHP is required to comply with certain financial covenants commencing on June 30, 2021. No other new or revised terms and conditions to the Facility Agreement were made.


Domestic Cement Volumes and Prices Domestic cement volumes decreased by 31% year-over-year during the second quarter and by 30% on a sequential basis. Volume recovery month-on-month in May and June of 2020. On a year-to-date basis, domestic cement volumes decreased by 17% year-over-year, reflecting the impact of nationwide quarantine measures and the Luzon Enhanced Community Quarantine (ECQ) from March 16 until May 31. Domestic cement prices were 6% lower year-over-year during the second quarter and first half of 2020, reflecting declines during the second half of 2019. Sequential change in price reflects changes in geographic mix due to temporary closure of Solid Plant.


-35% Net Sales As a result of lower volumes and prices, net sales decreased, year-over-year, by 35% during the second quarter and by 22% during the first half of 2020. Net Sales1 1 Millions of Philippine Pesos -22%


Private Sector Construction employment significantly declined year-over-year during the second quarter due to COVID-19 quarantine measures. The ban on construction works imposed during the start of the Luzon ECQ and eventual decline in business activity led to the drop in employment. Residential sector demand was lower during the quarter as remittances were stifled by global disruptions from COVID-19. Cuts in the key interest rate and stable inflation may offer support but altered consumer behavior and higher unemployment may continue to affect the sector. The non-residential sector was heavily challenged during the period with small businesses filing for temporary and permanent closure as activity significantly slowed down during the ECQ. The retail, hospitality, and tourism sectors were greatly affected by the pandemic, while manufacturing operations and output were subdued. The potential passing of the Corporate Recovery and Tax Incentives for Enterprise Act (CREATE), which aims to reduce corporate income tax from 30% to 25%, could aid businesses on their way to recovery. Sources: Colliers, Department of Trade and Industry, Leechiu Property Consultants, Philippine Statistics Authority Employment in Construction (M Persons) YoY % +13.1% +5.2% +3.6% +7.9% -2.6% -33.8%


Public Sector During April and May of 2020, infrastructure cash disbursements reached Php 79.1 B, representing an 11.9% contraction year-over-year. The decline is mainly attributed to the prolonged ECQ in Luzon and the implementation of stricter quarantine measures in other areas in the country, which likewise affected project implementation of the government. Meanwhile, infrastructure budget for the year was reduced by 22% to Php 775 B to intensify COVID-19 response. Despite the budget cut and bottlenecks in execution, the government remains firm on their stance to use infrastructure formation in supporting economic recovery of the country given its strong multiplier effects. In the last three months, Fitch Ratings, Standard & Poor’s, and Moody’s Investors Services have affirmed their stable outlook, while the Japan Credit Rating agency upgraded their rating for the Philippines. Disbursements on Infrastructure and Capital Outlays (in PHP billion) Refers to year-over-year growth % Sources: Department of Budget and Management, National Economic and Development Authority


Cost of Sales Cost of sales was at 61% of sales during the first six months of 2020, compared with 59% in the same period of 2019. Postponed all major kiln maintenance to the second half of 2020. Optimized operations of our kilns in APO Plant, as part of working capital initiatives. Total fuel cost was 7% lower year-over-year, while total power cost declined by 24% year-over-year during the first half of 2020 mainly due to the temporary stoppage of Solid Cement Plant and our APO Plant kiln optimization. Power costs also benefitted from lower electricity prices and a one-off rebate from the wholesale electricity spot market in the first quarter of the year. 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 6M20. Measures to control distribution expenses limited the increase in our cost to 1.4 percentage points of sales year-over-year despite the significant reduction in sales volumes. Selling and administrative expenses, as a percentage of sales, was at 14% for 6M20. Total cost lower by 11% year-over-year for the first half of 2020. Distribution (% of net sales) Selling and Administrative (% of net sales)


Operating EBITDA and Operating EBITDA Margin Operating EBITDA for the first six months of 2020 decreased by 22% year-over-year. 2Q20 was adversely affected by lower activity due to COVID-19 quarantine measures, as operating EBITDA decreased by 40%. Operating EBITDA margin was at 19% for the first half of 2020, impacted by lower volumes and prices, which were partially offset by cost reduction initiatives and lower absolute distribution expenses. 1 Millions of Philippine Pesos Refers to operating EBITDA margin % Operating EBITDA Variation1 21% 19% 19% 19%


Net Income Net income was at PHP 135 million for the first six months of 2020. Operating earnings were adversely affected by lower activity due to COVID-19 quarantine measures.  Income tax during the first half of the year reflects an increase in 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 2Q 2020


Free cash flow after maintenance CAPEX for the first six months of 2020 was at PHP 45 million. Working capital reflected the use of cash as we continued to make payments to suppliers, while payables were lower due to reduced purchases from lower production. Strategic CAPEX for the first half of the year was at PHP 1.95 billion due to our Solid Cement Plant Expansion project. Free Cash Flow


Implemented strict health and safety protocols, and preventive measures to reduce the risk of COVID-19 in our project site. Civil works started again in mid-May, after the easing of Community Quarantine measures in Antipolo, Rizal. Our contractors continue to work on the different buildings and structures of the new line. Expected start of operations under evaluation. Estimated total investment of US$235 million Solid Cement Plant Capacity Expansion


Q&A SESSION 2Q 2020


1Q19 appendix APPENDIX 2Q 2020


Debt Maturity Profile Total Debt: PHP 13,681 Avg. life of debt1: 5.1 years Net Debt to EBITDA2: 2.3x 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 6M20 / 6M19 Results for the first six 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