This paper presents fundamental and financial analysis of Cemex. The analysis is
performed by analyzing the company's financial data for the period beginning December
2002 through December 2005.
The paper introduces Cemex by presenting the company's information and a brief
summary of its main activities. Following the introduction, the paper will perform an
extensive industry and company analysis and summarize these findings in the SWOT
analysis. This will assess Cemex's strengths, weaknesses, opportunities, and threats.
The paper will then provide a complete financial statement analysis and ratio analysis.
In conclusion, the paper presents an assessment of the intrinsic value of Cemex and a
recommendation based on the company's valuation and findings presented in the paper.
Cemex S.A.B. de C.V. (Summary)
Corporate Headquarters Address:Cemex SAB
Ave. Ricardo Margain 325
Web Site: http://www.cemex .com
Main Business: Production, distribution, marketing, and sale
of cement, ready-mix concrete, aggregates, and clinker
Facilities: Worldwide (50 countries)
Sector: Industrial Goods
Chairman: Lorenzo Zambrano
Annual Sales:$15.3 billion
Growth rate: 15 year growth rate of 15%
Stock Exchange: NYSE (ticker symbol CX)
Shares Outstanding 732.91 billion
Fiscal Year End: December 31, 2005 (most recent
Stock Price: $33.02 per share (as of March 6,
Cemex is the world's third largest cement producer behind Lafarge and Holcim
(formerly Holderbank). It operates in 50 countries around the world with a concentration
on the America's and Europe. It also has a presence in Africa, Asia, and the Middle East.
In 2005, it completed a US $5.8 billion acquisition of RMC Group, one of Europe's
largest producers of cement and aggregates and the world's largest supplier of ready-mix
concrete. This acquisition doubled the size of Cemex. In October of 2006, it put in a
hostile bid to acquire Rinker Materials Corp. (NYSE: RIN) for $12.8 billion. This would
nearly double the size of the company again. This possible acquisition will play out in
the second quarter of 2007.
Cemex is a vertically integrated company that mines the aggregate and uses this
material in the manufacturing of portland cement. The cement and additional aggregate
material is then used at a ready-mix plant. The ready-mix plants combine these materials
to customer specifications and deliver the concrete to the end user. The company also
has import/export terminals to ship cement to a region that needs the additional supply of
cement. This will allow maximum cement production of their cement plants if a slow
down occurs in one area of the world.
Cemex S.A.B. de C.V. posted record financial results in fiscal year 2005. Diluted
earnings per share rose to $2.15, and increase in 55% compared to the previous year.
Gross and operating margins also significantly increased, reaching 69% and 34%
respectively. Cemex has a solid balance sheet with stockholders equity of $9.826 billion
and total assets of $26.763 billion. Stockholders equity increased 25% while total assets
The cement industry is currently undergoing a consolidation. As previously mentioned,...