Mexican cement maker Cemex shook off steep losses on Monday to rise after the company said price increases would pave the way to stronger results later this year.
(Bloomberg) — Mexican cement maker Cemex shook off steep losses on Monday to rise after the company said price increases would pave the way to stronger results later this year.
Depositary receipts in New York closed up over 1%, reversing a 5% drop earlier triggered by an unexpected quarterly loss and guidance for 2023 that was lower than expected amid pressures from energy costs and weak volumes.
Chief Financial Officer Maher Al-Haffar said the company would keep pushing forward with price increases this year after seeing good traction for recent hikes.
“More than 80% of our volume is being repriced in the early part of the year and we think there is very good traction,” Al-Haffar said in a call with analysts. “This momentum should continue despite a little bit of a backdrop of slower demand in some of the markets we are operating in.”
Actinver analyst Ramon Ortiz said that the company’s assurance that price increases would help offset higher energy costs countered initial disappointment with its guidance.
“You will see the benefit of these price increases in a more tangible way during the second half of the year,” Ortiz said in a telephone interview.
Despite weakness this month, Cemex remains one of the top performing stocks on the Mexbol index this year after one of the worst returns of 2022 on the gauge.
Cemex said in a presentation that it saw operating Ebitda growth for 2023 in the low single-digits while it forecast that energy costs per ton of cement would rise 10%. It also forecast a low single-digit decline in cement volumes.
Scotiabank analyst Francisco Suarez said recent results in the US and Europe support Cemex’s around 50% rally since late October.
“A soft landing and reduced pressures from energy fuels should unfold operating leverage,” he said in a note.
(Updates first two paragraphs with share movement.)
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