UPDATE 5-Cemex posts loss but debt deal propels stock

* Loss from continuing operations $86 mln

* Hurt by weak U.S. and European sales

* Recovery crucial as Cemex seeks to pay back debt

* Cemex adjusts its 2009 financing agreement

* Shares jump nearly 6 percent
(Add more details on fourth quarter outlook)

By Robin Emmott

MONTERREY, Mexico, Oct 26 (BestGrowthStock) – Mexico’s Cemex, the
world’s No. 3 cement maker, lost money in the third quarter
because of lower sales and debt servicing costs, but a new
financing agreement propelled its stock by nearly 6 percent.

The company on Tuesday posted a quarterly loss from
continuing operations of $86 million, citing weak revenue in
its key U.S. and European markets. The results were at the low
end of already downbeat analyst forecasts.

Cemex, which faced its toughest ever year in 2009, is
struggling to find a way of out its slump.

“The recovery has been delayed in the United States and
there is still no visibility (of when it will arrive),” Cemex’s
Chief Financial Officer Rodrigo Trevino told analysts.

Cemex (CX.N: ) (CMXCPO.MX: ) is depending on a comeback in the
U.S. market to help it pay back its $17 billion debt after
buying Australian rival Rinker just before the U.S. housing
market tanked in 2007.

Revenue fell during the third quarter to $3.8 billion from
$4.2 billion a year earlier. Stripping out its Australian
operations from the year-earlier figures, the sales decline was
just 2 percent. Cemex sold the assets in October 2009.

Fernando Gonzalez, Cemex’s executive vice president of
planning and finance, said the outlook could only improve. “We
believe that economic conditions in most of our geographies
have stabilized and/or bottomed out, with the fourth quarter
likely to be an inflection point,” he said.

Trevino said that in the fourth quarter, sales volumes in
all Cemex’s major markets except for Spain are expected to
grow, with Colombia, Egypt and northern Europe doing best.

But the U.S. Portland Cement Association, which represents
cement companies, warned last week that U.S. cement consumption
might not recover to pre-housing-crisis levels until 2013.

TWEAKING ITS DEBT DEAL

Cemex, which competes with Switzerland’s Holcim (HOLN.VX: )
and France’s Lafarge (LAFP.PA: ), said it renegotiated its
financing agreement with bankers to give the company more time
to pay back the $15 billion it took on to buy Rinker. That sent
its stock 5.6 percent higher in Mexico City.

Cemex negotiated increased leverage goals, agreeing that by
this December and June next year, Cemex’s total debt plus
perpetual notes must not exceed 7.75 times 12-months’ trailing
EBITDA, or earnings before interest, tax, depreciation and
amortization, and that the ratio must fall to 4.25 times by the
end of 2013.

Cemex has $9.7 billion still outstanding under its
financing agreement and paid off $300 million in the third
quarter, but foreign exchange fluctuations from the euro to the
U.S. dollar mean its debt actually increased.

EBITDA fell 13 percent, a slightly deeper slump than
analysts had expected. Operating income slid by a quarter.

Less income means less free cash flow to repay debt, and
Cemex said cash flow after maintenance capital expenditures for
the third quarter dropped 4 percent to $250 million.

During a conference call with analysts, Gonzalez cut
Cemex’s 2010 EBITDA forecast for the third time this year to
about $2.4 billion. He also trimmed the company’s expected free
cash flow generation for this year to at least $500 million,
down from an earlier view of $680 million.

Underscoring the weakness in the U.S. market, where Cemex
is the top cement maker, the company reported net sales of $683
million there, down 9 percent from the same period in 2009.
EBITDA was a loss of $2 million in the quarter. In Europe, net
sales for the quarter decreased 9 percent to $1.4 billion.

Cemex sees global cement volumes declining 2 percent in
2010, compared with an earlier forecast of flat sales. U.S.
cement and ready-mix volumes are now seen declining by about 1
and 7 percent respectively, Gonzalez said, compared with a July
growth forecast of 5 percent for both of them.

Five analysts polled by Reuters had forecast Cemex’s net
earnings ranging from a loss of $80 million to a profit of $61
million. The analysts were divided over how weak sales were.
(Editing by Gerald E. McCormick)

UPDATE 5-Cemex posts loss but debt deal propels stock