EX-99.2 3 d279110dex992.htm EX-2

EX-2

Exhibit 2

2016

THIRD QUARTER RESULTS

Stock Listing Information

Philippine Stock Exchange Ticker: CHP

Investor Relations

+ 632 849 3600 E-Mail: chp.ir@cemex.com

Operating and Financial Highlights    

    January—SeptemberThird Quarter

2016    2015% var201620162015% var2016

Pro Forma1    Pro Forma1ActualPro Forma1Pro Forma1Actual

Cement volume2    3.9 3.84%3.91.31.33%1.3

Net sales    19,809 18,5487%19,2496,5596,3034%6,530

Gross profit    10,332 9,30711%9,7713,7223,4558%3,694

as % of net sales    52.2% 50.2%2.0pp50.8%56.7%54.8%1.9pp56.6%

Operating earnings before other    

4,373    3,85114%3,8131,6591,5467%2,876

expenses, net    

as % of net sales    22.1% 20.8%1.3pp19.8%25.3%24.5%0.8pp44.0%

Controlling Interest Net Income    1,879 1,4039831,360

Operating EBITDA    5,311 4,65914%4,7501,9701,8139%3,187

as % of net sales    26.8% 25.1%1.7pp24.7%30.0%28.8%1.2pp48.8%

Free cash flow after maintenance capital    

3,888    3,1511,1431,807

expenditures    

Free cash flow    3,237 2,5005091,173

Net debt3    285 285285285

Total debt3    318 318318318

Earnings per share4    0.92 0.690.210.29

In millions of Philippine Pesos, except volumes, percentages, net debt and total debt    

1 Refer to page 7 for information on pro forma adjustments    

2 Cement volume is in millions of metric tons. It includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker.    

3 In millions of U.S. Dollars    

4 In Philippine Pesos    

Pro forma net sales in the third quarter of 2016 reached PhP 6,559 million, representing an increase of 4% compared with the third quarter of 2015. The increase was due to higher volumes and prices of our products. For the first nine months, net sales increased 7% from PhP18,548 million in 2015 to PhP19,809 million in 2016.

Pro forma cost of sales as a percentage of net sales decreased by 1.9pp during the third quarter of 2016 compared with the same period last year, from 45.2% to 43.3%. The decrease was mainly driven by lower energy costs. For the first nine months of 2016, cost of sales as a percentage of net sales decreased by 2.0pp. For this same period, fuel and power costs included in our cost of sales decreased from approximately 22.1% to 18.3% and from 26.0% to 21.1%, respectively.

Pro forma operating expenses as a percentage of net sales increased by 1.2pp during the third quarter of 2016 compared with the same period last year, from 30.3% to 31.5% due to higher depreciation of an

increased asset base. For the first nine months of 2016, operating expenses as a percentage of net sales increased 0.7pp.

Pro forma operating EBITDA increased by 9% to PhP 1,970 million during the third quarter of 2016 compared with the same period last year. For the first nine months of 2016, pro forma operating EBITDA increased 14% from Php 4,659 million to PhP 5,311 million.

Pro forma operating EBITDA margin increased by 1.2pp from 28.8% in the third quarter of 2015 to 30.0% this quarter. For the first nine months of the 2016, operating EBITDA margin increased 1.7pp from 25.1% to 26.8%.

Pro forma controlling interest net income was an income of PhP983 million in the third quarter of 2016.

Total debt at the end of September 2016 stands at US$318 million. During the third quarter, long term debt was reduced by US$56 million.

2016 Third Quarter Results    Page 2

Operating Results    

Domestic Gray Cement    January—September Third QuarterThird Quarter 2016

2016 vs. 2015    2016 vs. 2015vs. Second Quarter 2016

Volume    4% 3%(1%)

Price in USD    (2%) (1%)(1%)

Price in PHP    2% 1%0%

Domestic gray cement volume increased 3% during the third quarter of 2016 versus the same period last year. Domestic gray cement volume during the first nine months of the year increased by 4% on a year-over-year basis.

Domestic gray cement prices increased 1% during the third quarter against same period last year. For the first nine months of 2016, domestic gray cement prices have increased 2% versus same period previous year.

During the third quarter, there was a moderation in the growth of our cement volumes, reflecting lower public infrastructure activity compared to previous quarters. Sales volumes to our Visayas and Mindanao markets, where we distribute principally by sea, have been negatively impacted by adverse weather. In addition, increased cement imports into the country also affected our sales volumes during the quarter.

2016 Third Quarter Results    Page 3

Operating EBITDA, Free Cash Flow and Debt Information    

Operating EBITDA and Free Cash Flow    

    January—SeptemberThird Quarter

2016    2015% var201620162015% var2016

Pro Forma1    Pro Forma1ActualPro Forma1Pro Forma1Actual

Operating earnings before other    

4,373    3,85114%3,8131,6591,5467%2,876

expenses, net    

+ Depreciation and operating    938 808938311267311

Operating EBITDA    5,311 4,65914%4,7501,9701,8139%3,187

- Net financial expenses    1,065 930388442

- Capital expenditures for maintenance    193 193121121

- Change in working Capital    (684) (684)111111

- Taxes paid    852 852226465

- Other cash items (Net)    (3) 310(20)241

Free cash flow after maintenance capital    3,888 3,1511,1431,807

- Strategic Capital expenditures    651 651634634

Free cash flow    3,237 2,5005091,173

In millions of Philippine Pesos, except volumes and percentages    

1 Refer to page 7 for information on pro forma adjustments    

Debt Information    

Third Quarter    Third Quarter

2016    2016

Total debt    318 Currency denomination

Short term    0% U.S. dollar100%

Long term    100% Philippine peso0%

Cash and cash equivalents    33 Interest rate

Net debt    285 Fixed93%

    Variable7%

In millions of U.S. Dollars, except percentages    

2016 Third 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—September    Third Quarter

INCOME STATEMENT    2016 2015% var201620162015% var2016

Pro Forma1    Pro Forma1ActualPro Forma1Pro Forma1Actual

Net sales    19,809,308 18,547,9457%19,248,7406,558,7256,303,3754%6,530,491

Cost of sales    (9,477,536) (9,240,660)(3%)(9,477,536)(2,836,843)(2,848,704)0%(2,836,843)

Gross profit    10,331,772 9,307,28511%9,771,2043,721,8813,454,6718%3,693,648

Operating expenses    (5,958,589) (5,456,619)(9%)(5,958,589)(2,063,015)(1,908,347)(8%)(818,102)

Operating earnings before other    4,373,183 3,850,66614%3,812,6151,658,8671,546,3247%2,875,546

expenses, net    

Other expenses, net    2,943 (309,543)19,679(241,020)

Operating earnings    4,376,126 3,503,0721,678,5452,634,526

Financial expenses    (1,023,905) (888,341)(352,863)(406,600)

Other financial income    

(916,497)    (916,497)(574,852)(574,852)

(expenses), net    

Net income before income taxes    2,435,723 1,698,234750,8301,653,074

Income tax    (556,693) (294,777)232,364(293,264)

Consolidated net income    1,879,031 1,403,457983,1941,359,811

Non-controlling Interest Net Income    19 1955

Controlling Interest Net Income    1,879,050 1,403,477983,2001,359,816

Operating EBITDA    5,310,771 4,658,87014%4,750,2031,970,0381,812,8299%3,186,718

Earnings per share    0.92 0.690.210.29

1 Refer to page 7 for information on pro forma adjustments    

as of September 30    

BALANCE SHEET     2016

Total Assets     51,006,618

Cash and Temporary Investments     1,597,701

Trade Accounts Receivables     1,029,637

Other Receivables     241,616

Inventories     2,369,550

Other Current Assets     1,316,367

Current Assets     6,554,873

Fixed Assets     15,702,412

Other Assets     28,749,333

Total Liabilities     22,250,071

Current Liabilities     5,901,049

Long-Term Liabilities     15,535,356

Other Liabilities     813,666

Consolidated Stockholders’ Equity     28,756,547

Non-controlling Interest     251

Stockholders’ Equity Attributable to Controlling Interest    28,756,296

2016 Third 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—September    Third Quarter

INCOME STATEMENT    2016 2015% var201620162015% var2016

Pro Forma1    Pro Forma1ActualPro Forma1Pro Forma1Actual

Net sales    420,322 410,8732%408,428138,379135,8342%137,784

Cost of sales    (201,098) (204,698)2%(201,098)(59,853)(61,388)2%(59,853)

Gross profit    219,224 206,1746%207,32978,52674,4465%77,931

Operating expenses    (126,432) (120,875)(5%)(126,432)(43,527)(41,124)(6%)(17,261)

Operating earnings before other    92,792 85,3009%80,89835,00033,3225%60,670

expenses, net    

Other expenses, net    62 (6,568)415(5,085)

Operating earnings    92,854 74,33035,41555,585

Financial expenses    (21,726) (18,849)(7,445)(8,579)

Other financial income    

(19,447)    (19,447)(12,129)(12,129)

(expenses), net    

Net income before income taxes    51,682 36,03415,84134,877

Income tax    (11,812) (6,255)4,903(6,187)

Consolidated net income    39,870 29,77920,74428,690

Non-controlling Interest Net Income    0 000

Controlling Interest Net Income    39,870 29,78020,74428,690

Operating EBITDA    112,686 103,2039%100,79241,56539,0656%67,235

Earnings per share    0.02 0.010.000.01

1 Refer to page 7 for information on pro forma adjustments    

    as of September 30

BALANCE SHEET     2016

Total Assets     1,051,683

Cash and Temporary Investments     32,942

Trade Accounts Receivables     21,230

Other Receivables     4,982

Inventories     48,857

Other Current Assets     27,142

Current Assets     135,152

Fixed Assets     323,761

Other Assets     592,770

Total Liabilities     458,764

Current Liabilities     121,671

Long-Term Liabilities     320,317

Other Liabilities     16,777

Consolidated Stockholders’ Equity     592,918

Non-controlling Interest     5

Stockholders’ Equity Attributable to Controlling Interest    592,913

2016 Third Quarter Results     Page 6

Definitions of Terms and Disclosures

Methodology for translation, consolidation, and presentation of results

CEMEX Holdings Philippines, Inc. (“CHP”) reports its interim financial statements under Philippine Financial Reporting Standards (“PFRS”).

When reference is made in 2016 to consolidated interim financial statements, it means CHP financial information together with its subsidiaries. When reference is made in 2015 to combined financial information, it means the combined operations of CHP’s subsidiaries.

For the purpose of presenting figures in U.S. dollars, the consolidated interim balance sheet as of September 30, 2016 has been converted at the exchange rates of 48.50 Philippine pesos per US dollar. The consolidated interim income statements for the nine-month period ended September 30, 2016 and the combined interim financial information for the nine-month period ended September 30, 2015 have been converted at the exchange rates of 47.13 and 45.14 Philippine pesos per US dollar, respectively, based on the simple average PHP/US$ of the end-of-month exchange rates for each of the nine-month periods of 2016 and 2015, respectively. The exchange rates used to convert results for the third quarter of 2016 and the third quarter of 2015 were 47.40 and 46.41 Philippine pesos per US dollar, respectively, based on the simple average PHP/US$ end-of-month exchange rates for each of the three-month periods of 2016 and 2015, respectively. The same methodology of converting to US$ was applied in respect to figures in the pro forma financial information.

Pro forma financial information included in the report

[For the purpose of the below clarification, the term “Company” refers to CEMEX Holdings Philippines, Inc., “CHP”” refers to the Company and its subsidiaries, and “CEMEX” refers CEMEX, S.A.B. de C.V. and its subsidiaries excluding CHP.]

CEMEX Holdings Philippines, Inc. was incorporated on September 17, 2015 for purposes of the initial equity offering concluded on July 18,

2016 (the “IPO”). For accounting purposes, the group reorganization by means of which the Company acquired its consolidated subsidiaries was effective January 1, 2016. As a result, CHP has no historical consolidated financial information for the nine-month period ended September 30, 2015 or for the three-month period ended September 30, 2015. Furthermore, several strategies discussed in the CHP primary offer prospectus (“the Prospectus”) were implemented upon conclusion of the initial equity offering: a) the new royalty scheme was implemented in July 2016 with retroactive effects as of January 1, 2016, and b) the new reinsurance scheme was incorporated prospectively effective August 1, 2016. Correspondingly, the historical consolidated financial information of CHP for the third quarter of 2016 is not directly comparable with the first and second quarter of the same year, which was prepared under the previous royalty and insurance agreements.

For convenience of the reader, and in order to present comprehensive comparative operating information for the nine-month periods ended

September 30, 2016 and 2015, and for the three-month periods ended

September 30, 2016 and 2015, CHP prepared pro forma selected consolidated income statement information for the nine-month period ended September 30, 2016 and for the three-month period ended

September 30, 2016, as well as pro forma selected combined income statement information for the nine-month period ended September 30,

2015, and for the three-month period ended September 30, 2015, intended in all cases and to the extent possible, to present the operating performance of CHP on a like-to-like basis under a “normalized” expected ongoing operation; therefore, as if the new royalty scheme and insurance agreements would have been both effective from the beginning of each year.

CHP Pro forma consolidated income statement for the three-month period ended September 30, 2016, was adjusted to reflect the effects of certain agreements entered into by CHP with CEMEX: a) the effects of the 5% corporate service charges and royalties agreement that entered into force after the conclusion of the IPO during the third quarter of 2016 with retroactive effects for full year 2016, only for the portion allocated to the third quarter; and b) the effects of the new reinsurance agreements entered prospectively beginning on August 1, 2016, as if the agreements would have been effective for the full third quarter of 2016. Moreover, CHP Pro forma consolidated income statement for the nine-month period ended September 30, 2016, was adjusted to reflect the effects of the aforementioned reinsurance agreements as if the agreements would have been effective beginning January 1, 2016.

CHP Pro forma consolidated income statement for the nine-month and the three-month periods ended September 30, 2015 appearing in this report represent combined historical selected income statement information of CHP subsidiaries, adjusted to reflect the 5% corporate service charges and royalties and reinsurance agreements, as well as interest expenses, (on a like-to-like basis) for both the year-to-date and the three-month periods ended September 30, 2015.

In addition:

(1) the Pro Forma selected consolidated income statement information for the nine-month and the three-month periods ended September 30, 2016 and Pro Forma 2015 appearing in this report, was prepared under the same assumptions used for the Pro Forma combined income statement information for the year ended December 31, 2015 which was included in the Prospectus, in respect to the adjustments associated with the 5% corporate service charges and royalties and the reinsurance agreements, as if the applicable contracts were in place from January 1, 2015.

(Continued on page 8)

2016 Third Quarter Results    Page 7

Definition of Terms and Disclosures

(Continued from page 7)

(2) the effects from the new reinsurance agreements appearing in this report’s Pro Forma consolidated income statement information for the nine-month and the three-month periods ended September 30, 2016 and 2015 reflect the actual accounting initiated on August 1, 2016 resulting in an increase in revenue, whereas the effects from the reinsurance agreements included in the Prospectus’ Pro Forma consolidated income statement information for the year ended December 31, 2015, for simplicity of the Pro Forma information, were presented reducing operating costs.

Nonetheless, this difference in presentation would have had no effect on the reported Pro Forma operating income, reported Pro Forma Operating EBITDA or reported Pro Forma net income for the year ended December 31, 2015.

(3) the Pro Forma selected combined income statement information for the nine-month and the three-month periods ended September 30, 2015 were adjusted to reflect depreciation arising from asset revaluation.

(4) the Pro Forma selected consolidated income statement information for the nine-month and the three-month periods ended September 30, 2016 appearing in this report was prepared by (a) removing IPO-related operating expenses, (b) removing interest payments on short-term debt, and (c) annualizing long-term debt.

Definition of terms

PHP refers to Philippine Pesos.

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.

Net debt equals total debt minus cash and cash equivalents.

Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization.

pp equals percentage points.

Prices all references to pricing initiatives, price increases or decreases, refer to our prices for our products.

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.

January—September    Third QuarterJanuary—September

2016    20152016201520162015

average    averageaverageaverageEnd of periodEnd of period

Philippine peso    47.13 45.1447.4046.4148.5046.74

Amounts provided in units of local currency per US dollar    

2016 Third Quarter Results    Page 8