EX-99.2 3 d343672dex992.htm EX-2

EX-2

Exhibit 2

2016 FOURTH 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—December Fourth Quarter 2016 2015 % var 2016 2016 2015 % var 2016 Pro Forma1 Pro Forma1 Actual Pro Forma1 Pro Forma1 Actual Cement volume2 5.1 5.0 1% 5.1 1.1 1.2 (8%) 1.1 Net sales 25,367 24,927 2% 24,806 5,557 6,379 (13%) 5,557 Gross profit 13,481 12,659 6% 12,920 3,149 3,361 (6%) 3,149                as % of net sales 53.1% 50.8% 2.3pp 52.1% 56.7% 52.7% 4.0pp 56.7% Operating earnings before other expenses, net 5,506 4,937 12% 4,946 1,133 1,095 3% 1,133                as % of net sales 21.7% 19.8% 1.9pp 19.9% 20.4% 17.2% 3.2pp 20.4% Controlling Interest Net Income 1,872 1,413 (7) 10 Operating EBITDA 6,727 6,056 11% 6,167 1,417 1,407 1% 1,417                as % of net sales 26.5% 24.3% 2.2pp 24.9% 25.5% 22.0% 3.5pp 25.5% Free cash flow after maintenance capital expenditures 3,896 3,335 7 7 Free cash flow 3,099 2,539 (138) (138) Net debt3 291 291 291 291 Total debt3 318 318 318 318 Earnings per share4 0.66 0.50 (0.00) 0.00 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 fourth quarter of 2016 reached PhP 5,557 year, from 35.5% to 36.3%. For both the fourth quarter and full year of million, a decrease of 13% compared with the fourth quarter of 2015. 2016, higher operating expenses, as a percentage to net sales, was The decline reflected lower public infrastructure activity versus previous mainly due to increases in SG&A items, driven by organic cost increases. quarters, impact of “La Nińa-like” adverse weather conditions, and Distribution expenses, as a percentage to net sales, have remained flat intensified market competition. For 2016, net sales increased 2%, from year-on-year, for both the full year and fourth quarter of 2016. PhP24,927 million in 2015 to PhP25,367 million in 2016, resulting from higher volumes and prices of our products. Pro forma operating EBITDA, at PhP 1,417 million pesos during the fourth quarter of 2016, increased by 1% compared with previous year Pro forma cost of sales as a percentage of net sales decreased by 2.3pp same period. This increase reflects lower cost of sales even as revenues in 2016 compared to 2015, from 49.2% to 46.9%. The decrease was declined. For 2016, pro forma operating EBITDA increased 11% from mainly driven by lower energy costs, which have more than offset a PhP 6,056 million pesos to PhP 6,727 million pesos. higher proportion of our cement volumes being imported. For 2016, as a percentage of cost of sales, fuel and power were 16% and 22%, Pro forma operating EBITDA margin increased by 3.5pp during the respectively, while for 2015, they were 22% and 26%, respectively. fourth quarter of 2016 on a year-on-year basis, from 22.0% to 25.5%. During the fourth quarter of 2016, cost of sales as a percentage of net For 2016, operating EBITDA margin increased 2.2pp year-on-year, sales decreased by 4.0pp compared with the same period last year, reaching 26.5%. from 47.3% to 43.3%. Total debt at the end of December 2016 stood at US$ 318 million, of Pro forma operating expenses as a percentage of net sales increased by which US$ 291 million pertained to long-term debt owed to New 0.4pp in 2016 compared to 2015, from 31.0% to 31.4%. During the Sunward Holding B.V. (NSH). On February 1, 2017, we signed a Senior fourth quarter, pro forma operating expenses increased 0.8 pp year-on- Unsecured Peso Term Loan Facility Agreement with BDO Unibank, Inc. to refinance majority of our long-term debt with NSH. 2016 Fourth Quarter Results    Page 2

Operating Results                Domestic Gray Cement January—December Fourth Quarter Fourth Quarter 2016 2016 vs. 2015 2016 vs. 2015 vs. Third Quarter 2016 Volume 1% (8%) (12%) Price in USD (3%) (9%) (9%) Price in PHP 1% (5%) (5%) Domestic gray cement volume decreased 8% in the fourth quarter of 2016 versus the same period last year. During this time, we observed a decrease in cement consumption, reflecting lower public infrastructure activity and some restraint in private construction compared to previous quarters. In addition, adverse “La Nińa-like” weather conditions, compared with a relatively dry 2015, also affected our sales volumes during the quarter. The Visayas and Mindanao markets, where we distribute our products principally by sea, have been negatively impacted. We estimate a downtime of 12 additional days which were lost during the quarter relative to the quarter of the previous year due to an inability to operate at some ports. In 2016, this additional downtime was at 28 days compared to 2015. This particularly impacted sales volumes via dispatches from our APO plant where sea-bound volumes average around 6 thousand tons per day. Weather analysts have predicted that these “La Nińa-like” conditions will persist until March of 2017. We observed that imports of cement into the country grew in 2016, a year in which the country appears to be experiencing a tight capacity situation. We estimate that imports by domestic cement manufacturers constituted the largest proportion of total imports versus imports by traders. Domestic gray cement volume for 2016 increased by 1% on a year-on-year basis. Domestic gray cement prices decreased 5% during the fourth quarter against same period last year. For 2016, domestic gray cement prices increased 1% versus same period previous year. 2016 Fourth Quarter Results    Page 3    

Operating EBITDA, Free Cash Flow and Debt Information    Operating EBITDA and Free Cash Flow January—December Fourth Quarter 2016 2015 % var 2016 2016 2015 % var 2016 Pro Forma1 Pro Forma1 Actual Pro Forma1 Pro Forma1 Actual Operating earnings before other expenses, net 5,506 4,937 12% 4,946 1,133 1,095 3% 1,133 + Depreciation and operating 1,221 1,119 1,221 284 311 284 Operating EBITDA 6,727 6,056 11% 6,167 1,417 1,407 1% 1,417—Net financial expenses 1,404    1,404 339    339—Capital expenditures for maintenance 534    534 341    341—Change in working Capital (378) (378) 306    306—Taxes paid 1,240    1,240 388    388—Other cash items (Net) 32 32 35 35 Free cash flow after maintenance capital 3,896    3,335 7    7—Strategic Capital expenditures 796    796 145    145 Free cash flow 3,099    2,539 (138)    (138) In millions of Philippine Pesos, except volumes and percentages 1 Refer to page 7 for information on pro forma adjustments Debt Information Fourth Quarter Fourth Quarter 2016 2016 Total debt 318 Currency denomination                Short term 0%                U.S. dollar 100%                Long term 100%                Philippine peso 0% Cash and cash equivalents 27 Interest rate Net debt 291                Fixed 91%                Variable 9% In millions of U.S. Dollars, except percentages 2016 Fourth 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—December Fourth Quarter INCOME STATEMENT 2016 2015 % var 2016 2016 2015 % var 2016 Pro Forma1 Pro Forma1 Actual Pro Forma1 Pro Forma1 Actual Net sales 25,366,667 24,927,203 2% 24,806,099 5,557,360 6,379,258 (13%) 5,557,360 Cost of sales (11,885,883) (12,268,630) 3% (11,885,883) (2,408,348) (3,018,622) 20% (2,408,348) Gross profit 13,480,784 12,658,573 6% 12,920,216 3,149,012 3,360,636 (6%) 3,149,012 Operating expenses (7,974,576) (7,721,846) (3%) (7,974,576) (2,015,987) (2,265,227) 11% (2,015,987) Operating earnings before other 5,506,208 4,936,727 12% 4,945,640 1,133,025 1,095,409 3% 1,133,025 expenses, net Other expenses, net (31,853) (319,783) (34,796) (10,239) Operating earnings 5,474,355 4,625,857 1,098,229 1,122,786                Financial expenses (1,371,585) (1,236,021) (347,680) (347,680)                Other financial income                (expenses), net (1,412,625) (1,412,625) (496,129) (496,129) Net income before income taxes 2,690,145 1,977,211 254,420 278,977                Income tax (818,294) (563,744) (261,601) (268,968) Consolidated net income 1,871,851 1,413,467 (7,181) 10,009 Non-controlling Interest Net Income 24 24 5 5 Controlling Interest Net Income 1,871,875 1,413,491 (7,176) 10,014 Operating EBITDA 6,727,481 6,056,135 11% 6,166,913 1,416,710 1,406,613 1% 1,416,710 Earnings per share 0.66 0.50 (0.00) 0.00 1 Refer to page 7 for information on pro forma adjustments as of December 31 BALANCE SHEET 2016 Total Assets 51,041,884                Cash and Temporary Investments 1,337,155                Trade Accounts Receivables 909,667                Other Receivables 342,561                Inventories 2,577,577                Other Current Assets 1,420,057 Current Assets 6,587,017 Fixed Assets 15,814,811 Other Assets 28,640,056 Total Liabilities (22,357,671) Current Liabilities (5,654,205) Long-Term Liabilities (15,919,322) Other Liabilities (784,144) Consolidated Stockholders’ Equity (28,684,213) Non-controlling Interest (246) Stockholders’ Equity Attributable to Controlling Interest (28,683,967)    2016 Fourth 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—December Fourth Quarter INCOME STATEMENT 2016 2015 % var 2016 2016 2015 % var 2016 Pro Forma1 Pro Forma1 Actual Pro Forma1 Pro Forma1 Actual Net sales 532,154 546,539 (3%) 520,394 112,760 135,705 (17%) 112,760 Cost of sales (249,348) (268,995) 7% (249,348) (48,866) (64,215) 24% (48,866) Gross profit 282,806 277,544 2% 271,046 63,894 71,490 (11%) 63,894 Operating expenses (167,294) (169,305) 1% (167,294) (40,905) (48,188) 15% (40,905) Operating earnings before other 115,512 108,239 7% 103,752 22,989 23,302 (1%) 22,989 expenses, net Other expenses, net (668) (6,709) (706) (208) Operating earnings 114,844 97,043 22,283 22,781                Financial expenses (28,774) (25,930) (7,054) (7,054)                Other financial income                (expenses), net (29,635) (29,635) (10,067) (10,067) Net income before income taxes 56,435 41,478 5,162 5,660                Income tax (17,167) (11,826) (5,308) (5,457) Consolidated net income 39,268 29,652 (146) 203 Non-controlling Interest Net Income 1 1 0 0 Controlling Interest Net Income 39,269 29,653 (146) 203 Operating EBITDA 141,132 132,783 6% 129,372 28,745 29,923 (4%) 28,745 Earnings per share 0.00 0.00 0.00 0.00 1 Refer to page 7 for information on pro forma adjustments as of December 31 BALANCE SHEET 2016 Total Assets 1,026,587                Cash and Temporary Investments 26,894                Trade Accounts Receivables 18,296                Other Receivables 6,890                Inventories 51,842                Other Current Assets 28,561 Current Assets 132,483 Fixed Assets 318,077 Other Assets 576,027 Total Liabilities (449,672) Current Liabilities (113,722) Long-Term Liabilities (320,179) Other Liabilities (15,771) Consolidated Stockholders’ Equity (576,915) Non-controlling Interest (5) Stockholders’ Equity Attributable to Controlling Interest (576,910) 2016 Fourth Quarter Results    Page 6    

Definitions of Terms and Disclosures                Methodology for translation, consolidation, and presentation of new reinsurance scheme was incorporated prospectively effective results August 1, 2016. Correspondingly, the historical consolidated financial information of CHP for the fourth quarter of 2016 is not directly CEMEX Holdings Philippines, Inc. (“CHP”) reports its interim financial comparable with the first, second and the third quarters of the same statements under Philippine Financial Reporting Standards (“PFRS”). year, which was prepared fully or partially under the previous royalty When reference is made in 2016 to consolidated interim financial and insurance agreements, as applicable. statements, it means CHP financial information together with its subsidiaries. When reference is made in 2015 to combined financial For convenience of the reader, and in order to present comprehensive information, it means the combined operations of CHP’s subsidiaries. comparative operating information for the twelve-month periods ended December 31, 2016 and 2015, and for the three-month periods ended For the purpose of presenting figures in U.S. dollars, the consolidated December 31, 2016 and 2015, CHP prepared pro forma selected balance sheet as of December 31, 2016 has been converted at the consolidated income statement information for the twelve-month exchange rates of 49.72 Philippine pesos per US dollar. The period ended December 31, 2016 and for the three-month period consolidated income statements for the twelve-month period ended ended December 31, 2016, as well as pro forma selected combined December 31, 2016 and the combined financial information for the income statement information for the twelve-month period ended twelve-month period ended December 31, 2015 have been converted December 31, 2015, and for the three-month period ended December at the exchange rates of 47.67 and 45.61 Philippine pesos per US dollar, 31, 2015, intended in all cases and to the extent possible, to present the respectively, based on the simple average PHP/US$ of the end-of- operating performance of CHP on a like-to-like basis under a month exchange rates for each of the twelve-month periods of 2016 “normalized” expected ongoing operation; therefore, as if the new and 2015, respectively. The exchange rates used to convert results for royalty scheme and insurance agreements would have been both the fourth quarter of 2016 and the fourth quarter of 2015 were 49.29 effective from the beginning of each year. and 47.01 Philippine pesos per US dollar, respectively, based on the simple average PHP/US$ end-of-month exchange rates for each of the CHP Pro forma consolidated income statement for the twelve-month three-month periods of 2016 and 2015, respectively. The same period ended December 31, 2016, was adjusted beginning on August 1, methodology of converting to US$ was applied with respect to figures in 2016 to reflect the effects of reinsurance agreements as if the the pro forma financial information. agreements would have been effective beginning January 1, 2016.    CHP Pro forma consolidated income statement for the twelve-month and the three-month periods ended December 31, 2015 appearing in Pro forma financial information included in the report this report represent combined historical selected income statement information of CHP subsidiaries, adjusted to reflect the 5% corporate For the purpose of the below clarification, the term “Company” refers service charges and royalties, and reinsurance agreements (on a to CEMEX Holdings Philippines, Inc., “CHP”” refers to the Company and like-to-like basis) for both the year-to-date and the three-month periods its subsidiaries, and “CEMEX” refers CEMEX, S.A.B. de C.V. and its ended December 31, 2015. subsidiaries excluding CHP. In addition: CEMEX Holdings Philippines, Inc. was incorporated on September 17, 2015 for purposes of the initial equity offering concluded on July 18, (1) The Pro Forma income statement for the three-month period ended 2016 (the “IPO”). For accounting purposes, the group reorganization by December 31, 2015 appearing in this report was prepared under the means of which the Company acquired its consolidated subsidiaries was same assumptions used for the Pro Forma combined income statement effective January 1, 2016. As a result, CHP has no historical consolidated information for the year ended December 31, 2015 which was included financial information for the twelve-month period ended December 31, in the Prospectus, with respect to the adjustments associated with the 2015 or for the three-month period ended December 31, 2015. 5% corporate service charges and royalties, and the reinsurance Furthermore, several strategies discussed in the CHP primary offer agreements, as if the applicable contracts were in place from January 1, prospectus (“the Prospectus”) were implemented upon conclusion of 2015.    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 (Continued on page 8) 2016 Fourth Quarter Results    Page 7

Definition of Terms and Disclosures                (Continued from page 7) Definition of terms (2) the effects from the new reinsurance agreements appearing in this PHP refers to Philippine Pesos. report’s Pro Forma consolidated income statement information for the twelve-month and the three-month periods ended December 31, 2016 Free cash flow equals operating EBITDA minus net interest expense, and 2015 reflect the actual accounting initiated on August 1, 2016 maintenance and strategic capital expenditures, change in working resulting in an increase in revenue, whereas the effects from the capital, taxes paid, and other cash items (net other expenses less reinsurance agreements included in the Prospectus’ Pro Forma proceeds from the disposal of obsolete and/or substantially depleted consolidated income statement information for the year ended operating fixed assets that are no longer in operation). December 31, 2015, for simplicity of the Pro Forma information, were presented reducing operating costs. Maintenance capital expenditures investments incurred for the purpose of ensuring the company’s operational continuity. These include capital Nonetheless, this difference in presentation would have had no effect expenditures on projects required to replace obsolete assets or on the reported Pro Forma operating income, reported Pro Forma maintain current operational levels, and mandatory capital Operating EBITDA or reported Pro Forma net income for the year ended expenditures, which are projects required to comply with governmental December 31, 2015. regulations or company policies. (3) the Pro Forma selected combined income statement information for Net debt equals total debt minus cash and cash equivalents. the twelve-month and the three-month periods ended December 31, 2015 were adjusted to reflect depreciation arising from asset Operating EBITDA equals operating earnings before other expenses, revaluation. net, plus depreciation and operating amortization. (4) the Pro Forma selected consolidated income statement information pp equals percentage points. for the twelve-month and the three-month periods ended December 31, 2016 appearing in this report was prepared by (a) removing IPO- Prices all references to pricing initiatives, price increases or decreases, related operating expenses, (b) removing interest payments on short- refer to our prices for our products. term debt, and (c) annualizing long-term debt. 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—December Fourth Quarter January—December 2016                 2015                 2016                 2015                 2016                 2015                 average average average average End of period End of period Philippine peso 47.67 45.61 49.29 47.01 49.72 47.06 Amounts provided in units of local currency per US dollar 2016 Fourth Quarter Results    Page 8