EX-99.2 3 d425351dex992.htm EX-2

Exhibit 2

2017 SECOND QUARTER RESULTS Stock Listing Information Philippine Stock Exchange Ticker: CHP Investor Relations + 632 849 3600 E-Mail:

Operating and Financial Highlights January—June Second Quarter 2017 2016 % var 2016 2017 2016 % var 2016 Pro Forma1 Actual Pro Forma1 Actual Cement volume2 2.5 2.6 (5%) 2.5 1.3 1.3 (2%) 1.3 Net sales 10,989 12,718 (14%) 12,718 5,627 6,390 (12%) 6,390 Gross profit 4,892 6,078 (19%) 6,078 2,320 2,981 (22%) 2,981 as % of net sales 44.5% 47.8% (3.3pp) 47.8% 41.2% 46.6% (5.4pp) 46.6% Operating earnings before other 1,203 2,714 (56%) 937 435 1,378 (68%) 404 expenses, net as % of net sales 10.9% 21.3% (10.4pp) 7.4% 7.7% 21.6% (13.9pp) 6.3% Controlling Interest Net Income 486 896 (46%) 44 137 436 (69%) (171) Operating EBITDA 1,824 3,341 (45%) 1,563 753 1,701 (56%) 727 as % of net sales 16.6% 26.3% (9.7pp) 12.3% 13.4% 26.6% (13.2pp) 11.4% Free cash flow after maintenance capital 827 1,067 expenditures Free cash flow 590 904 Net debt 13,863 13,863 Total debt 15,036 15,036 Earnings per share3 0.09 0.06 0.03 (0.06) In millions of Philippine Pesos, except volumes 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 Philippine Pesos Net sales for the second quarter of 2017 was PHP 5,627 million, a Operating EBITDA, at PHP 1,824 million during the first half of 2017, decrease of 12% compared to the second quarter of 2016, reflecting decreased by 45% year-on-year, reflecting lower prices and volumes lower cement prices and volumes. and higher operating expenses. Cost of sales as a percentage of net sales increased by 5.4 pp during the Operating EBITDA margin decreased by 9.7 pp during the first half of second quarter of 2017 compared with the same period last year, from 2017 versus the same period in 2016, from 26.3% to 16.6%. 53.4% to 58.8%. As a percentage of cost of sales, power and fuels accounted for 21% and 20%, respectively. Controlling interest net income was PHP 486 million in the first half of 2017 against a pro forma net income of PHP 896 million in the same Operating expenses as a percentage of net sales increased by 8.4 pp period of 2016. Improvements in other income and reductions in during the second quarter of 2017 compared with the same period last financial and income tax expenses mitigated lower operating earnings year, from 25.1% to 33.5%. Distribution expenses increased 3.6 pp, before other income (expenses). driven by lower utilization and higher diesel prices. Selling and administrative expenses increased 4.8 pp due to additional marketing Total debt at the end of June 2017 stood at PHP 15,036 million, of promotions, and other overhead expenses. which PHP 13,977 million pertained to long-term debt owed to BDO Unibank, Inc. 2017 Second Quarter Results Page 2

Operating Results Domestic Gray Cement January—June Second Quarter Second Quarter 2017 2017 vs. 2016 2017 vs. 2016 vs. First Quarter 2017 Volume (6%) (3%) 6% Price in USD (14%) (15%) (2%) Price in PHP (8%) (9%) (2%) Domestic gray cement volumes declined by 3% during the second quarter of 2017 and by 6% year-to-date, compared with the same periods last year. Sequential activity improved with cement volumes increasing by 6% versus the first quarter. Daily cement volumes remained practically flat during the quarter. A longer-than-expected shutdown of our APO Cement Plant in Cebu during the second quarter temporarily affected cement output. For the second quarter of 2017, domestic gray cement prices declined by 9% on a year-over-year basis and by 2% on a sequential basis. The decline in prices reflects heightened competitive conditions and the continued presence of imports in the markets. 2017 Second Quarter Results Page 3

Operating EBITDA, Free Cash Flow and Debt Information Operating EBITDA and Free Cash Flow January—June Second Quarter 2017 2016 % var 2017 2016 % var Pro Forma1 Pro Forma1 Operating earnings before other expenses, 1,203 2,714 (56%) 435 1,378 (68%) net + Depreciation and operating amortization 621 626 (1%) 319 323 (1%) Operating EBITDA 1,824 3,341 (45%) 753 1,701 (56%) —Net financial expenses 459 200 —Capital expenditures for maintenance 196 147 —Change in working Capital 58 (862)—Taxes paid 306 204 —Other cash items (Net) (22) (3) Free cash flow after maintenance capital 827 1,067 —Strategic Capital expenditures 237 163 Free cash flow 590 904 In millions of Philippine Pesos, except volumes and percentages 1 Refer to page 7 for information on pro forma adjustments Debt Information Second Quarter Second Quarter 2017 2017 Total debt 15,036 Currency denomination Short term 0% U.S. dollar 7% Long term 100% Philippine peso 93% Cash and cash equivalents 1,173 Interest rate Net debt 13,863 Fixed 37% Variable 63% In millions of Philippine Pesos, except percentages U.S. dollar-denominated debt converted using end June 2017 exchange rate of PHP 50.47 2017 Second 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—June Second Quarter INCOME STATEMENT 2017 2016 % var 2016 2017 2016 % var 2016 Pro Forma1 Actual Pro Forma1 Actual Net sales 10,989,341 12,718,249 (14%) 12,718,249 5,626,964 6,390,040 (12%) 6,390,040 Cost of sales (6,096,885) (6,640,693) (8%) (6,640,693) (3,307,369) (3,409,218) (3%) (3,409,218) Gross profit 4,892,456 6,077,556 (19%) 6,077,556 2,319,595 2,980,822 (22%) 2,980,822 Operating expenses (3,689,719) (3,363,239) 10% (5,140,487) (1,884,971) (1,602,370) 18% (2,576,826) Operating earnings before other 1,202,737 2,714,317 (56%) 937,069 434,624 1,378,452 (68%) 403,996 expenses, net Other income (expenses), net 21,780 (16,737) (230%) (68,522) 2,614 (24,853) (111%) (76,640) Operating earnings 1,224,517 2,697,580 (55%) 868,547 437,238 1,353,599 (68%) 327,356 Financial expenses (439,946) (671,042) (34%) (481,742) (190,763) (336,568) (43%) (463,801) Other financial income (147,993) (341,645) (57%) (341,645) (50,653) (142,341) (64%) (142,340) (expenses), net Net income before income taxes 636,578 1,684,893 (62%) 45,160 195,822 874,690 (78%) (278,785) Income tax (150,525) (789,057) (81%) (1,513) (59,308) (438,577) (86%) 108,130 Consolidated net income 486,053 895,836 (46%) 43,647 136,514 436,113 (69%) (170,655) Non-controlling Interest Net Income 15 14 7% 14 7 8 (13%) 8 Controlling Interest Net Income 486,068 895,850 (46%) 43,661 136,521 436,121 (69%) (170,647) Operating EBITDA 1,824,128 3,340,732 (45%) 1,563,485 753,433 1,701,032 (56%) 726,575 Earnings per share 0.09 0.03 1 Refer to page 7 for information on pro forma adjustments as of June 30 BALANCE SHEET 2017 Total Assets 51,340,280 Cash and Temporary Investments 1,173,039 Trade Accounts Receivables 986,888 Other Receivables 78,938 Inventories 3,179,122 Other Current Assets 1,442,582 Current Assets 6,860,569 Fixed Assets 15,592,084 Other Assets 28,887,627 Total Liabilities 22,128,537 Current Liabilities 6,261,559 Long-Term Liabilities 15,036,198 Other Liabilities 830,780 Consolidated Stockholders’ Equity 29,211,743 Non-controlling Interest 231 Stockholders’ Equity Attributable to Controlling Interest 29,211,512 2017 Second 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—June Second Quarter INCOME STATEMENT 2017 2016 % var 2016 2017 2016 % var 2016 Pro Forma1 Actual Pro Forma1 Actual Net sales 219,549 270,630 (19%) 270,630 112,401 136,243 (17%) 136,243 Cost of sales (121,806) (141,306) (14%) (141,306) (66,066) (72,689) (9%) (72,689) Gross profit 97,743 129,324 (24%) 129,324 46,335 63,554 (27%) 63,554 Operating expenses (73,715) (71,566) 3% (109,384) (37,653) (34,164) 10% (54,941) Operating earnings before other 24,028 57,758 (58%) 19,940 8,682 29,390 (70%) 8,613 expenses, net Other income (expenses), net 435 (356) (222%) (1,458) 52 (530) (110%) (1,634) Operating earnings 24,463 57,402 (57%) 18,482 8,734 28,860 (70%) 6,979 Financial expenses (8,789) (14,279) (38%) (10,251) (3,811) (7,176) (47%) (9,889) Other financial income (2,957) (7,270) (59%) (7,270) (1,012) (3,035) (67%) (3,035) (expenses), net Net income before income taxes 12,717 35,853 (65%) 961 3,911 18,649 (79%) (5,945) Income tax (3,007) (16,790) (82%) (32) (1,185) (9,351) (87%) 2,305 Consolidated net income 9,710 19,063 (49%) 929 2,726 9,298 (71%) (3,640) Non-controlling Interest Net Income 0 0 0 0 0 0 Controlling Interest Net Income 9,710 19,063 (49%) 929 2,726 9,298 (71%) (3,640) Operating EBITDA 36,443 71,087 (49%) 33,269 15,050 36,268 (59%) 15,491 Earnings per share 0.00 0.00 0.00 0.00 1 Refer to page 7 for information on pro forma adjustments as of June 30 BALANCE SHEET 2017 Total Assets 1,017,243 Cash and Temporary Investments 23,242 Trade Accounts Receivables 19,554 Other Receivables 1,564 Inventories 62,990 Other Current Assets 28,583 Current Assets 135,933 Fixed Assets 308,938 Other Assets 572,372 Total Liabilities 438,449 Current Liabilities 124,065 Long-Term Liabilities 297,923 Other Liabilities 16,461 Consolidated Stockholders’ Equity 578,794 Non-controlling Interest 5 Stockholders’ Equity Attributable to Controlling Interest 578,789 2017 Second Quarter Results Page 6

Definitions of Terms and Disclosures Methodology for translation, consolidation, and presentation of Nevertheless and for the convenience of the reader, and in order to results present a comprehensive comparative operating information for the six-month and the three-month periods ended June 30, 2017, CHP CEMEX Holdings Philippines, Inc. (“CHP”) reports its interim financial continued to use pro forma selected consolidated income statement statements under Philippine Financial Reporting Standards (“PFRS”). information for the six-month and the three-month periods ended June When reference is made in 2017 and 2016 to consolidated interim 30, 2016, intended in all cases and to the extent possible, to present the financial statements, it means CHP financial information together with operating performance of CHP on a like-to-like basis under a its subsidiaries. “normalized” expected ongoing operation; therefore, as if the new For the purpose of presenting figures in U.S. dollars, the consolidated royalty scheme and insurance agreements would have been effective balance sheet as of June 30, 2017 has been converted at the end of from the beginning of 2016. period exchange rate of 50.47 Philippine pesos per US dollar while the CHP Pro forma consolidated income statement for the six-month and consolidated income statement for the six-month period ended June the three-month periods ended June 30, 2016 appearing in this report 30, 2017 has been converted at the January to June, 2017 average represent combined historical selected income statement information exchange rate of 50.05 Philippine pesos per US dollar. On the other of CHP subsidiaries, adjusted to reflect the 5% corporate service charges hand, the consolidated income statement for the three-month period and royalties, and reinsurance agreements (on a like-to-like basis) for ended June 30, 2017 has been converted at the April to June, 2017 the six-month and the three-month periods ended June 30, 2016. average exchange rate of 50.06 Philippine pesos per US dollar. In addition: Pro forma financial information included in the report (1) beginning fiscal year of 2017, a change in accounting treatment of For the purpose of the below clarification, the term “Company” refers the effects from the new reinsurance agreements is adopted to CEMEX Holdings Philippines, Inc., “CHP”” refers to the Company and recognizing the same as a reduction in operating expenses instead of an its subsidiaries, and “CEMEX” refers CEMEX, S.A.B. de C.V. and its increase of revenue (which was the accounting treatment utilized in subsidiaries excluding CHP. 2016). CEMEX Holdings Philippines, Inc. was incorporated on September 17, This change in accounting treatment is presented in this report’s Pro 2015 for purposes of the initial equity offering concluded on July 18, Forma consolidated income statement information for the six-month 2016 (the “IPO”). For accounting purposes, the group reorganization by and the three-month periods ended June 30, 2016 This difference in means of which the Company acquired its consolidated subsidiaries was presentation does not have an effect on the reported Pro Forma effective January 1, 2016. Several strategies discussed in the CHP operating income, reported Pro Forma Operating EBITDA or reported primary offer prospectus (“the Prospectus”) were implemented upon Pro Forma net income for the six-month and the three-month periods conclusion of the initial equity offering: a) the new royalty scheme was ended June 30, 2016. implemented in July 2016 with retroactive effects as of January 1, 2016, and b) the new reinsurance scheme was incorporated prospectively (2) the Pro Forma selected consolidated income statement information effective August 1, 2016. These strategies are already in full effect in for the six-month and the three-month periods ended June 30, 2016 2017. appearing in this report was prepared by (a) removing interest payments on short-term debt, and (b) annualizing long-term debt. 2017 Second Quarter Results Page 7

Definition of Terms and Disclosures Definition of terms PHP refers to Philippine Pesos. pp equals percentage points. Prices all references to pricing initiatives, price increases or decreases, refer to our prices for our products. Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization. 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. 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. Net debt equals total debt minus cash and cash equivalents. January—June Second Quarter January—June 2017 2016 2017 2016 2017 2016 average average average average End of period End of period Philippine peso 50.05 47.00 50.06 46.90 50.47 47.06 Amounts provided in units of local currency per US dollar 2017 Second Quarter Results Page 8