EX-99.2 3 d485850dex992.htm EX-2 EX-2

Exhibit 2

 

LOGO

Operating and Financial Highlights    LOGO

 

 

 

 

     January - September     Third Quarter  
     2017     2016     % var     2016     2017     2016     % var     2016  
           Pro Forma1           Actual           Pro Forma1           Actual  

Cement volume2

     3.8       3.9       (2 %)      3.8       1.3       1.3       3 %      1.3  

Net sales

      16,561       19,009       (13 %)      19,009       5,572       6,290       (11 %)      6,290  

Gross profit

      7,215       9,531       (24 %)      9,531       2,323       3,453       (33 %)      3,453  

as % of net sales

      43.6 %      50.1 %      (6.5  pp)      50.1 %      41.7 %      54.9 %      (13.2  pp)      54.9 % 

Operating earnings before other expenses, net

      1,671       4,373       (62 %)      3,813       468       1,659       (72 %)      2,876  

as % of net sales

      10.1 %      23.0 %      (12.9  pp)      20.1 %      8.4 %      26.4 %      (18.0  pp)      45.7 % 

Controlling Interest Net Income

      688       1,879       (63 %)      1,403       202       983       (79 %)      1,360  

Operating EBITDA

      2,627       5,311       (51 %)      4,750       803       1,970       (59 %)      3,187  

as % of net sales

      15.9 %      27.9 %      (12.0  pp)      25.0 %      14.4 %      31.3 %      (16.9  pp)      50.7 % 

Free cash flow after maintenance capital expenditures

      1,502       3,888       (61 %)      3,151       675       1,143       (41 %)      1,807  

Free cash flow

      1,061       3,237       (67 %)      2,500       470       509       (8 %)      1,173  

Net debt3

     13,430       13,811       (3 %)      13,811       13,430       13,811       (3 %)      13,811  

Total debt3

     15,016       15,409       (3 %)      15,409       15,016       15,409       (3 %)      15,409  

Earnings per share4

     0.13       0.92       (86 %)      0.69       0.04       0.21       (81 %)      0.29  

In millions of Philippine Pesos, except volumes and earnings per share

 

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  2016 U.S. dollar debt converted using end-of-period exchange rate of PHP 48.50
4  In Philippine Pesos

 

Net sales for the third quarter of 2017 was PHP 5,572 million, a decrease of 11% compared to the third quarter of 2016, reflecting lower cement prices.

Cost of sales as a percentage of net sales increased by 13.2 pp during the third quarter of 2017 compared with the same period last year, from 45.1% to 58.3%, due to higher fuel prices, timing differences in the recognition of annual shutdown expenses, as well as the effect of lower prices. As a percentage of cost of sales, power and fuels accounted for 22% and 24%, respectively.

Operating expenses as a percentage of net sales increased by 4.8 pp during the third quarter of 2017 compared with the same period last year, from 28.5% to 33.3%. Distribution expenses increased 4.1 pp, driven by higher fuel cost and lower utilization of logistics assets. Selling and administrative expenses increased 0.7 pp but declined in absolute terms by PHP 50 million as marketing promotions, and other overhead expenses decreased.

Operating EBITDA, at PHP 803 million during the third quarter of 2017, decreased by 59% year-on-year, mainly resulting from lower prices. Higher fuel and distribution costs, as well as increased maintenance cost also contributed to this decline.

Operating EBITDA margin decreased by 16.9 pp during the third quarter of 2017 versus the same period in 2016, from 31.3% to 14.4%. Lower prices account for ~70% of the margin decrease.

Controlling interest net income was PHP 202 million in the third quarter of 2017 against a pro forma net income of PHP 983 million in 2016, a 79% decline against same period of the prior year.

Total debt at the end of September 2017 stood at PHP 15,016 million, of which PHP 13,942 million pertained to long-term debt owed to BDO Unibank, Inc. Total debt decreased by PHP 20 million during the quarter.

 

 

 

2017 Third Quarter Results    Page 2

Operating Results    LOGO

 

 

 

Domestic Gray Cement    January - September     Third Quarter     Third Quarter 2017  
     2017 vs. 2016     2017 vs. 2016     vs. Second Quarter 2017  

Volume

      (3 %)      2 %      4 % 

Price in USD

      (16 %)      (19 %)      (6 %) 

Price in PHP

      (10 %)      (13 %)      (5 %) 

Domestic gray cement volumes increased by 2% during the third quarter of 2017 compared with the same period last year. Sequential activity improved with cement volumes increasing by 4% versus the second quarter.

We estimate that positive demand, supported by a pick-up in infrastructure spending and stability in private sector construction, resulted in mid-single digit growth for the industry year-on-year.

Volumes also grew sequentially despite adverse weather, which affected logistics capabilities.

For the third quarter of 2017, domestic gray cement prices declined by 13% on a year-over-year basis and by 5% on a sequential basis. The decline in prices reflects heightened competitive conditions.

Import volume by traders was observed to have decelerated versus previous quarter.

 

2017 Third Quarter Results    Page 3

Operating EBITDA, Free Cash Flow and Debt Information    LOGO

 

 

 

Operating EBITDA and Free Cash Flow

 

     January - September     Third Quarter  
     2017     2016     % var     2016     2017     2016     % var     2016  
           Pro Forma1           Actual           Pro Forma1           Actual  

Operating earnings before other expenses, net

      1,671       4,373       (62 %)      3,813       468       1,659       (72 %)      2,876  

+ Depreciation and operating

      956       938         938       335       311         311  
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

      

 

 

  

Operating EBITDA

      2,627       5,311       (51 %)      4,750       803       1,970       (59 %)      3,187  

- Net financial expenses

      667       1,065         930       208       388         442  

- Capital expenditures for maintenance

      413       193         193       218       121         121  

- Change in working Capital

      (348 )      (684 )        (684 )      (406 )      111         111  

- Taxes paid

      424       852         852       118       226         465  

- Other cash items (Net)

      (31 )      (3 )        310       (9 )      (20 )        241  
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

      

 

 

  

Free cash flow after maintenance capital

      1,502       3,888       (61 %)      3,151       675       1,143       (41 %)      1,807  

- Strategic Capital expenditures

      441       651         651       204       634         634  
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

      

 

 

  

Free cash flow

      1,061       3,237       (67 %)      2,500       470       509       (8 %)      1,173  
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

      

 

 

  

In millions of Philippine Pesos, except volumes and percentages

 

1  Refer to page 7 for information on pro forma adjustments

Debt Information

 

     Third Quarter     Second  
                       Quarter  
     2017     2016 1     % var     2017 1  

Total debt

      15,016       15,409       (3 %)      15,036  

Short term

      0 %      0 %        0 % 

Long term

      100 %      100 %        100 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash and cash equivalents

      1,586       1,598       (1 %)      1,173  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net debt

      13,430       13,811       (3 %)      13,863  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

     Third Quarter  
     2017     2016  

Currency denomination

     

U.S. dollar

      0 %      100 % 

Philippine peso

      100 %      0 % 
    

Interest rate

     

Fixed

      44 %      93 % 

Variable

      56 %      7 % 
    
 

In millions of Philippine Pesos, except percentages

 

1  U.S. dollar debt converted using end-of-period exchange rate

 

2017 Third Quarter Results    Page 4

Financial Results    LOGO

 

 

 

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

(Thousands of Philippine Pesos in nominal terms, except per share amounts)

 

     January - September           Third Quarter        
     2017     2016     % var     2016     2017     2016     % var     2016  
           Pro Forma1           Actual           Pro Forma1           Actual  

INCOME STATEMENT

                 

Net sales

      16,561,253       19,008,531       (13 %)      19,008,531       5,571,912       6,290,282       (11 %)      6,290,282  

Cost of sales

      (9,346,142 )      (9,477,536 )      1 %      (9,477,536 )      (3,249,257 )      (2,836,843 )      (15 %)      (2,836,843 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      7,215,111       9,530,995       (24 %)      9,530,995       2,322,655       3,453,439       (33 %)      3,453,439  

Operating expenses

      (5,543,998 )      (5,157,812 )      (7 %)      (5,718,380 )      (1,854,279 )      (1,794,572 )      (3 %)      (577,893 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings before other expenses, net

      1,671,113       4,373,183       (62 %)      3,812,615       468,376       1,658,867       (72 %)      2,875,546  

Other income (expenses), net

      31,100       2,942       957 %      (309,544 )      9,320       19,679       (53 %)      (241,020 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings

      1,702,213       4,376,125       (61 %)      3,503,071       477,696       1,678,546       (72 %)      2,634,526  

Financial expenses, net

      (667,103 )      (1,065,363 )      37 %      (929,798 )      (208,491 )      (388,065 )      46 %      (441,802 ) 

Foreign exchange loss, net

      (157,208 )      (875,039 )      82 %      (875,039 )      (27,881 )      (539,650 )      95 %      (539,650 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income before income taxes

      877,902       2,435,723       (64 %)      1,698,234       241,324       750,831       (68 %)      1,653,074  

Income tax

      (189,941 )      (556,693 )      66 %      (294,777 )      (39,416 )      232,364       N/A       (293,264 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated net income

      687,961       1,879,030       (63 %)      1,403,457       201,908       983,195       (79 %)      1,359,810  

Non-controlling Interest Net Income

      21       19       11 %      19       6       5       20 %      5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Controlling Interest Net Income

      687,982       1,879,049       (63 %)      1,403,476       201,914       983,200       (79 %)      1,359,815  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating EBITDA

      2,627,458       5,310,771       (51 %)      4,750,203       803,331       1,970,038       (59 %)      3,186,718  

Earnings per share

      0.13       0.92       (86 %)      0.69       0.04       0.21       (81 %)      0.29  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

1 Refer to page 7 for information on pro forma adjustments

 

     as of September 30         
     2017      2016      % Var  

BALANCE SHEET

         

Total Assets

      51,162,429        51,006,618        0 % 

Cash and Temporary Investments

      1,586,345        1,597,701        (1 %) 

Trade Accounts Receivables

      999,675        1,029,637        (3 %) 

Other Receivables

      76,556        241,616        (68 %) 

Inventories

      3,046,854        2,369,551        29 % 

Other Current Assets

      756,107        1,316,368        (43 %) 

Current Assets

      6,465,537        6,554,873        (1 %) 

Fixed Assets

      15,690,808        15,702,412        (0 %) 

Other Assets

      29,006,084        28,749,333        1 % 
  

 

 

     

 

 

     

 

 

  

Total Liabilities

      21,721,917        22,250,071        (2 %) 

Current Liabilities

      6,030,449        5,901,049        2 % 

Long-Term Liabilities

      14,842,169        15,535,356        (4 %) 

Other Liabilities

      849,299        813,666        4 % 
  

 

 

     

 

 

     

 

 

  

Consolidated Stockholders’ Equity

      29,440,512        28,756,547        2 % 

Non-controlling Interest

      225        251        (10 %) 

Stockholders’ Equity Attributable to Controlling Interest

      29,440,287        28,756,296        2 % 
        

 

2017 Third Quarter Results    Page 5

Financial Results    LOGO

 

 

 

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

(Thousands of U.S. Dollars, except per share amounts)

 

     January - September           Third Quarter        
     2017     2016     % var     2016     2017     2016     % var     2016  
           Pro Forma1           Actual           Pro Forma1           Actual  

INCOME STATEMENT

                 

Net sales

      329,199       403,331       (18 %)      403,331       109,651       132,716       (17 %)      132,716  

Cost of sales

      (185,779 )      (201,098 )      8 %      (201,098 )      (63,943 )      (59,853 )      (7 %)      (59,853 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      143,420       202,233       (29 %)      202,233       45,708       72,863       (37 %)      72,863  

Operating expenses

      (110,202 )      (109,441 )      (1 %)      (121,335 )      (36,491 )      (37,863 )      4 %      (12,193 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings before other expenses, net

      33,218       92,792       (64 %)      80,898       9,217       35,000       (74 %)      60,670  

Other income (expenses), net

      618       62       897 %      (6,568 )      183       415       (56 %)      (5,085 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating earnings

      33,836       92,854       (64 %)      74,330       9,400       35,415       (73 %)      55,585  

Financial expenses, net

      (13,260 )      (22,605 )      41 %      (19,729 )      (4,103 )      (8,188 )      50 %      (9,321 ) 

Foreign exchange loss, net

      (3,125 )      (18,567 )      83 %      (18,567 )      (549 )      (11,386 )      95 %      (11,386 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income before income taxes

      17,451       51,682       (66 %)      36,034       4,748       15,841       (70 %)      34,878  

Income tax

      (3,776 )      (11,812 )      68 %      (6,255 )      (776 )      4,903       N/A       (6,187 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated net income

      13,675       39,870       (66 %)      29,779       3,972       20,744       (81 %)      28,691  

Non-controlling Interest Net Income

                 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Controlling Interest Net Income

      13,675       39,870       (66 %)      29,779       3,972       20,744       (81 %)      28,691  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating EBITDA

      52,228       112,686       (54 %)      100,792       15,809       41,565       (62 %)      67,235  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per share

                 

 

1  Refer to page 7 for information on pro forma adjustments

 

     as of September 30         
     2017      2016      % Var  

BALANCE SHEET

         

Total Assets

      1,006,838        1,051,683        (4 %) 

Cash and Temporary Investments

      31,218        32,942        (5 %) 

Trade Accounts Receivables

      19,673        21,230        (7 %) 

Other Receivables

      1,507        4,982        (70 %) 

Inventories

      59,960        48,857        23 % 

Other Current Assets

      14,880        27,142        (45 %) 

Current Assets

      127,238        135,152        (6 %) 

Fixed Assets

      308,783        323,761        (5 %) 

Other Assets

      570,817        592,770        (4 %) 
  

 

 

     

 

 

     

 

 

  

Total Liabilities

      427,471        458,764        (7 %) 

Current Liabilities

      118,674        121,671        (2 %) 

Long-Term Liabilities

      292,082        320,317        (9 %) 

Other Liabilities

      16,715        16,777        (0 %) 
  

 

 

     

 

 

     

 

 

  

Consolidated Stockholders’ Equity

      579,367        592,918        (2 %) 

Non-controlling Interest

      4        5        (23 %) 

Stockholders’ Equity Attributable to Controlling Interest

      579,363        592,913        (2 %) 
        

 

2017 Third Quarter Results    Page 6

Definitions of Terms and Disclosures    LOGO

 

 

 

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 2017 and 2016 to consolidated interim financial statements, it means CHP financial information together with its subsidiaries.

For the purpose of presenting figures in U.S. dollars, the consolidated balance sheet as of September 30, 2017 has been converted at the end of period exchange rate of 50.82 Philippine pesos per US dollar while the consolidated income statement for the nine-month period ended September 30, 2017 has been converted at the January to July, 2017 average exchange rate of 50.31 Philippine pesos per US dollar. On the other hand, the consolidated income statement for the three-month period ended September 30, 2017 has been converted at the July to September, 2017 average exchange rate of 50.82 Philippine pesos per US dollar.

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. 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. These strategies are already in full effect in 2017.

Nevertheless and for the convenience of the reader, and in order to present a comprehensive comparative operating information for the nine-month and the three-month periods ended September 30, 2017, CHP continued to use pro forma selected consolidated income statement information for the nine-month and the three-month periods ended September 30, 2016, 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 effective from the beginning of 2016.

In addition:

(1) beginning fiscal year of 2017, a change in accounting treatment of the effects from the new reinsurance agreements is adopted recognizing the same as a reduction in operating expenses instead of an increase of revenue (which was the accounting treatment utilized in 2016).

This change in accounting treatment is presented in this report’s Pro Forma consolidated income statement information for the nine-month and the three-month periods ended September 30, 2016. This difference in presentation does not have an effect on the reported Pro Forma operating income, reported Pro Forma Operating EBITDA or reported Pro Forma net income for the nine-month and the three-month periods ended September 30, 2016.

(2) 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 interest payments on short-term debt, and (b) annualizing long-term debt.

 

 

2017 Third Quarter Results    Page 7

Definition of Terms and Disclosures    LOGO

 

 

 

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 - September      Third Quarter      January - September  
     2017      2016      2017      2016      2017      2016  
     average      average      average      average      End of period      End of period  

Philippine peso

      50.31        47.13        50.82        47.40        50.82        48.50  

Amounts provided in units of local currency per US dollar

 

2017 Third Quarter Results    Page 8