EX-99.2 3 d851219dex992.htm EX-2

EX-2

Exhibit 2

2019 FOURTH QUARTER RESULTS Stock Listing Information Philippine Stock Exchange Ticker: CHP Investor Relations + 6328849 3600 E-Mail: chp.ir@cemex.com

Operating and Financial Highlights
January - December Fourth Quarter
2019 2018 % var 2019 2018 % var
Net sales 23,596 23,418 1% 5,372 5,513 (3%) Gross profit 9,683 9,190 5% 2,177 1,918 14% as % of net sales 41% 39% 2pp 41% 35% 6pp Operating earnings before other expenses, net 2,342 1,521 54% 257 83 211% as % of net sales 10% 7% 3pp 5% 2% 3pp Controlling Interest Net Income (Loss) 1,280 (971) N/A 405 (307) N/A Operating EBITDA 4,227 3,376 25% 781 526 49% as % of net sales 18% 14% 4pp 15% 10% 5pp Free cash flow after maintenance capital expenditures 2,481 1,460 70% (411) (463) 11% Free cash flow (719) 1,165 N/A (1,570) (526) (199%)
1 18,664 17,923 4% 18,664 17,923 4% Net debt
1 20,063 19,737 2% 20,063 19,737 2% Total debt
2 0.25 (0.19) N/A 0.08 (0.06) N/A
Earnings per share
In millions of Philippine Pesos, except percentages and earnings per share
1 U.S. dollar debt converted using end-of-period exchange rates. See Debt Information on page 4 and Exchange Rates on page 8 for more detail.
2 In Philippine Pesos
Net sales in the fourth quarter of 2019 decreased by 3% compared with the fourth quarter of 2018 due to lower volumes.
Cost of sales was at 59% of sales during the quarter, 6 pp lower on a year-over-year basis. The fourth quarter of 2018 was impacted by higher input costs due to the September landslide in Naga City, Cebu, near APO Cement plant.
For 2019, cost of sales was at 59% of sales compared with 61% in 2018. Fuel costs remained flat at 21% of cost of sales, benefitting from the use of a new coal mix and hedged coal inventory at the start of the year carried over from 2018. Power costs, as a percentage of cost of sales, was at 19%, 2 pp lower on a year-over-year basis, reflecting savings from lower electricity rates.
Operating expenses, as a percentage of sales, decreased by 2 pp in 2019 compared with 2018. The decrease was due to lower distribution expenses resulting from reduced double-handling, and supply-chain-optimization initiatives.
Distribution expenses during the fourth quarter increased by 2 pp year-over-year, from 19% in 2018 to 21% in 2019, mainly due to one-off costs associated with the termination of a bulk vessel charter contract, in line with the company’s initiative to further optimize logistics assets.
For 2019, distribution expenses were at 18% compared with 20% in 2018.
Selling and administrative expenses, as a percentage of sales, were flat on a year-over-year basis at 13%.
Operating EBITDA increased by 25% year-over-year in 2019, and by 49% during the fourth quarter.
Operating EBITDA margin was at 18% for 2019, and 15% for the fourth quarter.
Controlling interest net income for 2019 was around PHP 1.3 billion due to higher operating earnings, foreign exchange gains, and lower income tax expenses.
Total debt, including leases, at the end of December 2019 stood at PHP 20,063 million, of which PHP 11,427 million pertained to long-term debt owed to BDO Unibank, Inc.

Operating Results
Domestic Gray Cement January - December Fourth Quarter Fourth Quarter 2019
2019 vs. 2018 2019 vs. 2018 vs. Third Quarter 2019
Volume (3%) (3%) (7%)
Price in PHP 4% 0% (2%)
Our domestic cement volumes decreased by 3% year-over-year during the fourth quarter. Despite an improvement in activity early in the quarter, adverse weather conditions in December negatively impacted our operations.
For 2019, our domestic cement volumes decreased by 3%, reflecting a slowdown in construction activity due to the delayed approval of the national budget and mid-term elections held in May. Our first quarter volumes also reflected the impact of the September 2018 landslide in Naga City, Cebu, near our APO Cement plant.
Our domestic cement prices increased by 4% year-over-year in 2019, reflecting price adjustments implemented in 2018.

Operating EBITDA, Free Cash Flow and Debt Information
Operating EBITDA and Free Cash Flow
In millions of Philippine Pesos
Debt Information
In millions of Philippine Pesos, except percentages
(1) U.S. dollar debt converted using end-of-period exchange rates. See Exchange Rates on page 8 for more detail.
(2) Includes leases, in accordance with Philippine Financial Reporting Standards (PFRS).
(3) Based on BDO Loan Facility financial covenants which we are required to comply commencing in June 2020.
January - December Fourth Quarter 2019 2018 % var 2019 2018 % var Operating earnings before other expenses, net 2,342 1,521 54% 257 83 211% + Depreciation and operating amortization 1,886 1,856 524 443 Operating EBITDA 4,227 3,376 25% 781 526 49% Net financial expenses 1,305 1,114 237 314- Maintenance capital expenditures 659 1,145 273 652- Change in working capital (561) (886) 579 (108)- Income taxes paid 352 500 78 80- Other cash items (net) (9) 43 24 51 Free cash flow after maintenance capital expenditures 2,481 1,460 70% (411) (463) 11%- Strategic capital expenditures 3,199 295 1,159 62 Free cash flow (719) 1,165 N/A (1,570) (526) (199%) 1 -17% -201% Conversion Rate
Fourth Quarter Third Quarter Fourth Quarter 2019 2018 % var 2019 2019 2018 (1)(2) 20,063 19,737 2% 20,235 Currency denomination Total debt Short term 9% 8% 9% U.S. dollar 30% 17% Long term 91% 92% 91% Philippine peso 70% 83% Cash and cash equivalents 1,399 1,814 (23%) 2,592 Interest rate Net debt 18,664 17,923 4% 17,643 Fixed 43% 45% (3) 3.47 4.04 Variable 57% 55% Leverage Ratio (3) 3.73 3.40 Coverage Ratio

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 2019 2018 % var 2019 2018 % var
Net sales 23,595,877 23,417,697 1% 5,372,359 5,512,576 (3%) Cost of sales (13,913,316) (14,227,211) 2% (3,195,374) (3,594,853) 11%
Gross profit 9,682,561 9,190,486 5% 2,176,985 1,917,723 14%
Selling and Administrative expenses (3,111,531) (2,999,236) (4%) (804,531) (804,301) (0%) Distribution expenses (4,229,410) (4,670,626) 9% (1,115,482) (1,030,668) (8%)
Operating earnings before other expenses, net 2,341,620 1,520,624 54% 256,972 82,754 211%
Other income (expenses), net 8,544 (42,653) N/A (23,615) (50,891) 54%
Operating earnings (loss) 2,350,164 1,477,971 59% 233,357 31,863 632%
Financial expenses, net (1,304,539) (1,113,511) (17%) (237,304) (314,131) 24% Foreign exchange gain (loss), net 453,125 (381,443) N/A 325,204 164,287 98%
Net income (loss) before income taxes 1,498,750 (16,983) N/A 321,257 (117,981) N/A
Income tax benefit (expenses) (219,174) (953,704) 77% 83,637 (189,273) N/A
Consolidated net income (loss) 1,279,576 (970,687) N/A 404,894 (307,254) N/A
Non-controlling interest net income (loss) 23 28 (18%) 5 7 (29%)
Controlling Interest net income (loss) 1,279,599 (970,659) N/A 404,899 (307,247) N/A
Operating EBITDA 4,227,133 3,376,299 25% 780,929 525,861 49% Earnings per share 0.25 (0.19) N/A 0.08 (0.06) N/A
as of December 31
BALANCE SHEET 2019 2018 % Var
Total Assets 58,790,125 58,058,770 1%
Cash and Temporary Investments 1,399,180 1,813,665 (23%) Derivative Asset 0 12,875 (100%) Trade Accounts Receivables 892,951 708,906 26% Other Receivables 92,993 103,396 (10%) Insurance Claims and Premium Receivables 445,535 949,983 (53%) Inventories 3,013,444 3,488,178 (14%) Assets Held for Sale 0 0 Other Current Assets 1,672,392 1,677,671 (0%) Current Assets 7,516,495 8,754,674 (14%) Fixed Assets 19,937,723 17,768,023 12% Investments in an Associate and Other Investments 14,097 14,097 (0%) Other Assets and Noncurrent Accounts Receivables 821,098 818,247 0% Advances to Contractors 1,606,397 2,069,601 (22%) Deferred Income Taxes - net 1,034,620 774,434 34% Goodwill 27,859,694 27,859,694 0% Other Assets 31,335,906 31,536,073 (1%)
Total Liabilities 29,124,637 29,332,804 (1%)
Current Liabilities 10,136,812 10,534,046 (4%) Long-Term Liabilities 16,533,587 16,009,642 3% Deferred Tax Liability 1,587 147,387 (99%) Other Liabilities 2,452,651 2,641,729 (7%)
Consolidated Stockholders’ Equity 29,665,487 28,725,966 3%
Non-controlling Interest 170 193 (12%) Stockholders’ Equity Attributable to Controlling Interest 29,665,317 28,725,773 3%

Financial Results
Income Statement & Balance Sheet Information
CEMEX Holdings Philippines, Inc.
(Thousands of U.S. Dollars, except per share amounts)

Supplemental Information
Newly issued PFRS effective in 2019
PFRS 16, Leases (“PFRS 16”)
In summary, beginning January 1, 2019, PFRS 16 introduces a single lessee accounting model and requires a lessee to recognize, for all leases, allowing exemptions in case of leases with a term of less than 12 months or when the underlying asset is of low value, assets for the right-of-use of the underlying asset against a corresponding financial liability, representing the net present value of estimated lease payments under the contract, with a single income statement model in which a lessee recognizes amortization of the right-of-use asset and interest on the lease liability. After concluding the inventory and measurement of its leases, CEMEX Holdings Philippines, Inc. and Subsidiaries adopted PFRS 16 using the full retrospective approach by means of which it determined an opening cumulative effect in its statement of financial position as of January 1, 2017 as follows:
SELECTED INFORMATION INCOME STATEMENT
December 31, 2017 As originally
(Thousands of Philippine Pesos) reported As modified Revenues 21,784,450 21,784,450 Cost of sales (12,400,901) (12,325,087) Operating expenses (7,396,982) (7,345,047) Other income (expenses), net (226,179) (226,179) Financial expenses and others, net (962,033) (1,119,030) Earnings before income tax 798,355 769,107 Income tax (139,544) (130,770) Net income (loss) 658,811 638,337
SELECTED INFORMATION INCOME STATEMENT As originally reported As modified December 31, 2018 Fourth Fourth (Thousands of Philippine Pesos) Jan-Dec Quarter Jan-Dec Quarter Revenues 23,417,697 5,512,576 23,417,697 5,512,576 Cost of sales (14,307,126) (3,614,866) (14,227,211) (3,594,853) Operating expenses (7,744,129) (1,854,840) (7,669,862) (1,834,969) Other income (expenses), net (42,653) (50,891) (42,653) (50,891) Financial expenses and others, net (1,282,954) (135,936) (1,494,954) (149,844) Earnings before income tax 40,835 (143,957) (16,983) (117,981) Income tax (970,993) (181,476) (953,704) (189,273) Net income (loss) (930,158) (325,433) (970,687) (307,254)
(Thousands of Philippine Pesos) As of January 1, 2017 Assets for the right-of-use 2,187,292 Deferred income tax assets 33,509 Deferred income tax liability (3,053) Lease liabilities 2,309,165 1Retained earnings (85,311)
1 The initial effect in retained earnings refers to a temporary difference between the straight-line amortization expense of the right-of-use asset and the amortization of the financial liability under the effective interest rate method since origination of the contracts. This difference will reverse over the remaining term of the contracts.
CEMEX Holdings Philippines, Inc. and Subsidiaries modified the previously reported income statement for the year ended December 31, 2018 and 2017 to give effect to the retrospective adoption of PFRS 16, as follows:
As of December 31, 2019, 2018 and 2017, assets for the right-of-use amounted to PHP 1,962 million, PHP 2,151 million and                PHP 2,167 million, respectively. In addition, financial liabilities related to lease contracts amounted to PHP 2,163 million as of December 31, 2019, PHP 2,360 million as of December 31, 2018 and PHP 2,318 million as of December 31, 2017. These amounts of financial liabilities as of December 31, 2019 and December 31, 2018 are included in the “Debt Information” section appearing on page 4.

Definitions of Terms and Disclosures
Methodology for translation, consolidation, and presentation of results
CEMEX Holdings Philippines, Inc. (“CHP”) reports its consolidated financial statements under Philippine Financial Reporting Standards (“PFRS”). When reference is made in 2019 and 2018 to consolidated 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 December 31, 2019 has been converted at the end of period exchange rate of 50.64 Philippine pesos per US dollar while the consolidated income statement for the whole year period ended December 31, 2019 has been converted at the January to December 2019 average exchange rate of 51.57 Philippine pesos per US dollar. On the other hand, the consolidated income statement for the three-month period ended December 31, 2019 has been converted at the October to December, 2019 average exchange rate of 50.73 Philippine pesos per US dollar.
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 (debt plus leases) minus cash and cash equivalents.
Amounts provided in units of local currency per US dollar
Exchange Rates January - December Fourth Quarter January - December 2019 2018 2019 2018 2019 2018 average average average average End of period End of period Philippine peso 51.57 52.69 50.73 52.86 50.64 52.58
Amounts provided in units of local currency per US dollar