Cemex 1997 Annual Report Download - page 39

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33
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Improved efficiency
Vilanova plant, Spain.
CEMEX SpainÕs production costs,
in dollar terms, dropped 13%
versus last year.
CEMEX Mexico
An improving Mexican econo-
my and greater dedication to
sales efforts drove increased
net sales.
In dollar terms, MexicoÕs
EBITD continues to improve.
Operating Margin
As a consequence of the gross margin decrease,
the Operating Margin in Mexico went from 30.9%
in 1996 to 29.7% in 1997. Operating income
reached $4.112 billion pesos, 2% less than in 1996,
although, in dollars, it grew 10% to US$510 million.
Operating Cash Flow
Operating Cash Flow at CEMEX Mexico declined
4% in real terms, and reached $5.162 billion
pesos, but increased 9% in dollar terms to US$640
million for the year.
SPAIN
Sales
CEMEX Spain’s operations reported Net Sales of
Ptas. 109.795 billion during the year, 20% more
than 1996. This increase was principally due to
strong volume growth, as well as the incorporation of
Cementos Especiales de las Islas, S.A. (excluding
Islas, sales grew 13%). Net sales increased less in
dollar terms, 3%, because of the peseta’s deprecia-
tion vis-à-vis the US dollar.
Prices and Volumes
Valenciana’s domestic cement sales volume grew
21% in 1997, versus 1996, significantly exceeding
the growth in domestic demand. Likewise, ready-
mix volume increased 17% during the year. Higher
domestic demand caused exports to decrease 4%
during the year.
In peseta terms, the average price of domestic
cement decreased 3% vis-à-vis the preceding year.
Additionally, the average price of ready-mix dropped
1% for the period.
Costs
The average cost of sales per metric ton (excluding
depreciation) remained relatively stable when com-
pared to 1996. Despite better labor costs, which
resulted in a 6% drop in fixed costs, variable costs
increased 6% as a result of greater maintenance and
fuel costs. Nevertheless, in dollar terms, production
costs decreased 13% year-to-year.
Net sales
Operating cash flow
millions of dollars