Cemex 1997 Annual Report Download - page 40

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34
VENEZUELA
Sales
In 1997, Net Sales reached Bs. 233.412 billion, a 5%
increase in real terms over 1996, mostly as a result of
volume growth. In dollars, net sales rose 36% to
US$462 million as a result of the bolivar’s relative
stability versus the US dollar.
Prices and Volumes
Vencemos’ domestic cement sales volume increased
15%, compared to the preceding year, because of
growing domestic demand. Ready-mix sales volume
grew 40% due to new regional market expansion. As
a result of rising domestic demand, the volume of
Venezuelan exports dropped 4% for the year, but still
represented 48% of Vencemos’ total sales volume.
In 1997, cement prices decreased 3% in real
terms, while ready-mix prices increased 1% com-
pared to 1996. In dollars, both cement and ready-
mix prices rose 26% and 32%, respectively, because
of 38% inflation for the year. The bolivar devalued at
a rate of only 6% during the same period.
Costs
The average cost of sales per metric ton of cement
(excluding depreciation) increased 15% in constant
bolivars during 1997, as compared to 1996. Fixed
costs remained stable because increased labor costs
were offset by decreased maintenance costs.
However, variable costs grew 52% due to increases
in the cost of electric power and purchased raw
materials.
Gross Margin
Gross Margin remained at 42.7% throughout the
year on gross income of Bs. 99.602 billion, which
grew 2% in absolute terms from 1996 to 1997.
Operating expenses decreased 9% during 1997.
They now represent 8.9% of sales, versus 9.3% in
1996, as a result of the optimization programs that
have been implemented.
Operating Margin
As a result of the above, Operating Margin remained
constant at 34.6%, during 1996 and 1997, on oper-
ating income of Bs. 80.823 billion, 5% more in real
terms than 1996.
CEMEX Spain
Net sales growth is evidence
of the Spanish economyÕs
recovery. Valenciana's oper-
ating cash flow recovered in
1997.
Gross Margin
Gross Margin decreased from 36.4% in 1996 to
33.6% in 1997 because of a substantial increase in
depreciation expenses resulting from the restatement
of assets. Gross profit grew 11%, reaching Ptas.
36.875 billion (US$243 million).
Operating expenses rose 13% during the year as
a result of increased transportation and advertising
expenses. Nevertheless, operating expenses decreased
year-to-year as a percentage of sales and represent
only 12.1% of sales, as opposed to 12.8% in 1996.
Operating Margin
Operating Margin decreased from 23.6% in 1996 to
21.5% in 1997 on operating income of Ptas. 23.634
billion, 10% more than the operating income for the
preceding year.
Operating Cash Flow
Operating Cash Flow increased 25% to Ptas. 37.719
billion (US$249 million).
Net sales
Operating cash flow
millions of dollars