Cemex 1997 Annual Report Download - page 43

Download and view the complete annual report

Please find page 43 of the 1997 Cemex annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

37
Operating Margin
CEMEX USA’s operating income decreased 12% to
US$28 million. Operating Margin consequently
declined from 7.7% in 1996 to 6.4% in 1997.
Individually, the operating margin of the cement
business (including ready-mix and aggregates)
was 8%, as compared to 10% for 1996.
Operating Cash Flow
Operating Cash Flow decreased 9% to US$45 mil-
lion after US$11 million charges related to operat-
ing leases. Before these charges, operating cash
flow decreased 7% to US$56 million.
CENTRAL AMERICA AND THE CARIBBEAN
Sales
During 1997, the Net Sales of CEMEX’ operations
in Central America and the Caribbean were US$207
million, 19% higher than 1996, thanks to the con-
tinued expansion of operations and greater market
penetration.
Operating Margin
The region’s Operating Margin was 20% for the
year, with operating income of US$41 million.
Operating Cash Flow
Operating Cash Flow remained stable during
1997, as compared to 1996, at US$57 million and
US$56 million, respectively.
FINANCIAL POSITION
Net Debt
Net Debt, which includes derivative financing,
decreased by over US$200 million vis-á-vis 1996,
representing a 5% reduction, to US$4.738 billion.
This is a significant reduction because it was accom-
plished despite the US$231 million purchase of
CEMEX’ shares and the shares of some subsidiaries,
including shares that were part of CEMEX’ Share
Repurchase Program, and the investment of US$93
million in the acquisition of a 30% interest in the
capital stock of Rizal Cement in the Philippines.
The cost of the company’s debt in 1997 averaged
8.2% for dollar-denominated debt, 5.6% for pesetas,
and 18.7% for bolivar-denominated debt.
Derivative Financing
At the close of 1997, Equity Derivative Financing
amounted to approximately US$500 million. The
drop was mainly due to the expiration of the SRUs
(Share Repurchase Units) in the amount of US$90
million. The expiration of the SRUs resulted in extra-
ordinary gains of approximately US$36 million.
Hedges
To hedge its financial risk, CEMEX has made use
of hedge agreements. At year-end 1997, any trans-
actions currently in force are designed to provide
the company with coverage against fluctuations in
interest rates, currency exchange rates and share
prices. The financial effect of these hedging opera-
tions is reflected either as a part of the financial
expenses line item or as a part of stockholders’
equity, as the case may be.
FINANCIAL RATIOS
Leverage
The Leverage ratio of 49.6% (total debt/total capi-
talization) at the close of 1997 was lower than the
53.0% leverage ratio on December 31, 1996.
The financial leverage ratio, measured by com-
paring the total debt on the balance sheet to the
operating cash flow throughout the last 12 months,
decreased from 4.39 times in 1996 to 3.87 times in
1997, which represents a 12% decrease for the year.
Interest Coverage
Central America and
the Caribbean net sales
millions of dollars
With greater territorial cover-
age and increasing trading
activity, the sales in Central
America and the Caribbean
increased substantially.