Cemex 2013 Annual Report Download - page 15

Embracing a holistic approach
to value creation
At CEMEX, we are taking a holistic approach to value cre-
ation. We are proactively improving our operating perfor-
mance, while optimizing our portfolio of assets to gener-
ate an increasingly higher return on capital employed.
To improve our operating performance, we continue to
intensify our focus on the variables within our control,
particularly maintaining our cost discipline, implement-
ing our value-driven pricing strategy, and outsourcing
support activities. We remain vigilant about our cost
base—seizing every opportunity to drive down costs and
maximize our operating efficiency. In a rapidly changing
business environment, we continually adapt our global
operations network to meet current market dynam-
ics. For example, in 2013, we achieved approximately
US$100 million in savings during the second half of the
year through our cost-reduction initiatives in Mexico and
Northern Europe. These savings include capacity rational-
ization, freight optimization, and cost management.
We also continue to implement our value-before-vol-
ume strategy in all of our regions. Designed to capture
the full value of our products and services, this global
initiative concentrates our efforts on achieving sustain-
able margins and returns in all of our core businesses.
Thus far, in our cement business, we have implemented
the gross-minus logic, price roadmaps, and other pric-
ing elements in countries that represent more than 80%
of our volumes. In our ready-mix concrete business, we
have launched companywide initiatives to promote the
de-bundling of our ready-mix concrete prices into their
different value elements. As part of these initiatives,
our first and most important objective in the short to
medium term is to recover full freight costs in all of
our markets. In our aggregates business, we have now
started the implementation of this strategy in our major
markets. Our goal is to improve our aggregates prices
to enable us to recover the full costs of production, in-
cluding the replenishment of depleted reserves at mar-
ket value and the capital costs associated with them.
We further recognize that we can extract greater value
by outsourcing certain support activities to best-in-class
companies rather than proceeding with those activities
on our own. With that in mind, in July 2012, we executed
a 10-year strategic agreement with IBM, which is ex-
pected to generate savings of approximately US$1 billion
during the life of the contract. Under this agreement,
IBM is providing finance, accounting, and human resource
La Samaria Educational
Institute, Colombia
In cement, ready-mix con-
crete and aggregates, we
will continue to improve the
transparency of the value
we provide to our customers
through our products and
services by revisiting our
surcharges and service fees
in each market.
We are proactively improving
our operating performance,
while optimizing our portfolio
of assets to generate an
increasingly higher return on
capital employed.
improving
operating
performance
optimizing
our portfolio
improved
return on
capital
=
delivering on our commitment to value creation for our
investors
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