(Bloomberg) -- Shares of Cemex SAB de CV rose on Thursday after the Mexican cement maker posted better-than-expected operating income, outweighing a sales miss due to poor weather in its largest market and a weaker peso.
Operating income in the second quarter was $665.9 million, according to a Thursday filing, above the average estimate of $615.2 million compiled by Bloomberg. The Monterrey, Mexico-based company said its Ebitda margin, a measure of profitability that excludes items such as taxes and interest, was the highest since 2016, propelled by higher prices.
The stock rose 4.1% to 11.85 pesos (65 cents) at 10:55 a.m. in Mexico City trading. The gain pared the stock’s year-to-date decline to about 10%, which is more than the drop of Mexico’s benchmark equity index.
The profitability update offset disappointing sales in Mexico and the US, which are the markets that generate the most sales for the company. Cemex said it faced weather challenges in the countries and experienced headwinds related to the peso’s depreciation. The company has also faced increased competition in markets such as the Middle East and Africa.
Second-quarter revenue and controlling interest net income came in below expectations.
See also: Cemex Announces Joint Venture to Accelerate US Growth
The company expects a low to mid-single digit percentage increase in Ebitda in 2024, unchanged from last quarter’s estimate. In Mexico, the incoming government’s agenda is seen as “supportive” of the company, due to plans to increase housing by 1 million units and build out infrastructure nationally, communications and investor relations executive Lucy Rodriguez said on the company’s earnings call.
Earlier this year, Cemex regained its investment-grade credit rating as it works to reduce its debt load. Actinver analyst Ramon Ortiz estimates leverage will be 2 times net ebitda at the end of the year and 1.8 times Ebitda at the end of 2025. In its statement, Cemex said the cost of its debt would be stable this year.
(Updates market trading and adds details from report.)
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