Standard & Poor’s Upgrades Cemex to Investment Grade

Rhea-AI Summary

Standard & Poor's upgrades Cemex's credit rating to Investment Grade (BBB-) due to strong financial performance and deleveraging strategy. Cemex's EBITDA grew 25% in 2023, with Free Cash Flow doubling.

Insights

Financial Analyst

The upgrade of Cemex's long-term issuer credit rating to Investment Grade (BBB-) by Standard & Poor's is a significant indicator of the company's improved financial health and market trust. This upgrade typically leads to lower borrowing costs for the company, as it is now deemed a lower credit risk by lenders. Investors may view this as a positive signal, potentially leading to a more favorable investment environment for Cemex's securities. The company's strong performance, as evidenced by a 25% growth in EBITDA and a doubling of Free Cash Flow after maintenance capital expenditures, suggests that operational efficiencies and a robust deleveraging strategy are in place. The improved national scale issue-level rating further solidifies Cemex's financial standing within the Mexican market, which could attract more domestic investment and enhance its competitive position.

Market Research Analyst

From a market perspective, the S&P upgrade reflects broader industry trends where construction and building materials companies are recovering and growing post-pandemic. Cemex's performance, particularly its EBITDA growth and Free Cash Flow increase, indicates a strong demand for its products and a successful adaptation to market conditions. The company's strategic decisions and capital allocation have evidently paid off, leading to this rating upgrade. This development could set a precedent for similar companies in the sector, potentially influencing investor sentiment towards the industry as a whole. It's also a sign that Cemex's medium-term strategy aligns well with market expectations and investor confidence, which could have a ripple effect on the sector's stock performance.

Economist

The elevation of Cemex's credit rating to Investment Grade status has macroeconomic implications. It is an indicator of economic stability and growth within the construction sector, which is a significant component of GDP in many countries. For emerging markets like Mexico, such positive developments in key companies can enhance the country's investment profile on a global scale. It also reflects well on the overall business climate, suggesting that corporations are able to successfully navigate economic challenges and implement effective financial strategies. Over time, this could lead to increased foreign direct investment, job creation and a healthier economy, benefiting a broader range of stakeholders beyond just the investors and the company itself.

MONTERREY, Mexico--(BUSINESS WIRE)-- Rating agency Standard & Poor’s (S&P) announced today that it has upgraded Cemex’s long-term global scale issuer credit rating to Investment Grade (BBB-) due to its strong financial and operating performance, deleveraging strategy, and flexible capital allocation.

“Achieving an investment-grade credit rating from S&P is a very important milestone for Cemex,” said Fernando A. González, CEO of Cemex. “While we had record results last year, this rating is recognition of successful execution against our medium-term strategy and consistent financial performance over several years.”

In 2023, Cemex’s EBITDA grew 25%, while Free Cash Flow after maintenance capex more than doubled.

S&P also upgraded Cemex’s national scale issue-level rating (Mexico) scale to mxAA+ from mxAA.

About Cemex

Cemex is a global construction materials company that is building a better future through sustainable products and solutions. Cemex is committed to achieving carbon neutrality through relentless innovation and industry-leading research and development. Cemex is at the forefront of the circular economy in the construction value chain and is pioneering ways to increase the use of waste and residues as alternative raw materials and fuels in its operations with the help of new technologies. Cemex offers cement, ready-mix concrete, aggregates, and urbanization solutions in growing markets around the world, powered by a multinational workforce focused on providing a superior customer experience enabled by digital technologies. For more information, please visit: www.cemex.com

Except as the context otherwise may require, references in this press release to “Cemex,” ”we,” ”us,” ”our,” refer to Cemex, S.A.B. de C.V. (NYSE: CX) and its consolidated subsidiaries. This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. Cemex intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the U.S. federal securities laws. These forward-looking statements reflect Cemex’s current expectations and projections about future events based on Cemex’s knowledge of present facts and circumstances and assumptions about future events, as well as Cemex’s current plans based on such facts and circumstances, unless otherwise indicated. These statements necessarily involve risks, uncertainties, and assumptions that could cause actual results to differ materially from Cemex’s expectations, including, among others, risks, uncertainties, and assumptions discussed in Cemex’s most recent annual report and detailed from time to time in Cemex’s other filings with the U.S. Securities and Exchange Commission and the Mexican Stock Exchange (Bolsa Mexicana de Valores), which factors are incorporated herein by reference, which if materialized could ultimately lead to Cemex’s expectations and/or expected results not producing the expected benefits and/or results. Forward-looking statements should not be considered guarantees of future performance, nor the results or developments are indicative of results or developments in subsequent periods. These factors may be revised or supplemented, and the information contained in this press release is subject to change without notice, but Cemex is not under, and expressly disclaims, any obligation to update or correct this press release or revise any forward-looking statement contained herein, whether as a result of new information, future events or otherwise, or to reflect the occurrence of anticipated or unanticipated events or circumstances. Any or all of Cemex’s forward-looking statements may turn out to be inaccurate. Accordingly, undue reliance on forward-looking statements should not be placed, as such forward-looking statements speak only as of the dates on which they are made. The content of this press release is for informational purposes only, and you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Cemex is not responsible for, and expressly disclaims responsibility for, the content of any third-party website or webpage referenced to or accessible through this press release, nor for any quote, expectation, or projection from any third-party contained herein. Certain data used in this press release was obtained from independent industry publications and reports that Cemex believes to be reliable sources. Cemex has not independently verified this data nor sought the consent of any organizations to refer to their reports in this document.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240313595342/en/

Analyst and Investor Relations

Fabián Orta

+52 (81) 8888-4327

ir@cemex.com

Media Relations

Jorge Pérez

+52 (81) 8259-6666

jorgeluis.perez@cemex.com

Source: Cemex

FAQ

What was Cemex's credit rating upgraded to by Standard & Poor's?

Cemex's credit rating was upgraded to Investment Grade (BBB-) by Standard & Poor's.

What were the reasons for Cemex's credit rating upgrade?

Cemex's credit rating was upgraded due to its strong financial and operating performance, deleveraging strategy, and flexible capital allocation.

By how much did Cemex's EBITDA grow in 2023?

Cemex's EBITDA grew by 25% in 2023.

How much did Cemex's Free Cash Flow increase after maintenance capex in 2023?

Cemex's Free Cash Flow more than doubled after maintenance capex in 2023.

Who is the CEO of Cemex?

Fernando A. González is the CEO of Cemex.