CEMEX capital structure gains strength
Company says significant progress being made towards investment-grade capital structure
CEMEX say they have made significant progress in their initiatives to bolster the company’s path towards regaining an investment-grade capital structure.
These initiatives include several transactions and efforts intended to strengthen CEMEX’s EBITDA and cash flow generation as well as to reduce debt, which are expected to dampen the effects of continued market volatility.
For the year to date, CEMEX have announced divestments of close to US$2 billion, about half of which have been completed and the rest are expected to close by early next year.
As such, the company will be able to meet its US$1.5–2.0 billion 2017 asset disposal target ahead of schedule.
With the proceeds from asset divestments, as well as free cash flow generation and cash on hand, CEMEX have reduced total debt plus perpetual securities by more than US$2 billion in the year to date, in line with this year’s target.
Taking into account this reduction in debt, as well as expected additional debt payments before the year end, CEMEX are on target to reach their leverage ratio target of about 4.25 times by the end of 2016.
Moreover, with the proceeds from pending asset divestments, as well as continued favorable free cash flow generation, CEMEX say they are also well on track to reach their debt reduction target of US$3.0–3.5 billion by the end of 2017.
The company is also currently on course to achieve its initiatives to increase free cash flow by US$670 million by the end of this year, and says it expects to meet its cost-and-expense-reduction target of US$150 million, which has contributed to the improvement in profitability during 2016.
Furthermore, CEMEX have increased their flexibility to optimize the use of proceeds from asset sales and free cash flow by enlarging their revolving credit facility under their facilities agreement, and now have no significant maturities until March 2018.
Commenting on the company’s current position, chief executive officer Fernando A. Gonzalez (pictured) said: ‘Despite challenging market conditions, working on the variables we can control means we are well on the way to significantly strengthening our capital structure, and we expect to continue to be able to do so in the near future.’
