Mexico

Mexico's Cemex, the world's No. 3 cement maker, cut its pretax earnings and free cash flow outlook for 2009 on Wednesday after the company sold its Australian assets, sending its shares down sharply.

Cemex shares fell after the company posted weaker-than-expected quarterly results late on Tuesday. It was down down 5.7 percent to 14.05 pesos in Wednesday afternoon trade in Mexico. The stock was down 7.3 percent to $10.50 inNew York.

Cemex (CMXCPO.MX) (CX.N) said it now sees earnings before interest, taxes, depreciation and amortization (EBITDA) of $2.9 billion in 2009, down from an earlier estimate of $3.1 billion and far below 2008's level of $4.3 billion.

That projection excludes earnings that would have come in from its Australian assets in the fourth quarter, Cemex said.

After buying Australia's Rinker in 2007 in one of the biggest emerging market takeovers at the time, Cemex was hit by the U.S. housing crisis and a collapse in sales in Europe, raising investor concerns it could default on its debt.

That forced it to sell its Australian operations to Switzerland's Holcim (HOLN.VX) for $1.7 billion in October.

But Hector Medina, Cemex's executive vice president of finance and legal, told a news conference the company had now covered its debt obligations until mid-2011.

"Our (debt) maturities from here until 2011 are now history. They are not maturities... we've already pre-paid them," Medina said, referring to about $3 billion due by then.

Cemex expects to generate $1.2 billion in free cash flow in 2009, lower than a $1.6 billion estimate in July. But the company says that money, coupled with income from the Australian sale and almost $1.8 billion raised in an equity offering in September, has put it on a firm footing.

ALL EYES ON REBOUND

Medina said third-quarter sales signaled the company may be ending its long slump as they were similar to the second quarter at $4.2 billion, but he was reluctant to say that the company's sales had now touched bottom.

As the U.S. economy goes through its worst recession in decades, Cemex, the top cement maker in the United States, said it expects its U.S. cement volumes to fall 30 percent in 2009.

"This is a recovery from a very deep crisis and as such we have little visibility," Medina said. "We see some signs but they are still not showing a clear recovery," he added.

Investors are eager to see how fast Cemex can recover its sales now that the company has negotiated its debt refinancing and has only has minor commercial paper debt outstanding.

In the third quarter, Cemex earned $121 million, 40 percent lower than the same period a year ago, and lower than analysts expected.

But the fall in net profit was not as great as in previous quarters and Cemex said it saw signs of improvement in some of its markets, notably the United Kingdom.

Medina said Cemex's U.S. cement sales could start to improve in early 2010 as public works pick up, driven by the U.S. government's stimulus program, but analysts shared his cautious sentiment.

"The recovery in construction activity will be slow and should lag an overall economic rebound, especially in the main markets for Cemex," Credit Suisse analyst Vanessa Quiroga said in a report.