Yahoo Finance Cemex Divests Guatemala Business to Holcim Group, Stock Up
Cemex, S.A.B. de C.V. CX has been witnessing an improvement in investors’ sentiment these days on the back of various divestitures and acquisitions announced recently. On Sept. 10, Cemex stock gained 3% after it announced the divestiture of its operations in Guatemala to Holcim Group for approximately $200 million.
The deal mainly consists of a grinding mill, which had an installed capacity of nearly 0.6 million metric tons per year at 2023-end, three ready mix plants and five distribution centers.
On Sept. 4, CX decided to sell its remaining 34.8% interest in Neoris N.V. for approximately $209 million in cash, subject to certain adjustments related to cash, debt, transaction expenses, and closing working capital. Cemex will continue its commercial relationship with Neoris post deal closing, which is currently expected to take place by 2024-end.
CX’s Stock to Rally on Solid Portfolio Rebalancing Strategy
In 2024, the company has accelerated the execution of its portfolio rebalancing strategy. So far, it has announced the sale of more than $2 billion in assets. The company now intends to redeploy most of the divestment proceeds in developed markets, primarily in the United States. These efforts are expected to drive sustainable growth for CX’s business in the short and medium term.
CX will prioritize this divestment proceeds toward aggregates, urbanization solutions, and cement, with a strong focus on lower-carbon and circular economy initiatives, along with other general corporate purposes. For this, the company is targeting bolt-on acquisitions in developed markets.
To this, CX recently announced that it has acquired a majority stake in a recycling company, RC-Baustoffe Berlin GmbH & Co. KG, part of Ulm, Germany-based Heim Group.
In July, Cemex partnered with the Ellen MacArthur Foundation to continue to leverage the potential of the cement value chain in circularity. The Ellen MacArthur Foundation is the world’s leading circular economy network, working with ambitious, like-minded organizations globally.
Earlier in May, it collaborated with the Mission Possible Partnership to conduct an analysis of the potential of decarbonization levers at Cemex's Balcones cement plant in Texas in partnership with the Bezos Earth Fund. This analysis will accelerate Cemex's net-zero carbondioxide emissions commitment by 2050.
Will Cemex’s Stock Gain in the Future?
Owing to the macroeconomic headwinds, CX’s stock plunged 12.9% in the past three months compared with the Zacks Building Products - Concrete and Aggregates industry’s 11.3% decline. The overall industry is plagued with a shortage of skilled laborers and rising wage costs.
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Nonetheless, the stock improved from a 25.5% decline in the year-to-date period, when the industry fell just 0.7%.
An uptick in spending on infrastructure and public construction is set to continue driving growth in the industry. The industry is also poised to benefit from improvements in the single-family residential construction market and advantageous pricing dynamics amid challenging conditions. Companies like Vulcan Materials Company VMC, Eagle Materials Inc. EXP and Summit Materials, Inc. SUM have been leveraging these favorable trends to their advantage.
The above-mentioned companies currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Potential Risks for Cemex
In the first half of 2024, Cemex witnessed lower Cement volume in the United States, Europe and SCAC regions. Ready-mix volume was down in almost all the regions, excluding Mexico, where it was up just 2% in the first half. Aggregates volume was also low in EMEA and SCAC regions.
Pricing declined in MEC regions for Cement and Aggregates. For Ready-mix, pricing was low in EMEA and SCAC regions.
For 2024, the company expects Ready-mix and Aggregates volume to decline across the regions (barring Mexico). Cement volume is likely to decline in the United States, MEA and SCAC regions in 2024.
CX’s Zacks Rank
Cemex presently carries a Zacks Rank of 3.
3 Concrete & Aggregates Stocks to Keep an Eye On
Eagle Materials: This Dallas, TX-based company produces and supplies heavy construction materials, light building materials and materials used for oil and natural gas extraction in the United States. Eagle Materials has benefited from a proactive maintenance strategy, effectively managing costs and ensuring smooth operations. It has also made significant strides in sustainability and key projects.
Earnings for fiscal 2024 are expected to grow 13.2%.
Vulcan Materials Company: This Birmingham, AL-based company produces and supplies construction aggregates, asphalt mix as well as ready-mixed concrete. The company’s focus on four strategic initiatives — Commercial Excellence, Operational Excellence, Strategic Sourcing, and Logistics Innovation — should enhance price performance and operating efficiencies.
VMC surpassed earnings estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 2.5%. Earnings for 2024 are expected to rise 11.7%.
Summit Materials: Based in Denver, CO, this is a construction material company. Summit Materials has been witnessing solid pricing growth across all lines of business and expects the trend to continue in 2024. The company has also been optimizing its portfolio as it intends to shift toward a more materials-led portfolio.
Earnings for 2024 are expected to rise 7%. SUM surpassed earnings estimates in all the trailing four quarters, with the average surprise being 19.3%.
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Cemex S.A.B. de C.V. (CX) : Free Stock Analysis Report
Vulcan Materials Company (VMC) : Free Stock Analysis Report
Eagle Materials Inc (EXP) : Free Stock Analysis Report
Summit Materials, Inc. (SUM) : Free Stock Analysis Report
