EX-2

EX-99.2 3 d588305dex992.htm EX-2 EX-2

Exhibit 2

LOGO


Operating and Financial Highlights


	January - June									Second Quarter
	2018			2017			% var			2018			2017			% var
Net sales		11,879			10,989			8	%		5,988			5,627			6	%
Gross profit		4,957			4,892			1	%		2,511			2,320			8	%
as % of net sales		42	%		45	%		(3pp	)		42	%		41	%		1pp
Operating earnings before other expenses, net		1,019			1,203			(15	%)		463			435			6	%
as % of net sales		9	%		11	%		(2pp	)		8	%		8	%		0pp
Controlling Interest Net Income (Loss)		(535	)		486			N/A			(635	)		137			N/A
Operating EBITDA		1,724			1,824			(5	%)		838			753			11	%
as % of net sales		15	%		17	%		(2pp	)		14	%		13	%		1pp
Free cash flow after maintenance capital expenditures		1,435			827			74	%		715			1,067			(33	%)
Free cash flow		1,251			591			112	%		645			904			(29	%)
Net debt¹		12,836			13,863			(7	%)		12,836			13,863			(7	%)
Total debt¹		15,300			15,036			2	%		15,300			15,036			2	%
Earnings per share²		(0.10	)		0.09			N/A			(0.12	)		0.03			N/A

In millions of Philippine Pesos, except percentages and earnings per share

¹	U.S. dollar debt converted using end-of-period exchange rate. See Debt Information on page 4 and Exchange Rates on page 7 for more detail.

²	In Philippine Pesos

Net sales increased by 8% year-over-year during the quarter resulting from higher volumes, mitigated by lower prices.

Cost of sales were 5% higher during the quarter due to higher output and input costs. As a percentage of sales, cost of sales was at 58% versus 59% during the same period last year.

Fuel costs accounted for 25% of cost of sales, up from 20% during the same period last year. The increase was mainly driven by higher coal prices.

However, on a sequential basis, fuel costs as a percentage of cost of sales decreased as our coal costs continue to converge closer to 2017 levels.

Power costs accounted for 24% of cost of sales versus 21% during the same period last year. Higher grid rates in both our plants resulted to this increase.

Operating expenses increased by 9%. As a percentage of sales, this resulted to an increase of 1 pp year-over-year during the quarter.

Distribution expenses increased 23% year-over-year due to higher fuel costs, higher dispatched volumes benefitting from our debottlenecking efforts, and upgrading of vessels.

As a percentage of sales, distribution expenses increased from 19% to 22%.

Selling and administrative expenses declined by 10% during the quarter, a result of continued efforts to optimize costs.

As a percentage of sales, selling and administrative expenses declined from 15% to 12%.

Operating EBITDA increased by 11% during the quarter, mainly driven by higher sales.

Operating EBITDA margin during the quarter was 14%, slightly higher than the same period last year.

Controlling interest net income was negative during the quarter due to higher income tax expense mainly from the utilization of Net Operating Loss Carry-Over (NOLCO) credits for tax on intra-group dividends and subsequent decrease in amount of deferred tax assets (non-cash expenses).

Total debt at the end of June 2018 stood at PHP 15,300 million, of which PHP 13,837 million pertained to long-term debt owed to BDO Unibank, Inc.


2018 Second Quarter Results		Page 2


Operating Results


Domestic Gray Cement	January - June			Second Quarter			Second Quarter 2018
	2018 vs. 2017			2018 vs. 2017			vs. First Quarter 2018
Volume		12	%		8	%		(1	%)
Price in USD		(7	%)		(5	%)		2	%
Price in PHP		(3	%)		(0	%)		3	%

Our domestic cement volumes increased by 8% year-over-year during the quarter, driven by higher public infrastructure spending and a strong residential sector.

On a year-to-date basis, domestic cement volumes grew 12% versus the same period of the prior year. This performance reflects increased construction activity from both public and private sectors, progress from our debottlenecking efforts, and favorable weather conditions compared to the first half of last year.

Our domestic cement prices continued to recover during the quarter with a 3% sequential increase. Prices for the month of June were 6% higher than in the month of December last year.

Against the same period last year, prices during the first six months were still 3% lower as cement prices were higher at the start of 2017. For the second quarter, however, prices had already converged closer to prices of the same period last year.


2018 Second Quarter Results		Page 3


Operating EBITDA, Free Cash Flow and Debt Information

Operating EBITDA and Free Cash Flow


				January - June						Second Quarter
	2018			2017			% var			2018			2017			% var
Operating earnings before other expenses, net		1,019			1,203			(15	%)		463			435			6	%
+ Depreciation and operating amortization		705			621						375			319

Operating EBITDA		1,724			1,824			(5	%)		838			753			11	%
- Net financial expenses		445			459						237			200
- Maintenance capital expenditures		362			196						283			147
- Change in working capital		(747	)		58						(524	)		(862	)
- Income taxes paid		243			306						139			204
- Other cash items (net)		(14	)		(22	)					(12	)		(3	)

Free cash flow after maintenance capital expenditures		1,435			827			74	%		715			1,067			(33	%)
- Strategic capital expenditures		184			237						70			163

Free cash flow		1,251			591			112	%		645			904			(29	%)

In millions of Philippine Pesos

Debt Information


	Second Quarter									First Quarter
	2018			2017			% var			2018
Total debt¹		15,300			15,036			2	%		15,327
Short term		3	%		0	%					3	%
Long term		97	%		100	%					97	%

Cash and cash equivalents		2,464			1,173			110	%		1,851

Net debt		12,836			13,863			(7	%)		13,476


	Second Quarter
	2018			2017
Currency denomination
U.S. dollar²		3	%		7	%
Philippine peso		97	%		93	%
Interest rate
Fixed		43	%		37	%
Variable		57	%		63	%

In millions of Philippine Pesos, except percentages

¹	U.S. dollar debt converted using end-of-period exchange rate. See Exchange Rates on page 7 for more detail.

²	Pertains to related party loans with CEMEX Asia B.V.


2018 Second Quarter Results		Page 4


Financial Results

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

(Thousands of Philippine Pesos in nominal terms, except per share amounts)


	January - June												Second Quarter
	2018			2017			% var			2018			2017			% var
INCOME STATEMENT
Net sales		11,879,333			10,989,341			8	%		5,988,074			5,626,964			6	%
Cost of sales		(6,922,603	)		(6,096,885	)		(14	%)		(3,477,178	)		(3,307,369	)		(5	%)

Gross profit		4,956,730			4,892,456			1	%		2,510,896			2,319,595			8	%
Operating expenses		(3,937,242	)		(3,689,719	)		(7	%)		(2,048,106	)		(1,884,971	)		(9	%)

Operating earnings before other expenses, net		1,019,488			1,202,737			(15	%)		462,790			434,624			6	%
Other income (expenses), net		14,319			21,780			(34	%)		12,043			2,614			361	%

Operating earnings		1,033,807			1,224,517			(16	%)		474,833			437,238			9	%
Financial expenses, net		(444,663	)		(458,612	)		3	%		(236,919	)		(200,134	)		(18	%)
Foreign exchange loss, net		(411,142	)		(129,327	)		(218	%)		(163,358	)		(41,282	)		(296	%)

Net income (loss) before income taxes		178,002			636,578			(72	%)		74,556			195,822			(62	%)
Income tax expenses		(712,842	)		(150,525	)		(374	%)		(709,678	)		(59,308	)		(1097	%)

Consolidated net income (loss)		(534,840	)		486,053			N/A			(635,122	)		136,514			N/A
Non-controlling interest net income (loss)		16			15			7	%		6			7			(14	%)

Controlling Interest net income (loss)		(534,824	)		486,068			N/A			(635,116	)		136,521			N/A

Operating EBITDA		1,724,225			1,824,128			(5	%)		837,777			753,433			11	%

Earnings per share		(0.10	)		0.09			N/A			(0.12	)		0.03			N/A


	as of June 30		as of June 30		as of December 31
	2018		2017		% Var			2017		% Var
BALANCE SHEET
Total Assets		52,277,352		51,340,280		2	%		51,751,676		1	%
Cash and Temporary Investments		2,463,598		1,173,039		110	%		1,058,267		133	%
Trade Accounts Receivables		910,784		986,888		(8	%)		833,259		9	%
Other Receivables		145,669		78,938		85	%		101,002		44	%
Inventories		2,688,193		3,179,122		(15	%)		3,258,252		(17	%)
Assets held for sale		22,653		0					90,629		(75	%)
Other Current Assets		1,369,243		1,442,582		(5	%)		1,310,504		4	%
Current Assets		7,600,140		6,860,569		11	%		6,651,913		14	%
Fixed Assets		15,454,036		15,592,084		(1	%)		15,582,732		(1	%)
Investments in an associate and other investments		16,197		15,273		6	%		15,407		5	%
Other assets and noncurrent accounts receivables		767,264		385,321		99	%		716,700		7	%
Deferred income taxes - net		580,021		627,339		(8	%)		925,230		(37	%)
Goodwill		27,859,694		27,859,694		0	%		27,859,694		0	%
Other Assets		29,223,176		28,887,627		1	%		29,517,031		(1	%)

Total Liabilities		23,083,118		22,128,537		4	%		22,329,280		3	%
Current Liabilities		7,528,970		6,261,559		20	%		6,873,552		10	%
Long-Term Liabilities		14,618,237		15,036,198		(3	%)		14,674,110		(0	%)
Other Liabilities		935,911		830,780		13	%		781,618		20	%

Consolidated Stockholders’ Equity		29,194,234		29,211,743		(0	%)		29,422,396		(1	%)
Non-controlling Interest		205		231		(11	%)		221		(7	%)
Stockholders’ Equity Attributable to Controlling Interest		29,194,029		29,211,512		(0	%)		29,422,175		(1	%)


2018 Second Quarter Results		Page 5


Financial Results

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

(Thousands of U.S. Dollars, except per share amounts)


	January - June									Second Quarter
	2018			2017			% var			2018			2017			% var
INCOME STATEMENT
Net sales		227,606			219,549			4	%		113,986			112,401			1	%
Cost of sales		(132,636	)		(121,806	)		(9	%)		(66,190	)		(66,066	)		(0	%)

Gross profit		94,970			97,743			(3	%)		47,796			46,335			3	%
Operating expenses		(75,437	)		(73,715	)		(2	%)		(38,987	)		(37,653	)		(4	%)

Operating earnings before other expenses, net		19,533			24,028			(19	%)		8,809			8,682			1	%
Other income (expenses), net		274			435			(37	%)		229			52			340	%

Operating earnings		19,807			24,463			(19	%)		9,038			8,734			3	%
Financial expenses, net		(8,520	)		(9,162	)		7	%		(4,510	)		(3,998	)		(13	%)
Foreign exchange loss, net		(7,877	)		(2,584	)		(205	%)		(3,110	)		(825	)		(277	%)

Net income (loss) before income taxes		3,410			12,717			(73	%)		1,418			3,911			(64	%)
Income tax expenses		(13,658	)		(3,007	)		(354	%)		(13,509	)		(1,185	)		(1040	%)
Consolidated net income (loss)		(10,248	)		9,710			N/A			(12,091	)		2,726			N/A
Non-controlling interest net income (loss)		0			0			0	%		0			0			0	%

Controlling Interest net income (loss)		(10,248	)		9,710			N/A			(12,091	)		2,726			N/A

Operating EBITDA		33,036			36,443			(9	%)		15,948			15,050			6	%


	as of June 30		as of June 30		as of December 31
	2018		2017		% Var			2017		% Var
BALANCE SHEET
Total Assets		980,078		1,017,243		(4	%)		1,036,485		(5	%)
Cash and Temporary Investments		46,187		23,242		99	%		21,195		118	%
Trade Accounts Receivables		17,075		19,554		(13	%)		16,689		2	%
Other Receivables		2,731		1,564		75	%		2,023		35	%
Inventories		50,397		62,990		(20	%)		65,256		(23	%)
Assets held for sale		425		0					1,815		(77	%)
Other Current Assets		25,670		28,583		(10	%)		26,247		(2	%)
Current Assets		142,485		135,933		5	%		133,225		7	%
Fixed Assets		289,727		308,938		(6	%)		312,092		(7	%)
Investments in an associate and other investments		304		303		0	%		309		(2	%)
Other assets and noncurrent accounts receivables		14,384		7,635		88	%		14,354		0	%
Deferred income taxes - net		10,874		12,430		(13	%)		18,531		(41	%)
Goodwill		522,304		552,005		(5	%)		557,975		(6	%)
Other Assets		547,866		572,372		(4	%)		591,168		(7	%)

Total Liabilities		432,754		438,449		(1	%)		447,212		(3	%)
Current Liabilities		141,151		124,065		14	%		137,664		3	%
Long-Term Liabilities		274,058		297,923		(8	%)		293,894		(7	%)
Other Liabilities		17,546		16,461		7	%		15,654		12	%

Consolidated Stockholders’ Equity		547,323		578,794		(5	%)		589,273		(7	%)
Non-controlling Interest		4		5		(23	%)		4		(13	%)
Stockholders’ Equity Attributable to Controlling Interest		547,320		578,789		(5	%)		589,268		(7	%)


2018 Second Quarter Results		Page 6


Definitions of Terms and Disclosures

Methodology for translation, consolidation, and presentation of results

CEMEX Holdings Philippines, Inc. (“CHP”) reports its consolidated financial statements under Philippine Financial Reporting Standards (“PFRS”). When reference is made in 2018 and 2017 to consolidated financial statements, it means CHP financial information together with its subsidiaries.

For the purpose of presenting figures in U.S. dollars, the consolidated balance sheet as of June 30, 2018 has been converted at the end of period exchange rate of 53.34 Philippine pesos per US dollar while the consolidated income statement for the six-month period ended June 30, 2018 has been converted at the January to June, 2018 average exchange rate of 52.19 Philippine pesos per US dollar. On the other hand, the consolidated income statement for the three-month period ended June 30, 2018 has been converted at the April to June, 2018 average exchange rate of 52.53 Philippine pesos per US dollar.

Definition of terms

PHP refers to Philippine Pesos.

pp equals percentage points.

Prices all references to pricing initiatives, price increases or decreases, refer to our prices for our products.

Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization.

Free cash flow equals operating EBITDA minus net interest expense, maintenance and strategic capital expenditures, change in working capital, taxes paid, and other cash items (net other expenses less proceeds from the disposal of obsolete and/or substantially depleted operating fixed assets that are no longer in operation).

Maintenance capital expenditures investments incurred for the purpose of ensuring the company’s operational continuity. These include capital expenditures on projects required to replace obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or company policies.

Strategic capital expenditures investments incurred with the purpose of increasing the company’s profitability. These include capital expenditures on projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs.

Change in Working capital in the Free cash flow statements only include trade receivables, trade payables, receivables and payables from and to related parties, other current receivables, inventories, other current assets, and other accounts payable and accrued expense.

Net debt equals total debt minus cash and cash equivalents.

Exchange Rates

January - June

Second Quarter

January - June

2018

2017

2018

2017

2018

2017

average

End of period

Philippine peso

52.19

50.05

52.53

50.06

53.34

50.47

Amounts provided in units of local currency per US dollar


2018 Second Quarter Results		Page 7