www.cemex.com CEMEX global profile CEMEX worldwide is: One of - - PowerPoint PPT Presentation

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CEMEX global profile

CEMEX worldwide is:

• One of leaders in each of our core businesses:

Cement, Concrete and Aggregates

• Largest concrete producer in the world
• Present in more than 50 nations, Trade

relations with more than 100 nations Key Figures, 2014

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Key Figures, 2014

• Annual Sales US$

15.7 billion

• EBITDA, US$

2.7 billion

• Worldwide employees

44,000 Capacities, 2014

• Cement

94 million tons

• Aggregates

168 million tons

• Concrete

56 million m³

CEMEX in the Baltics

Timeline

• 1906 – founded as Cementos Hidalgo
• 1976 – listed Mexico stock exchange
• 1980s – Enters USA market
• 1990s (early) – Entry to Spain, Venezuela,

Caribbean, Central America

• 1990s (late) – Entry to Egypt, Philippines,

Costa Rica, further expansion in USA

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Costa Rica, further expansion in USA

• 1999 – listed on the NYSE
• 2000s (early) – Entry to Thailand, Puerto Rico,

Nicaragua…

• 2005 – acquisition of RMC group (20 new

markets, including Latvia)

• 2007-2010 – investment into new production

capacity in Latvia

• 2008 – Acquisition of Rinker

CEMEX investment in Latvia

Total investment

• > € 330 million

Operations

• Cement plant (1)

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• Concrete plants (7)
• Aggregates quarries (1 + 2)

Key data

• EBITDA € 22 million

Cement Aggregates Concrete Riga Broceni Liepaja Daugavpils Sauleskalns

Expansion of exports post-crisis period

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Main export markets

• Russia
• Finland
• Estonia
• Sweden
• Belarus

Benefits brought as an international investor

• Capital investment – growth in exports, value add, jobs (direct, in-direct)
• Transparency – tax compliance, code of ethics for all transactions
• Ethical workplace – focus on safety, internal ethics code

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• Environmental responsibility – CO2, emissions, re-cultivation
• Technology transfer – most advanced plant in the region, concrete roads
• Investment in local comunities – charities, education, infrastructure

Example – CO2 footprint

900 1,100 1,150 1,050 1,000 950

• 37%

1,115

CO2 reduction equal to emissions of ~200,000 cars (driving 20,000km annual)

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725 766 600 900 850 800 650 700 750 Old plant 2008 EU benchmark 3rd period New plant 2014

(driving 20,000km annual)

Some positive points of doing business in Latvia

• Generally good security (NATO member, public safety)
• Access to Russia, Scandinavia, Baltics markets
• EU membership, with legal framework and currency

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• Higher than average GDP growth for Europe
• Labor cost benefits compared to Western Europe
• Positioning as a European outpost with access to CIS

Issues facing CEMEX as investor in Latvia

• Energy cost and MPC (OIK)
• Reliability of infrastructure, especially roads
• Weak enforcement leading to unfair competition:

Taxes and grey market

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Quality and certifications Safety and regulation of transport

• Competitivity of SOEs, especially rail transport
• Legal system transparency and speed
• Workforce skills and education

Example: Energy Cost and MPC (OIK)

10 20 30 2014 2013 2012 2011 2010 2009 2008 +209% OIK evolution Other Electricity 2015 BGT 2014 2013 2012 Electricity in production cost

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OIK co-generation OIK - renewable Transmission Power CEMEX energy cost, 2014 2015 BGT 2014 2013 2012 Electricity cost for large consumers

*KPMG study, 2012

Cogeneration Renewable 7 18 32 33 40 42 50 52 59 61 76 77 78 20 40 60 80 €/MWh* Norway Siberia Sweden Russia Finland France Germany Bulgaria Estonia UK Lithuania Poland Latvia

Example: Reliability of infrastructure

Plant

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Limestone quarry

Required for Cement production 30 km distance to quarry ~ 400 truck trips (daily) 1.8 million tons (annual) Critical importance to operations

Impacts:

• Safety
• Reliability
• Efficiency
• Cost

… of operations

Example: Unfair competition in concrete market

CEMEX

• Salaries with full social and income taxes
• Trucks loaded to legal limits for deliveries
• No cash deals – always including VAT
• Only certified raw materials used

Grey producers

• Cash salaries (avoid social charges, tax)
• Overloaded trucks to save delivery costs
• Cash deals w/o VAT for private customers
• Purchase of non-certified materials

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• Only certified raw materials used
• Transparent quality control, with additional

safety margins

• Legal working time – in high / low season
• Purchase of non-certified materials
• No quality control, provision of unsafe and

under-spec products

• Overtime in high season, unemployment in low

Impacts: ~20% cost advantage for grey producers due to lax enforcement More than €2 million unpaid tax in 2014 for Riga concrete market alone Significant deterioration of road and building safety Impacts: ~20% cost advantage for grey producers due to lax enforcement More than €2 million unpaid tax in 2014 for Riga concrete market alone Significant deterioration of road and building safety

5.7 5.9 4.2

Social tax paid per employee, €k, 2014

Example: Concrete market – social taxes

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1.0 1.4 1.6 1.3 1.4 1.9 1.4 1.0 CEMEX

Unfair competition

Source: Publically available information

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