Dear fellow shareholders:

Rogelio Zambrano, Chairman of the Board
Fernando A. Gonzalez, Chief Executive Officer

CEMEX delivered strong underlying operational and financial results, despite a challenging environment.


million cost savings in 2015

We leverage our knowledge and scale to establish best practices and common processes worldwide.

Arbois Duranne Espace Polyvalent, France

During 2015, we continued to deleverage our balance sheet, while reducing financial costs and improving the maturity profile of our debt.

PGE Arena Stadium, Poland

Our long-term strategy rests on two main value creation drivers: maximizing EBITDA growth and improving our capital structure.

2015 was a challenging year for any company operating in an increasingly volatile global environment. The slowing of the Chinese economy, falling oil and other commodity prices, weaker than expected growth in many countries, capital outflows from emerging markets, and the outsized appreciation of the dollar translated into important headwinds for our business.

Despite that environment, we are pleased to report that CEMEX delivered strong underlying operational and financial results. We grew volumes in our core businesses; increased prices in local currency terms in excess of yearly input inflation; contained costs across the company; and continued to strengthen our balance sheet by lowering working capital use, selling assets valued at close to US$700 million, and executing a series of targeted financial transactions. We improved our EBITDA margin to the highest level in six years and dramatically increased free cash flow, as well as the rate at which we converted EBITDA into free cash.

The result was a 9% increase in EBITDA on a like-to-like basis, net income of US$75 million—positive for the first time in six years—free cash after total capex of US$628 million, and a total debt reduction of close to US$1 billion.

Those are not only important milestones on the road to once again producing sustainable returns for our investors, but also indicators of the resilience we have built into our operating and financial models.

Of course, we could not avoid the winds that buffeted the global economy. In our case, the biggest impact was currency translation: the super strong dollar adversely affected our operating EBITDA by more than US$300 million, resulting in total EBITDA of US$2.6 billion for the year.

The currency effect contributed to the performance of our stock during 2015. We want to be clear: as investors ourselves, the fall in the stock price deeply disappointed us. However, we manage the company to produce long-run value, knowing that macro and market fluctuations can affect results along the way. The obvious question is whether we are on the right track to produce the results that you, our fellow shareholders, expect. We are confident that we are.

In our first joint letter to you a year ago, we told you that our strategy is focused on leveraging our global portfolio of integrated cement, aggregates, and ready-mix concrete assets, developing the inherent power of our global networks, sustaining our drive to be a hyper-efficient (but also hyper-safe) operator, and actively managing our worldwide asset base. That strategy remains intact, because it is producing tangible results, even if they were partially obscured by the noise in the marketplace.

We have the right strategy; our challenge is to intensify and to accelerate its execution.

CEMEX is global, and we believe this is an important and abiding source of advantage in the market and of benefit to our customers.

We leverage our knowledge and scale to establish best practices and common processes worldwide. But best practices do not just spread themselves, which is why our senior operators now have both geographic and business process responsibilities.

We have established six global networks that cut across geographies: Customer Centricity to assure that we fully understand and serve the needs of our customers; Grow the Pie to increase the market penetration of our products; Cement Operations and Supply Chain to improve productivity and to realize the operating leverage inherent in our business portfolio; Ready-Mix and Aggregates to guarantee that the operating knowledge and skills we generate in any one market are spread throughout the CEMEX world.

These initiatives allow us to manage the business as a global enterprise, assuring that CEMEX is much more than the sum of its parts. They also make us more efficient.

During 2015, we delivered on our cost savings pledge of US$150 million. We aspire to be an efficient, lean operator. Over the past year, we reduced cost of sales and operating expenses as a share of sales by 1.1 percentage points, leading to an operating EBITDA margin of 18.7%. That’s good by industry standards, but we know we can do better.

We also know that there is no trade off between efficiency and safety. When it comes to safety, we refuse to compromise. Our goal is zero injuries. This is a moral necessity, and it is the standard by which we want to be measured.

In this regard, our performance in 2015 was good, putting us in a better position to achieve our high standards. Ninety-five percent of our operations were fatality and lost-time-injury free for the year; the 5% that did experience such injuries are aware of the need to improve and have plans to achieve that. But the overall direction is encouraging: during 2015, time lost to injuries fell to best-in-industry levels. We expect to report to you next year that we are within reach of—or have met—our Zero for Life goal.

An integral element of CEMEX’s strategy is our deep commitment to sustainability—in our operations, in our communities, and in the products and services we provide our customers. For example, in 2015, our alternative fuel usage, clinker factor reduction, and clean energy efforts reduced our CO2 emissions by 6.5 million tons, equivalent to the amount produced by 1.2 million cars. During the year, we installed 7.3 million square meters of resilient concrete pavement, equivalent to a 450-kilometer, four-lane concrete road, while roughly one-third of our ready-mix concrete sales derived from products with outstanding sustainability attributes.

Another element of our commitment to a sustainable future is our support for local infrastructure and housing development, in part by establishing community centers for construction training and also by empowering customers at the bottom of the socio-economic pyramid through self-construction assistance initiatives. During 2015, we established a goal of benefitting more than 3 million people between 2015 and 2020, on top of the 7 million we have helped since 1998.

In terms of financial management, as we already mentioned, during 2015 we continued to deleverage our balance sheet, while reducing financial costs and improving the maturity profile of our debt. The result is that we essentially have no maturities due in 2016 or 2017 and only 3% of our debt is exposed to potentially rising rates. Coupled with sufficient liquidity and continuing strong cash flow generation, we are confident that we are well prepared for whatever stresses might come from turbulent financial markets.

Finally, shareholders invest in growth: how are we going to increase shareholder value over the long term?

Our long-term strategy rests on two main value creation drivers:

Maximizing EBITDA growth
We will sustain our Value before Volume strategy, drive ourselves to find ways to be the most efficient producer in all our businesses in all our markets, and grow our volumes. Although we can’t make our markets grow faster, we can create more demand for the products we produce; that’s the principal idea behind Grow the Pie. We also can expand our footprint in high-growth markets, especially ones where we are already present.

Improving our capital structure
2015’s big increase in free cash flow was not an accident, but the result of focused action. We expect to continue to convert a growing share of EBITDA into cash. Of course, we will continue to pay down debt and to deleverage, as we work towards an investment-grade quality balance sheet.

We have set aggressive operating and financial goals for ourselves. Although market developments will define exactly when we achieve those goals, we are fully confident that we are on the right track with the right tools to succeed—with success defined as delivering increasing value to our shareholders well into the future.

CEMEX is a strong company with a solid future. Markets will go up and down and currencies will fluctuate—sometimes wildly—but we are confident that sound strategy and good execution by talented, dedicated people will always win in the end.

Thank you for your continuing support.


Rogelio Zambrano
Chairman of the Board

Fernando A. Gonzalez
Chief Executive Officer