CEMEX 2015 ANNUAL REPORT
ESPAÑOL FINANCIAL HIGHLIGHTS LETTER TO OUR STOCKHOLDERS

Selected consolidated financial information*

CEMEX, S.A.B. de C.V. and subsidiaries (In millions of US dollars, except per-ADS amounts)

Operating results 2006 2007 2008 2009 2010(i) 2011(i) 2012(i) 2013(i,4) 2014(i,4) 2015(i,4)
Net sales 18,249 20,893 20,131 14,544 14,021 15,215 14,984 14,815 15,288 14,127
Cost of sales (1) (11,649) (13,868) (13,735) (10,270) (10,090) (10,912) (10,548) (10,170) (10,356) (9,410)
Gross profit 6,600 7,025 6,396 4,274 3,930 4,303 4,436 4,645 4,932 4,717
Operating expenses (3,655) (4,130) (4,069) (3,109) (3,083) (3,353) (3,143) (3,144) (3,295) (3,043)
Operating earnings before other expenses, net 2,945 2,895 2,327 1,165 847 951 1,293 1,501 1,637 1,674
Other expenses, net (49) (273) (1,909) (407) (500) (419) (418) (378) (378) (190)
Financial expense (494) (807) (910) (994) (1,164) (1,353) (1,408) (1,549) (1,607) (1,238)
Other financial (expense) income, net (2) 462 900 (1,617) (117) (41) (177) 74 134 190 (77)
Earnings (loss) before income taxes 2,989 2,851 (2,031) (341) (897) (1,025) (403) (276) (137) 215
Discontinued Operations, net of tax (3,4) - 26 187 (314) - - - 8 8 61
Non-controlling interest net income (5) 110 77 4 18 4 2 50 95 82 58
Controlling interest net income (loss) 2,378 2,391 203 104 (1,064) (1,999) (913) (843) (507) 75
Millions of average ADSs outstanding (6,7) 718 743 838 893 1,104 1,109 1,117 1,170 1,256 1,353
Earnings (loss) per ADS (4,7,8) 3.31 3.21 0.24 0.11 (0.96) (1.80) (0.82) (0.71) (0.39) 0.06
Earnings (loss) per ADS of continuing operations (4,7,8)                   0.02
Earnings (loss) per ADS of discontinuing operations (4,7,8)                   0.04
Dividends per ADS (6,7,9) 0.90 0.83 n.a n.a n.a n.a n.a n.a n.a n.a
Balance sheet information                    
Cash and cash equivalents 1,579 743 939 1,077 676 1,155 971 1,163 854 887
Net working capital (10) 887 1,383 1,191 946 1,512 1,697 1,530 1,591 1,377 974
Assets from operations held for sale (4)                   200
Property, plant, and equipment, net (11) 17,196 22,895 19,671 19,776 17,902 16,787 16,582 15,764 13,767 12,428
Total assets 29,972 49,662 45,387 44,483 40,848 38,800 37,260 38,018 34,936 31,472
Liabilities from operations held for sale (4)                   39
Short-term debt & other financial obligations (12) 1,252 3,311 6,934 565 826 887 589 730 1,765 917
Long-term debt & other financial obligations (12) 6,290 16,542 11,849 15,565 16,214 16,976 16,378 16,917 14,818 14,648
Total liabilities 15,193 30,967 28,119 24,806 26,027 26,501 25,149 26,652 24,884 21,967
Non-controlling interest and perpetual debentures (5) 1,920 3,753 3,390 3,338 1,573 1,189 1,127 1,145 1,158 1,178
Total controlling interest 12,859 14,942 13,879 16,339 13,248 11,111 10,984 10,221 8,894 8,327
Total stockholders’ equity 14,779 18,695 17,268 19,677 14,821 12,300 12,111 11,366 10,052 9,505
Book value per ADS (6,7) 17.55 19.90 16.34 16.37 12.00 10.02 9.83 8.74 7.08 6.15
Other financial data                    
Operating margin 16.1% 13.9% 11.6% 8.0% 6.0% 6.2% 8.6% 10.1% 10.7% 11.8%
Operating EBITDA margin (10) 22.7% 21.6% 20.3% 18.3% 16.8% 15.6% 17.5% 17.6% 17.6% 18.7%
Operating EBITDA (10) 4,138 4,512 4,080 2,657 2,355 2,381 2,624 2,603 2,696 2,636
Free cash flow after maintenance capital expenditures (10) 2,689 2,455 2,600 1,215 455 191 167 (89) 401 881
 

Notes

to selected consolidated financial information

  1. Cost of sales includes depreciation, amortization and depletion of assets involved in production, expenses related to storage in production plants, and beginning in 2008, freight expenses of raw material in plants and delivery expenses of CEMEX’s ready-mix concrete business.

  2. Other financial (expense) income, net, includes financial income, realized and unrealized gains and losses from financial instruments, foreign exchange results and the effects of net present value on assets and liabilities.

  3. In October 2009, CEMEX completed the sale of its Australian operations for an amount then equivalent to approximately US$1,700 million. Australia’s operating results, net of income tax, for the years ended 2007, 2008 and 2009, were presented in a single line item as “Discontinued Operations” in our consolidated statement of operations.

  4. In August 2015, CEMEX signed an agreement with Duna-Dráva Cement for the sale of its operations in Croatia for an amount then equivalent to approximately US$251 million, which is expected to be finalized during the first quarter of 2016. In November 2015, CEMEX also completed the sale of its Austria and Hungary operations for an amount then equivalent to approximately US$179 million. Croatia, Austria and Hungary’s operating results, net of income tax, for the years ended 2013, 2014 and 2015, were presented in a single line item as “Discontinued Operations” in our consolidated statement of operations. In 2015, Croatian operations were reclassified to current assets and current liabilities held for sale. CEMEX balance sheet for 2014 was not restated as a result of the sale of its operations in Austria and Hungary. See note 4A to our consolidated financial statements included elsewhere in this annual report.

  5. From 2008 through 2015, non-controlling interest includes US$3,020 million, US$3,045 million, US$1,320 million, US$938 million, US$473 million, US$477 million, US$466 million and US$440 million, respectively, of aggregate notional amounts of perpetual debentures issued by consolidated entities. For accounting purposes, these debentures represent equity instruments (See note 20D to the 2015 Annual Report’s Financial Statements).

  6. The number of ADSs outstanding, stated in millions of ADSs: (i) represents the total average amount of ADS equivalent units outstanding of each year, (ii) includes the total number of ADS equivalents issued in underlying derivative transactions, and (iii) excludes the total number of ADS equivalents issued by CEMEX and owned by its subsidiaries. Each ADS listed on the New York Stock Exchange represents 10 CPOs.

  7. Our shareholders approved stock splits in 2005 and 2006. Consequently, each of our existing CPOs was surrendered in exchange for two new CPOs. The proportional equity interest participation of the stockholders in CEMEX’s common stock did not change as a result of the stock splits mentioned above. The number of our ADSs outstanding did not change as a result of the stock splits in 2005. Instead, the ratio of CPOs to ADSs was modified so that each ADS represented 10 new CPOs. As a result of the stock split approved during 2006, one additional ADS was issued in exchange for each existing ADS, each ADS representing 10 new CPOs. Earnings per ADS and the number of ADSs outstanding for the years ending December 31, 2005 and 2006, were adjusted to make the effect of the stock splits retroactive for the corresponding years. In the Consolidated Financial Statements, earnings (loss) per share are presented on a per-share basis (See note 22 to the 2015 Annual Report’s Financial Statements).

  8. For purposes of the selected financial information for the periods ended December 31, 2006 through 2015, the earnings (loss)-per-ADS amounts were determined by considering the average amount of balance number of ADS equivalent units outstanding during each year. These numbers of ADSs outstanding were not restated retrospectively neither to give effect to stock dividends occurring during the period nor to present the earnings (loss)-per-ADS of continuing and discontinuing operations, as would be required under MFRS and IFRS for their disclosure in the consolidated financial statements.

  9. Dividends declared at each year’s annual stockholders’ meeting for each period are reflected as dividends for the preceding year. We did not declare a dividend for the years 2008 to 2014. Instead, at our 2009 through 2015 annual shareholders’ meetings, CEMEX’s stockholders approved a capitalization of retained earnings. New CPOs issued pursuant to the capitalization were allocated to shareholders on a pro-rata basis. As a result, shares equivalent to approximately 384 million CPOs, 401 million CPOs, 419 million CPOs, 437 million CPOs, 468 million CPOs and 500 million CPOs were issued and paid each year from 2010 through 2015, respectively. CPO holders received one new CPO for each 25 CPOs held, and ADS holders received one new ADS for each 25 ADSs held. There was no cash distribution and no entitlement to fractional shares. (See note 20A to the 2015 Annual Report’s Financial Statements).

  10. This item was not restated to give the effect of discontinued operations. Please click here for the definition of terms.

  11. In 2014, property, plant, and equipment, net, excludes the assets of the western region of Germany and Andorra, Spain, that were classified as held for sale, as mentioned in note 15B to the 2015 Annual Report’s Financial Statements.

  12. From 2010 through 2015, other financial obligations include the liability components associated with ­CEMEX’s financial instruments convertible into CEMEX’s CPOs, liabilities secured with accounts receivable as well as CEMEX’s capital leases (See note 16B to the 2015 Annual Report’s Financial Statements). Prior to 2010, there were no significant transactions concerning capital leases or convertible financial instruments.

  13. (i) As a result of requirements by the National Banking and Exchange Commission, CEMEX prepares its consolidated financial statements using International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board. Accordingly, CEMEX’s consolidated financial statements as of December 31, 2015, 2014, 2013, 2012, 2011 and 2010 and for the years ended December 31, 2015, 2014, 2013, 2012, 2011 and 2010, were prepared and presented in accordance with IFRS. Prior years were prepared and presented in accordance with Mexican Financial Reporting Standards (“MFRS”). Reconciling one-time adjustments between IFRS and MFRS were recognized in the opening balance sheet under IFRS as of January 1, 2010 against stockholders’ equity.

  14. (*) The effects associated with newly issued IFRS are recognized in the year when they become mandatory and are applied retrospectively only for comparative prior periods presented in the set of financial statements issued in the year of adoption. Earlier periods are not restated to give retroactive effect to such new standards.