February 8, 2018 / 7:34 PM / 10 months ago

UPDATE 2-Mexico's Cemex eyes capital raise for new investment

(Recasts with details for financial plans)

By Daina Beth Solomon

MEXICO CITY, Feb 8 (Reuters) - Mexican cement maker Cemex aims to raise capital for potential investments by issuing shares, it said on Thursday, adding that it does not anticipate making more divestments to reduce debt.

Cemex Chief Executive Fernando Gonzalez said in a conference call with analysts that the company would not use new capital to pay down debt.

The Monterrey-based company, which is fighting to regain its investment-grade credit rating, posted a fourth-quarter net loss of $105 million on Thursday.

In the fourth quarter it reduced its debt plus perpetual notes by $209 million to a level 13 percent lower than end-2016.

“We’re getting there, but not there yet,” Gonzalez said. “We’re giving the company options moving forward.”

He added that target investments would be in high-growth markets for cement and aggregates in the United States and Europe.

Potential new investments would be funded with a mix of equity, debt and cash rather than just debt, which Cemex used before losing its high credit rating.

Gonzalez also said Cemex plans to propose a share buy-back fund worth $500 million. Both proposals would require board approval.

Cemex shares were down more than 4 percent at 2128 GMT.

Analysts had expected Cemex to post a fourth-quarter net profit of $179 million, compared with $214 million in the fourth quarter of 2016.

Fourth-quarter consolidated net sales were $3.4 billion, up 8 percent from the same period in 2016.

Maher Al-Haffar, a Cemex executive vice president, said a 15 percent rise in fuel and electricity expenses in the quarter was mostly caused by high energy prices in Mexico.

Fourth-quarter net sales in Mexico, Cemex’s biggest market, rose 11 percent despite a drop in volume. The United States, Cemex’s second-biggest market, registered a 2 percent fall.

“U.S. results in our view were the biggest disappointment in the quarter,” Barclays analyst Benjamin Theurer wrote in a report.

That performance helped push Cemex’s operating earnings before interest tax depreciation and amortization (EBITDA) to slip 5 percent to $625 million during the fourth quarter.

The global cement industry is preparing for a slightly better year in 2018 as developed markets recover in Europe and the United States, the head of the World Cement Association said in January. (Reporting by Anthony Esposito and Daina Beth Solomon; Editing by Susan Thomas, Will Dunham and Leslie Adler)

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