(Reuters) - Mexican cement maker Cemex (CMXCPO.MX) on Thursday posted a 92.3 percent drop in quarterly profit, and its shares tumbled more than 3 percent in morning trading, but company executives said construction of a new Mexico City airport should boost cement volumes this year.
Ahead of the July 1 presidential election, the new Mexico City airport has become a thorny political issue. Presidential frontrunner Andres Manuel Lopez Obrador has repeatedly threatened to cancel the multibillion-dollar project.
But Cemex executives, in a call with analysts after the earnings report, said the political noise had not affected construction of the airport, which will require 1.2 million tons of cement between 2017 and 2020.
The company now expects consolidated cement volumes to grow 2 to 3 percent this year, slightly more than previously anticipated.
Cemex’s net profit plunged to $26 million in the first three months of the year from $336 million a year earlier, hurt by higher operating expenses and a foreign exchange loss.
The profit was far below expectations of $109 million from a Reuters poll.
Net sales beat expectations, while operating expenses rose 12.2 percent to $741.6 million.
Revenue from Cemex’s U.S. business, which accounts for a quarter of its net sales, grew 5 percent, while revenue from European operations rose 9.2 percent. Overall net sales rose to $3.38 billion from $3.14 billion.
Monterrey-based Cemex, which is trying to gain its investment grade credit rating, said its operating results were affected by adverse weather conditions in Europe and the United States.
The company abandoned a capital raise plan in March, and was also told that it was facing a U.S. Department of Justice (DOJ) investigation into its operations in Colombia and other jurisdictions.
Reporting by Sanjana Shivdas in Bengaluru; Editing by Anil D'Silva and David Gregorio