see we say that there is a high dependence on sales from northern europe 31% coming from europe whereas

the ebitda margins are too low plus the growth expected in the next 4 years is only 1.7% therefore there is a high need to diversifiy the source of revenue nad enter into high growth markets which are us and BRICS US they are already present are you there? and then u say that india story and rinkers debt and all ...they have been trying to enter india sicne long

Globalization benefits to Cemex

Spain: Advantage of Low Cost of Capital Importance of Information: IT Equipped -> Neoris, a source of revenue Lowering risk: Geographical Diversification of revenue sources Operational Efficiency Cost Synergies Spain: Technology know-how of target - > Petroleum Coke, an efficient substitute to coal for running plants The Cemex Way: Best practices from Target companies

Cemex A Critical View

The Cemex Way: No involvement of Target company top management during standardization Single man running the show: Mr. Zambrano, leading to lack of power in the hands of management Internet at employees home: Over utilization of employees

Health of Cemex
P & L -2011 Common In $ bn Size 15.139 100 10.823 71.49% 4.317 28.52% 3.356 22.17% 0.96 6.34% 0.34 2.24% 1.436 9.49% 0.454 3.00%
Revenue Contribution by Countries EBITDA Country/Region Sales Margins
Mexico US 22.95% 16.65% 34.43% -3.97% 8.80% 25.54%

Net Sales COGS Gross Profit Operating Expenses Operating Income Other Expenses Financial Expenses PAT

Capital Structure of CEMEX Long Term Debt 16.756 Stockholders Equity 14.881 D:E Ratio 1.126 Debt 52.96% Equity 47.04%

Northern Europe 31.24% Mediterranean (Spain etc.) 11.35% South,Central America & Carribean 11.53% Asia 3.34% Others 2.94%

29.40% 16.04%

Note: COGS-Raw Material Costs + Expenses incurred in storage + Freight expenses of raw materials + Delivery Expenses

Rinker Deal
Acquired in 2007 Took a loan of $15.8 billion 80% of the revenue of rinker came from US US crisis in 2008, demand fell drastically European crisis , sales hit badly Problem in paying debts had to sell off australian asset and also for refinancing of loan The entire attempt to buy stake in Indian firm like murli cement,mangalam cement took a backseat

Sustainable Earning Growth

Start investing in BRIC nation
China and India is the biggest cement market China is the leader producing 50% of the world cement and followed by India at 6% of the world cement Lafarge (Raymond cement)and Holcim (Ambuja cement and ACC) already in these nation forming strong alliances with the respective domestic companies of the country The competitors are aggressively investing in these nation thus reaping off the benefits as these developing nations have high domestic demand

Sustainable Earning Growth

Shifting operations to emerging market gives cost efficiency . Holcim had about 50 % operation from emerging market giving them cost advantage Chinese cement is being sold for roughly $32 per metric ton while Thai cement is being sold for $34. Japanese and Korean cement are being sold within the same range. In contrast German cement runs for $71 a ton while Canadian cement runs for $66 Even if we produce in these country and export the cost would actually come down drastically

Sustainable Earning Growth

India and China markets are fragmented so instead of acquiring fully and turning it around completely with its management practices they should develop joint ventures, marketing and distribution agreements, trading alliances