Mexico's Cemex, the world's top building materials company by revenue, overcame falling sales in the U.S. market to post a 6% rise in second-quarter net profit, helped by strong performances in Mexico and Europe.
Cemex, which operates in more than 50 countries, said on Thursday its net profit was $611 million in the April-June period versus $579 million in the same period last year.
Six analysts polled by Reuters predicted an average of $623 million in the second quarter of this year, 2% lower than Cemex's actual earnings.
Cemex's sales in the United States, its top market, fell 16% in the quarter to $941 million and EBITDA fell tumbled 31% to $242 million.
The United States is experiencing a crisis in its subprime mortgage sector, which caters to borrowers with poor credit histories. That is bad news for a sector that is also suffering from an inventory build-up and an increasing number of borrowers falling behind with their mortgage payments.
But strong sales in Cemex's home country and in the rest of Latin America, as well as Spain, Asia and Africa helped the Monterrey-based company. "We achieved significant increases in net sales while further reducing our debt levels, even in the face of the continued downturn in the United States residential sector," said Hector Medina, Cemex's planning and finance chief.
Revenue rose 6% to $4.9 billion in the second quarter, but earnings before interest, taxes, depreciation and amortization (EBITDA) fell to $1.1 billion, down 1% from the year-ago period, the company said.
Cemex said it cut its net debt by $1.1 billion in the second quarter to $4.1 billion. The company's net debt fell to 1.0 times EBITDA from 1.2 times at the end of the first quarter.
Mexico, which is enjoying a construction boom on the back of increased credit, generated $967 million sales for the company, a 10% jump compared to the same period a year ago.
That was followed by $536 million in sales in the United Kingdom and $520 million in Spain, where sales climbed 9% in the quarter.
The company was also helped by a strong Mexican peso, which improved its dollar-based earnings by $28 million in the quarter, versus a loss $48 million in the year-ago period.
Cemex has grown from a local Mexican company to a global powerhouse with a series of acquisitions over the past decade. On Monday, it completed a $15.3 billion takeover of Australian building materials company Rinker Group.