The Mexican building-materials company's sales rose 8% to $4.59 billion and Ebitda rose 12%. Free cash flow from operations reached a record $723 million for a third quarter.
On a day when Latin American assets were dominated by a collapse in Brazil, Mexico's Cemex reported a quarter that pointed the other way.
Cemex said third-quarter sales rose 8% to $4.59 billion, or 5% on a like-for-like basis. Ebitda rose 12% to $990 million, so profit grew faster than revenue. Cemex kept its forecast for 16% to 17% growth in Ebitda this year. Free cash flow from operations rose 34% to $723 million, a record for the third quarter, and the company said its year-to-date free cash flow from operations has almost tripled.
Adjusted earnings of $0.28 per American depositary share topped estimates of $0.22 to $0.25 from Benzinga, Investing.com and FMP. Sales also topped forecasts of about $4.45 billion to $4.46 billion.
Cemex shares were up 1.52% at $10.36 in early afternoon trading in New York.
Margins and cash, not just volume
The composition is the point. Ebitda growing 12% on 8% sales growth means margins widened. Free cash flow growing 34% means more of that profit turned into cash. Cemex also cited progress on asset sales under its "Project Cutting Edge" program, with proceeds of more than $200 million so far that it plans to reinvest.
The Brazil contrast
The timing gave the result a second meaning. Brazil's stock market tripped a circuit breaker and fell as much as 17% on Monday, and the largest U.S.-listed Brazil fund lost about a fifth of its value. Mexico's peso, by contrast, was firmer against the dollar by early afternoon.
A Mexican industrial reporting rising profit and record cash flow, with its shares up on the day, is consistent with investors treating the Brazil selloff as a country-specific fiscal event rather than a reason to sell Latin America as a whole.
Two readings
One reading is that Cemex is executing: profit is growing faster than sales, cash conversion is improving and asset sales are simplifying the business.
The other is that one quarter of strong cash flow does not settle the outlook. Cemex reaffirmed rather than raised its full-year Ebitda forecast, and the stock's gain was modest.
What to watch
Fourth-quarter Ebitda against the reaffirmed 16% to 17% growth target, further asset sales, net debt at year-end, and whether Latin American stocks outside Brazil continue to hold up.