CEMEX – Case study

Type
Sociedad Anónima Bursátil de Capital Variable. Traded as BMV: CEMEX
NYSE: CX Industry Building materials
Founded1906; 113 years ago.
Headquarters: Monterrey, Mexico
Area served: Worldwide
Key people: Rogelio Zambrano Lozano
(Executive Chairman)
Fernando A. González
(CEO)
Productscement, ready-mix concrete, construction aggregates
Revenue  US$ 18 billion (2016)
Net income
 US$ 800 million (2016)Total assets  US$ 34.9 billion (2014)
Number of employees
50,000
Websitewww.cemex.com
CEMEX S.A.B. de C.V., known as Cemex, is a Mexican multinational building materials company
headquartered in San Pedro, near Monterrey, Mexico. It manufactures and
distributes cement, ready-mix concrete and aggregates in more than 50 countries. It is the
second largest building materials company worldwide, only after LafargeHolcim.
Lorenzo Zambrano was the chairman and chief executive officer until his death on May 21, 2014.
About one-third of the company's sales come from its Mexico operations, a quarter from its
plants in the U.S., 15% from Spain, and smaller percentages from its plants around the world.
CEMEX currently operates on four continents, with 66 cement plants, 2,000 ready-mix-concrete
facilities, 400 quarries, 260 distribution centres and 80 marine terminals. [1] The company's
world headquarters are in San Pedro Garza García, a city that is part of the Monterrey
metropolitan area in the north-eastern Mexican state of Nuevo León.
CEMEX was founded with the opening of Cementos Hidalgo, in 1906. Meanwhile, Cementos
Portland Monterrey began operations in 1920, and in 1931, the two companies merged,
becoming Cementos Mexicanos, now CEMEX. In the 1960s, CEMEX grew significantly when it
acquired several more plants throughout Mexico. In 1976, the company went public on the
Mexican stock exchange, and that same year, became the largest cement producer in Mexico
with the purchase of three plants from Cementos Guadalajara. In 1982, the company made
significant progress in overseas markets, doubling its exports. Further acquisitions of Mexican
cement companies were made in 1987 and 1989, making CEMEX one of the ten largest cement
companies in the world.
In 2004, CEMEX received the Wharton Infosys Business Transformation Award for their creative
and efficient use of information technology.

Internationalization, 1990–2006
In 1992, CEMEX began its push into the international landscape with the purchase of Spain's two
largest cement companies, Valenciana de Cementos (Valcem, currently head of CEMEX Spain)
and Cementos SANSON. Venezuela's largest cement company, VENCEMOS, was acquired by
CEMEX in 1994, and plants were purchased the same year in the United States and in  Panama.
In 1995 CEMEX acquired a cement company in the Dominican Republic, and with the purchase
of a majority stake in a Colombian cement company in 1996, CEMEX became the third largest
cement company in the world. In 1997–1999, the company expanded its scope to include Asia
and Africa, making major purchases in the Philippines, Indonesia and Egypt, as well as Costa
Rica. The acquisition of U.S. based Southdown made CEMEX the largest cement company in
North America, and further international purchases were made in the following two years —
a Thai company in 2001, and in 2002, a Puerto Rican company.
On March 1, 2005, CEMEX completed its $5.8 billion acquisition of the London-based  RMC
Group, which made CEMEX the worldwide leader in ready-mix concrete production and
increased its exposure to European markets. With the acquisition, the company expected its
annual cement production to increase to 97 million tons. Also they had hoped to see its annual
sales grow to $15 billion, just shy of the market leader, Lafarge NYSE: LR, which had sales of
$17 billion. As none of these targets was met, CEMEX started looking for another suitor in
its Merge & Aquisition push.
On October 27, 2006, CEMEX announced a US$12.8 billion offer to acquire all of the outstanding
shares of Rinker Group, Limited. Seven months later, on April 10, 2007, the Rinker board of
directors approved an upgraded offer of USD 14.2 billion, and on June 7, 2007, CEMEX secured
the commitment from the holders of more than 50% of the shares to complete the acquisition.

Recent history (2006 – …)

In November 2006, an American embassy cable released via WikiLeaks listed Cemex among
"Mexico's monopolists", with a market share of 87.6%; its competitor Holcim Apasco was listed
with a market share of 12.4%.
Shortly after the apparent finalization of the Rinker deal on 2007, the United States Department
of Justice brought an antitrust lawsuit against CEMEX, blocking the acquisition. After a lengthy
process, CEMEX complied with regulators by divesting (selling) 40+ cement and concrete plants
formerly part of itself or Rinker, essentially devaluing the initial deal.
In April 2008, the President of Venezuela, Hugo Chávez, announced the nationalization of "the
whole cement industry" in that country, in response to the belief that the industry was exporting
its products in order to receive prices above those it was allowed within the country. [11] In mid-
2008 the Venezuelan government took over the Venezuelan operations of CEMEX, the largest
Venezuelan producer with around a 50% market share; a deal on compensation was still to be
reached in March 2009, despite agreements being reached in mid-2008 with the other two major
cement producers. In December 2011, an agreement was reached, with Cemex receiving $600m
in compensation, and benefiting from the cancellation of $154m in debt.
After having problems with the Mexican peso devaluation of 2008, including problems with
derivatives, CEMEX had to rethink its international standings to decrease debt and avoid a
default. In June 2009, CEMEX sold its Australian operations to Holcim for A$ 2.2 billion (US$1.75
billion) helping refinance its US$14 billion debt, which partly was due to the acquisition, two years
earlier, of the Rinker Group.
In December 2010, DOL Resolves Employee Back Wage Case With CEMEX – The U.S.
Department of Labor announced the filing of a consent judgment in a case against CEMEX Inc.
and the recovery of $1,514,449 in overtime back wages for 1,705 current and former ready-mix
drivers who worked in eight state.
In February 2018, the company reported record earnings of $750 million for all of 2016, the
highest in a decade. Lowering company debt after recent acquisitions were a main cause of the
company's financial performance.

CEMEX World Corporate Headquarters is in Monterrey, Mexico and its U.S. operations

headquarters is in Memorial City, Houston, Texas.
The company operates in over 50 countries/territories around the world including:
   France   Panama
  Germany   Philippines
  Angola
  Haiti   Poland
  Argentina
  Hungary   Puerto Rico
  Brazil
  Ireland   Singapore
  Brunei
  Indonesia   Spain
  Colombia
  Israel   Sweden
  Costa Rica
  Jamaica    Switzerland
  Croatia
  Latvia   Trinidad
  Czech Republic
  Malaysia   Turkey
  Dominican Republic   Mexico
  Egypt   United Arab Emirates
  Morocco   United Kingdom
  El Salvador
  Nicaragua   United States
  Finland
  Nigeria
  Norway

Subsidiaries
 Cemento Ponce General (See Ponce Cement, Inc.) – Ponce, Puerto Rico
 Puerto Rican Cement Company – Guaynabo, Puerto Rico
 Compania Valencia de Cementos Portland S.A. – Madrid, Spain
 Rinker Materials Corporation – West Palm Beach, Florida, United States
 CEMEX Australia Pty Limited – Chatswood, Australia
 CEMEX Asia Holdings Ltd. – Philippines
 CxNetworks – Miami, Florida, United States
 CEMEX USA – Houston, Texas, United States
 Western Rail Road – New Braunfels, Texas, United States
 CEMEX UK Limited – Thorpe, Surrey, United Kingdom
 New Sunward Holding – Amsterdam, Netherlands
 Cena Acquisitions Corporation – Houston, Texas, United States
 CEMEX Mexico – Monterrey, Nuevo Leon, Mexico
 Ready Mix USA – Birmingham, Alabama
 Caribbean Cement Company Limited – Kingston, Jamaica
 Trinidad Cement Limited – Trinidad

Social responsibility
CEMEX has developed a number of educational and social responsibility initiatives. For example,
it instituted the Premio CEMEX, an annual award that recognizes works in the fields of
sustainability, accessibility, construction and architecture. Also, it funds the Catedra Blanca, an
honors architecture courses in three universities: the ITESM, in Monterrey, the Universidad
Iberoamericana, in Mexico City, and the Barcelona School of Architecture. Also, CEMEX has
created the Centro CEMEX-Tecnológico de Monterrey, which is a research and development
program for sustainable communities across Mexico thru the Premio CEMEX-TEC.
In 2007, the Organization of American States (OAS), through their Trust for the Americas,
awarded the company The Corporate Citizen of the Americas Award 2007, for the social benefits
of their program "Patrimonio Hoy", in Mexico, that according to José Miguel Insulza, President of
the OAS, has a positive effect in low-income families. This initiative, conceived in 1998, aims to
reduce the Mexican housing deficit, which leaves more than 20 million people with inadequate
shelter. Patrimonio Hoy organizes low-income families into self-financing cells that facilitate and
expedite the typical homebuilding process. CEMEX and its network provide the products needed
but also the technical assistance, including an architect who helps design homes to optimize
space and reduce waste. To date, more than 150,000 Mexican families have realized their
dreams of home ownership.

Environmental record
CEMEX has been accused of violating environmental laws in the United States. Environmental
watchdog groups and the United States Environmental Protection Agency are threatening to file
suit claiming the company has committed numerous violations of the Clean Air Act in  Lyons,
Colorado. The United States Environmental Protection Agency has also filed suit against CEMEX
in Victorville, California, claiming the company failed to install modern air pollution controls,
despite spending millions in renovations.
In the United Kingdom, CEMEX was originally fined £400,000 on October 2006 after hazardous
dust was deposited up to three miles (5 km) away from its Rugby works. The fine was the highest
ever given under the Integrated Pollution Prevention and Control regulations, and was also the
highest for an Environment Agency prosecution for six years. The fine was, however, judged
excessive by the Court of Appeal and so reduced to £50,000. In April 2007, CEMEX announced
that it had installed a £6.5 million dust abatement system at the same works in Rugby, which had
cut particulate emissions by 80%. The site comes under the auspices of the EU Waste
Incineration Directive as it burns waste tyres for fuel. There are concerns over the impact on both
the environment and human health from this practice, although it is common practice in many
cement works.
During tests conducted from June 10 to August 5, 2008, the Monterey Bay (California) Unified Air
Pollution Control District reported high levels of chromium VI, also known as hexavalent
chromium, a cancer causing chemical agent, at an elementary school and fire department
in Davenport, California. Chromium VI is the contaminant that inspired the movie, Erin
Brockovich. The toxic substance apparently originated from dust emitted by the Cemex Cement
plant in Davenport, as the levels of Chromium VI measured eight times the air district's
acceptable level at Pacific Elementary School and 10 times at the Davenport Fire Department.
Both are located less than a half-mile from CEMEX. Chromium VI may have been unwittingly
produced at the CEMEX plant in Davenport for the last seven years. According to Ed Kendig, the
executive director of the Monterey Bay Unified Air Pollution Control District, it's "highly possible"
that Chromium VI continues to be produced across the country as an accidental, previously
unknown byproduct of the cement-making process.
In 2007, the EPA filed a complaint against CEMEX for violating federal air regulations at its
Victorville plant, and in 2006, CEMEX was cited for violations at plants in Santa Barbara and
Michigan.
Environmentalists and scientists are concerned for the Monterey Bay coastline where Cemex
has a sand mining operation in the city of Marina, CA. The California Coastal Commission in
March 2016 issued a Cease and Desist order asking for "administration civil penalties" stating
that "the operation is narrowing beaches and impacting environmentally sensitive habitat."
Cemex denies the allegations and as of May 2017 continues to operate.

Competitors
Main CEMEX competitors / global cement players are: (dead link)

 HeidelbergCement
 Votorantim Cimentos
 Unibeton Ready Mix