Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GCC SAB de CV (GCWOF, Financial) reported strong project backlogs in the US, particularly in infrastructure and energy sectors, indicating a positive outlook for future demand.
- The company achieved a 31% reduction in recordable and lost time incidents, showcasing improvements in safety and operational efficiency.
- GCC SAB de CV (GCWOF) increased production of blended cements, contributing to a 1% reduction in Scope 1 CO2 emissions, aligning with their sustainability goals.
- The company secured favorable financing conditions for equipment purchases, strengthening their debt profile and supporting strategic investments.
- GCC SAB de CV (GCWOF) maintained a strong balance sheet with cash and equivalents totaling $873 million and a net debt-to-EBITDA ratio of negative 0.56 times, indicating financial stability.
Negative Points
- Sales and EBITDA declined year-over-year due to weather conditions, tariffs, and a 20% depreciation of the Mexican peso.
- The first quarter saw a 9.6% decline in consolidated sales compared to the previous year, partly due to foreign exchange impacts.
- Revenue in Mexico decreased by 20.7%, primarily due to the depreciation of the Mexican peso and reduced contributions from mining operations.
- The company faced an unplanned outage at the Odessa cement plant, temporarily impacting production volumes.
- Weather disruptions and macroeconomic headwinds, including inflationary pressures and global trade dynamics, created challenges for the company.
Q & A Highlights
Q: Can you discuss the cash cost structure in Mexico and the US, and any unique considerations for the quarter?
A: Enrique Escalante, CEO, explained that there were no significant changes in the cost structure for both regions. The increase in costs was mainly due to lower sales volumes affecting leverage. Energy costs, particularly natural gas, remained competitive, and the company expects this trend to continue. Maik Strecker, CFO, added that they are executing a flexible fuel strategy and have hedged over 50% of their Odessa plant's energy needs, which should benefit costs throughout the year.
Q: What are your expectations for US cement demand and pricing amid the US-China trade war and infrastructure investments?
A: Enrique Escalante, CEO, stated that they see a strong pipeline of projects and expect consistent volumes similar to last year. The recent price increase in April was well-received, and the industry is recovering cost inflation through these price adjustments.
Q: How do you anticipate US and Mexico volumes to trend in Q2 compared to Q1, considering tariff uncertainties?
A: Enrique Escalante, CEO, noted that they do not expect a change in trends and anticipate normal shipping patterns. March shipments were strong, and April is progressing as expected. The first quarter's challenges were mainly due to weather and a mechanical issue at the Odessa plant.
Q: What is the outlook for oil well cement demand and the impact of additional debt on your financials?
A: Enrique Escalante, CEO, expressed confidence in the Permian Basin's competitiveness and expects strong demand for oil well cement. Maik Strecker, CFO, explained that the additional debt was secured under favorable conditions for the Odessa plant expansion, providing flexibility for future growth opportunities.
Q: Can you provide more details on the profitability of blended cement and the carbon capture project?
A: Maik Strecker, CFO, mentioned that cash costs should normalize as shipping season progresses, with key cost drivers under control. Enrique Escalante, CEO, stated that the carbon capture project is under evaluation, and its financial viability will depend on potential subsidies and tax credits, with a decision expected this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
