Karl H. Watson Jr. President USA. February 14,

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1 Karl H. Watson Jr. President USA February 14,

2 Forward looking information This presentation contains certain forward-looking statements and information relating to CEMEX, S.A.B. de C.V. and its subsidiaries (collectively, CEMEX ) that are based on its knowledge of present facts, expectations and projections, circumstances and assumptions about future events. Many factors could cause the actual results, performance or achievements of CEMEX to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general economic, political, governmental, and business conditions globally and in the countries in which CEMEX operates, CEMEX s ability to comply with the terms and obligations of the facilities agreement entered into with major creditors and other debt agreements, CEMEX s ability to achieve anticipated cost savings, changes in interest rates, changes in inflation rates, changes in exchange rates, the cyclical activity of the construction sector generally, changes in cement demand and prices, CEMEX s ability to benefit from government economic stimulus plans, changes in raw material and energy prices, changes in business strategy, changes in the prevailing regulatory framework, natural disasters and other unforeseen events and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or targeted. Forward-looking statements are made as of the date hereof, and CEMEX does not intend, nor is it obligated, to update these forwardlooking statements, whether as a result of new information, future events or otherwise. UNLESS OTHERWISE NOTED, ALL FIGURES ARE PRESENTED IN DOLLARS, BASED ON INTERNATIONAL FINANCIAL REPORTING STANDARDS Copyright CEMEX, S.A.B. de C.V. and its subsidiaries. 2

3 CEMEX USA 2012 highlights Positive $43M EBITDA in 2012 vs. a loss of $100M in 2011 Improved YoY EBITDA margin by 4.8pp in 2012 YoY cement volume growth for 18 consecutive months Cement and ready mix prices in 4Q12 were 3% and 6% higher, respectively, versus the same period in the prior year 3

4 Today s agenda Our medium-term outlook for the industry Pricing strategy to capture full value of our products Commercial strategies to grow the pie Continuous management of energy, fuel and logistics costs Impact of operational leverage on our medium-term performance 4

5 Housing starts expected to surpass steady-state levels during ,400 2,200 2,000 1,800 1,600 1,400 1,200 1, Housing Starts (Thousand units) Multi-Family Single Family Steady- State 1, e 15e 17e Source: U.S. Census and internal estimates 5

6 Growth in our key markets expected to exceed 10% national average 25 Total Portland Cement Consumption Florida (M tons) 25 Texas % % California 25 Arizona % % Source: USGS, internal estimates

7 Expect favorable national cement supply/demand dynamics U.S. Cement Supply / Demand Dynamics (M tons) Practical Capacity Total Cement Demand Note: Total cement demand includes Portland, Blended and Masonry cement. Source: USGS, PCA and internal estimates 7

8 Real cement prices at early 90 levels Evolution of U.S. Cement Prices M tons Cement Demand Real Price Nominal Price $/ton Source: USGS, PCA Domestic Capacity Cement Imports 8

9 Our cement prices need to recover cost of capital At current reported cement prices, averaging $90/ton (1), CEMEX will not achieve an adequate return on investment Increasing fuel and energy costs have not been passed on to the market Stricter environmental regulations will require additional investment As history has shown, prices need to reach $140/ton to justify large scale reinvestments Source: USGS reported prices 9

10 Pricing Initiatives Pricing strategy to focus on 6 key initiatives Value Before Volume Strategy 1 Price roadmap 2 Market share & margin targets 3 Price system / "Gross minus logic" 4 Surcharges 5 Capability building (sales skills) 6 Price incentives (internal sales) 10

11 January cement price increases update Mixed results, cautious outlook Successful January increase Successful January increase Set for Apr 13 Set for Apr 13 CEMEX Cement Plant Successful January increase Achieving pricing excellence is our #1 priority 11

12 Tighter asset base expected in the industry U.S. Ready Mix Truck Fleet Statistics Thousand trucks Age, Years Range Oldest Average 4 5 Newest Source: NRMCA Fleet benchmarking and Costs Surveys 12

13 Successfully implementing ready mix pricing strategy CEMEX Ready Mix Price Evolution ($/m 3 ) +5% Fees & Surcharges Base Price Dec 2011 Price Increase Fees & Surcharges Dec

14 Commercial strategy focusing on enhancing volumes Growing the pie through increased in three pavement applications Providing customers with sustainable and cost competitive housing solutions Increasing development and usage of ready mix special products 14

15 Continuous effort to achieve excellence in cost management Cement Production Cash Costs (% of total, 2012) Alternative Fuels Usage Annual Average Substitution Rate (%) Power 13% Raw Materials 12% ~50% Fuel 19% 38% 18% Labor 4.8% 22.1% 18.2% 13.9% 10.4% 7.3% Other Target 15

16 Successfully containing freight costs Freight Cost vs. Diesel Price Evolution (Index) Avg. Diesel Price +61% Freight Cost ($/ton-mile) +3% Source: EIA 16

17 Operating leverage reflected in high incremental margins Quarterly Operating Leverage (YoY % Var.) 43% 42% 38% 15% 12% 4Q11 1Q12 2Q12 3Q12 4Q12 17

18 Promising returns expected over 4 years EBITDA Evolution ($ M) , EBITDA 2012 Volume Price Var. costs Fixed costs & distribution EBITDA

19 Conclusion Positive fundamentals expected to drive medium-term recovery Pricing strategy in place to capture full value of our products Innovative commercial solutions to enhance volume growth Cost efficiency continuously being pursued to maximize profitability 19

20 Karl H. Watson Jr. President USA February 14,