Good morning, welcome to the CEMEX First Quarter 2015 Conference Call and Webcast. My name is Sylvia, and I'll be your operator for today. [Operator Instructions] Our host for today are Fernando González, Chief Executive Officer; and Maher Al-Haffar, Executive Vice President of Investor Relations, Communications and Public Affairs. And now, I will turn the conference over to your host, Fernando González. Please proceed. Fernando Angel González Olivieri: Thank you. Good day to everyone, and thank you for joining us for our first quarter 2015 conference call and webcast. After Maher and I discuss the results of the quarter, we will be happy to take your questions. We are pleased with our first quarter results. We had a 7% increase in sales with operating EBITDA generation growing by 14% on a like-to-like basis. First quarter EBITDA was the highest since 2008, despite adverse currency fluctuations. EBITDA margin expanded by 1.8 percentage points, improvement in prices for our three core products in most of our operations, better volumes in most of our products in Mexico, the US, Northern Europe and Asia, the favorable operating leverage affect in the US, as well as our continued construction initiatives led to this EBITDA growth. We have significant achievements during the quarter. Consolidated first quarter grey cement and ready-mix volumes are the highest in seven and six years respectively. First quarter EBITDA margin was the highest since 2010. In addition, we continue with our working capital initiatives and achieve our record low 24-working capital days during the quarter. We continue with our efforts to improve our free cash flow generation. In January, we closed the three transactions with Holcim in the Czech Republic, Germany and Spain. We expect our recurring improvement in our EBITDA, including synergies of about $20million to $30 million dollars starting this…

Thank you, Fernando, hello everyone. Net sales on a like-to-like basis increased by 7% during the quarter while operating EBITDA increased by 14% with a margin expansion of 1.8 percentage points. There was higher EBITDA contribution from Mexico, the US, the Northern Europe and Asia regions. On a year-over-year basis we continue to see the effect of depreciation of some currency versus the US Dollars. As we commented last quarter, typically currency devaluation translate into input cost inflation which tends to put upward pressure on prices with some lag effect. Cost of sales as a percentage of net sales decreased by 2.9 percentage points during the quarter, mainly driven by our cost reduction initiatives, and product mix. Operating expenses also as a percentage of net sales increased by 0.5 percentage points as efficiencies were offset by higher distribution expenses. Our kiln fuel and electricity bill on a per ton of cement produced basis increased by 5% during the first quarter. This increase reflects higher fuel and electricity prices in Egypt as well as a country mix effect. During the quarter, our free cash flow after maintenance CapEx was less negative by $173 million; this is explained by higher EBITDA, as well as lower financial expenses and cash taxes during the quarter. While the working capital investment during the first quarter was similar to that of the first quarter last year, working capital days reached 24, a new first quarter record compared with 29 days in the same period in 2014. As in prior years we expect to recover most of the investment in working capital during the second half of the year. We had a foreign exchange gain of $59 million resulting primarily from the fluctuation of the Mexican peso and the Euro versus the US dollar. We also recognized…

Before we go into our Q&A session, I would like to remind you that any forward-looking statements we make today are based on our current knowledge of the markets in which we operate and it could change in the future due to a variety of factors beyond our control. In addition, unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases refer to our prices for our products. And now we will be happy to take your questions. Operator?

[Operator Instructions] And our first question comes from Benjamin Theurer from Barclays.

Hi, good morning Fernando, good morning Maher. First of all, congratulations for the results in Mexico, they were pretty decent. Can you hear me? Fernando Angel González Olivieri: Good morning and thank you for the comment.

Hello? Fernando Angel González Olivieri: Yes, we can hear you.

First of all thank you, thank you very much. My question is actually on the United States, and one on Colombia. So in the US you mentioned that you have pretty adverse weather conditions effecting volumes and you mentioned in the presentation that excluding the oil-well cement it would have grown by 4%, but do you also have an estimate on how much growth would have been in volumes in the U.S. if the weather would have been, let’s say in the normal condition and on Colombia one follow up that we have seen that actually in the region decrease prices in local currency terms. Any initiatives in the end of the first quarter, beginning of a second quarter to get the decent local currency terms into a positive territory that would be my question. Fernando Angel González Olivieri: Well, as an objectives here we have mentioned, and I am referring to Colombia we are always you know try to find ways to corporate prices in real terms so that continue being our objective in Colombia and everywhere else. The dynamics in the country, the first quarters as we mentioned compared very unfavorably to first quarter last year, precisely because of the timing of price increase but again we will continue with the objective of recovering prices in Colombia and everywhere else in real terms.

Yes Ben, regarding the weather, I would say that certainly Texas was probably the biggest recipient in our markets of the bunch of that and so you know we saw place like Midland, Austin, certainly suffering quite a bit from that. In fact if you take a look at Midland, Texas, we had almost close to 150% more rains, San Antonio is another market close to almost 50% more. I think you know we don't have a specific number but what I can do for instance is just give you an indicator, California for instance where we had very good weather and there are volume terms were up you know around 12%. So that can give you an idea of how much of difference weather makes an impact.

Okay, thank you very much Maher, but you expect that some sort of recovery in summer month’s right I suppose.

Yes, I mean if you take, you know if you take a look at our volumes that generated in the flat growth that we have seen in the first quarter and given our guidance which we high conviction on for the full year, you know that would translate to obviously to the high single digit growth in the rest of the year to get to that growth and we are fairly confident with the I mean weather played an important role in the housing construction for instance you know if you take a look at the numbers in housing and our markets, specially informants versus starts, there is a huge differences as a Fernando mentioned during his discussion of the US business. So we are confident that the construction activity will pick up as the year goes on we get better weather.

Alright, perfect. Thank you very much and congratulations, again.

Thank you.

Our next question comes from Adrien Wester [ph] from JP Morgan.

Hi, thank you. Good morning, Fernando and Maher, and congratulations as well on the results. My question has to do with margins, you posted a good expansion on EBITDA margin in the first quarter. What is the outlook for the rest of the year considering that now you're expecting lower energy cost, also the positive pricing environment that we're seeing in most regions and also for the remainder of the year and the potentially synergies that you are also expecting for the rest of the year. Thanks. Fernando Angel González Olivieri: I think the expectation is for the margins to improve, let me make a clarification of our margin improvement during the first quarter. About a third of it, about half a percentage point is because of the divestment of our German assets which because of seasonality they do have a negative impact on this year given that we closed the transaction before the starting of the quarter, we didn't have that negative impact that compares to last year. So on the other percentage point it's basically social, it has to do with our prices growing more than our cost and expenses, our cost and expenses grew about three percentage points less than our prices and I think that will prevail during the rest of the year. And the other element that we should continue considering because it's social also and we will continue since the benefit of it is operational leverage, mainly in the US as you saw the performance of EBITDA compared to sales, that is a confirmation that we do continue having a significant operating leverage in the US. So that's why we think margins this year compared to last year should be materially higher.

Excellent, thank you, I appreciate it. Fernando Angel González Olivieri: Thank you.

And the next question comes from Marigold from ITAU [ph].

Good morning everyone and congratulations on the strong results. Two quick questions; first in the US regarding the pricing environment, if you could comment a little bit on the success rate of the price increases and also for January, if you are like almost a 100% implemented already, so if the market is really strong and you continue to expect that to be the case where the price increase is also announced for April. And second question is regarding [indiscernible] we saw you upgraded a little bit the volume expectations for the full year on the cement side like we saw the very strong numbers 13% volume growth in the first quarter, is that like - is that a possibility, the market continue to be surprising and eventually we could see instead of high-single digit we could see double digit growth rate from Mexico for the year? Fernando Angel González Olivieri: Okay, regarding Mexico let me start with your question on Mexico’s expectation. I think what we saw in the first quarter this year is a positive trend that started third quarter last year. You remember our volumes in Mexico started increasing slightly in third quarter. Then even more during the fourth quarter. And what we saw this quarter on top of the growth of the formal housing sector industrial and commercial sector that was guiding this recovery, you know we saw a clearly an inflection point and a significant growth in infrastructure spending, and also in the consumer market or the informal construction market for 11%. So compared to our estimates, our original estimates and our current guidance, definitely there is an upside risk in Mexico because we believe that what we have expecting already for some time, the growth in the informal sector, as well as infrastructure is already happening, and that accounts for about 60% of total demand. We have to take into consideration also that we have elections in mid-term, so we are kind of cautious on the trends for the whole year, that's why we are not increasing our guidance even more despite of the good results that Mexico showed during the first quarter, but yes, we might have an upside risk in our estimates in volumes in Mexico.

And maybe I can address the US question? Fernando Angel González Olivieri: Please go ahead.

Marcus, I just like to say that Fernando kind of discussed the pricing environment in the US in his comments and it's very important to note actually that in the markets where we announced pricing increases for January, were starting January, Florida, Colorado, Ohio, Pennsylvania, Kentucky, Tennessee, the Carolina which represent - they represent around 40% of our volumes during the quarter and there if you take a look at kind of the volume weighted pricing increase, it's almost $9, that is almost representing about a 9% increase. That is awfully close to most of the pricing increases that we have announced. Now we were also quite encouraged frankly by the response to the pricing increases for April, and the markets that are affected with the April pricing increases represent about 53% of the markets, that's California, Texas and Georgia. So we think the supply demand dynamics are quite positive and we have high conviction on the pricing dynamics, not just in cement but across all of our products. I don't know if that answers your question Marcos [ph].

Yes, sure. Thank you very much, that was clear.

Thank you. Fernando Angel González Olivieri: Thank you.

And the next question comes from Marimar Torreblanca from UBS.

Hi guys, thanks for the call and congratulations also on your results. I have a question on your leverage ratio, can you tell us if you have a target for year-end considering the FX environment and also maybe if you can give us an update on the asset sales plan that you have for this year? Fernando Angel González Olivieri: Yes we do have a target for leverage ratio but we don't disclose it. But I can tell you that it will be - there will be an improvement compared to last year, there was improvement already compared to last quarter, the numbers I remember is 5.19 compared to 5.11 or so. And that is a trend that we have seen in the last two three years and the trend will continue and I do expect this trend to even accelerate as long as we manage to continue to providing good results and we manage to make the - to execute our 2015 program in order to support our objective of gaining back our investment grade which is - this is related to your second question on divestments, we don't have a significant amount of divestments already done, we are in progress as we have commented, the time horizon we have is from where we started last January and as of mid-next year. What I can tell you is that we are moving forward, we have divested some minor productive assets but we feel confident that in this time horizon we would be able to divest the assets for the amount we have been targeting from $1 billion to $1.5 billion. I don't know if that answers the question very much.

Yes, yes, thank you. Fernando Angel González Olivieri: Thank you very much.

And the following question comes from Mike Bett [ph] from Jefferies.

Yes, thank you very much. Maher, two questions please. Firstly, I think you remember, a year ago in the US there was a lot of maintenance spending that impacted the results, was there any benefit this time from the non-recurrence of that? And then secondly, in terms of the cost reductions, you can clearly see them in the overall results. So I'm wondering if you could give us some idea of where is that concentrated in terms of the regional mix in Q1. Thank you. Fernando Angel González Olivieri: On the first question on maintenance, the difference is not significant, yet we might see some difference as we advance in the year but so far this quarter we don't have a significant difference to show. On cost reduction, what I can mention is, as I already mentioned there is an impact because of the divestment in Germany but as I mentioned in terms of margin for about a third of it but the rest is reduction and cost and expenses across the Board and I don't have any specific comment, it's everywhere, the program we design and started executing in January is global and it's happening - I'm very pleased to say it's happening almost everywhere. The other comment that just in case it was not properly communicated, the other comment is that this first quarter - even though we are reducing cost and expenses, our energy cost did increase by 5% and it has to do with the mix of countries increases in Egypt and increases in Mexico, but at the same time through the year we will see that the inventories that we are using at higher prices are depleted and now we are going to start getting to benefit of lower cost of pet coke and other fuels.

Okay, thank you. And then just one small question, it's the final one. The 7% of the market in the US where you haven't raised cement prices either in January or April where is the 7% that prices aren’t going up and why?

Well I think, I mean it's probably just very small markets because I went through the list of the areas where we've done it - I mean there is really frankly no reason, we have to break down for - like you said, 93% of the market so far but - and there will be efforts obviously going forward for additional reviews of the pricing environment in the US as well on back of the results that we've gotten so far but there is really no reason why we have not had a 100% increases in prices throughout our portfolio.

I understood. Thank you very much. Fernando Angel González Olivieri: Thanks.

And our next question comes from Adam [ph] from BB&T Capital Markets.

Hi, good morning, congrats on a solid start to the year. Fernando Angel González Olivieri: Thanks.

In the US, how easy it is to switch from summit to construction summit, can you share your thoughts on whether you will be doing that this year?

Yes, it's not - I mean it's not easy but it's doable and we are certainly looking at possibly doing it, especially in Texas where the market continues, I mean despite the drop in oil well cement, as you know, leading up to this correction in the oil well cement market, Texas was a net importer of cement from neighboring states, we were importing for instance cement from Colorado, others bring cement from other locations and the state despite the drop in consumption continues to be a net importer of cement, albeit a very small amount. So clearly, to the extent that we need to for instance convert one of our oil well cements in Texas to regular cement, we will do that and it can be done and the switch is not that costly frankly.

Okay, good, thank you.

Thank you.

And the next question comes from Dan MacGowie [ph] from Citigroup.

Good morning, thanks for the call. Question is on prices and market share, in Columbia you mentioned your price increase is through but it looks like exceeded a fair amount of market share. You've been successful on the price increases in Mexico and the US, I'm wondering if you talk a little bit about whether or not that's come at the expense of market share in both countries and obviously, the focus on the regional markets where you're operating. And then the second question is just on the US, you had as usual a fairly significant drop in EBITDA margin quarter-on-quarter although for the lower volume amount the step down from the 15% EBITDA margin level in the fourth quarter to 7.5% is steeper than usual, I'm wondering as we move into the seasonally stronger quarters, if you could talk a little bit about the slope of increase heading into the mid-year in the US, specifically I'm referring. Thanks. Fernando Angel González Olivieri: Alright, let me start with the first question on prices and market shares, particularly in Columbia. As we commented, the comparison of first quarter 2015 to first quarter 2014 is a challenging one. Pricing initiatives or price increases happen in different ways in different times of the year and it happens that last year we did take the initiative during the first quarter and on balancing our market share, and this year we did take the initiative to increase prices and that did affect our market share, we don't know exactly to what amount, we don't have market information as of today for the first quarter but definitely we know it was affected for the dynamics and the comparison then it's very challenging. Is that going to affect our regular precision in the market in Columbia mid-term, I don't think so. I mean these are the characteristics of price increases, again with the objective of recovering prices in real terms, you act on it and you have to see how the dynamics go and then you have to react to them. Definitely the impact on the first quarter this year - although again we don't have information but we know we suffered on market share for the first quarter but we do expect that to come back little by little. In the case of Mexico, I think the pricing dynamics - we don't think, again, just clarifying we don't have market information that fast but we do think that in Mexico the impact was not as high as it was in Columbia. And in general terms, yes, the process is about the same, every time you try to increase prices, you have the same affect. Again, unfortunately at this point in time we don't have reliable data on market performance in either country, Columbia and Mexico, and we cannot provide specific figures on market share as of today.

And Dan, I don't know - I forget, did you have a similar question in terms of market share on the US or not?

No, I mean I think it became clear, I mean you don't have the specific data on market share yet but the color is provided on that is fine.

Great, now in terms of the EBITDA margin differential between fourth quarter and first quarter, I mean obviously you have enormous seasonality and non-comparability between those two quarters and if you look at prior years, for instance, if you take a look at the example of 2013 for instance, 2013 fourth quarter versus 2014, I mean it's not comparable, frankly, so that analysis is - I mean we can certainly look into it but it's really not comparable frankly. There are some maintenance issues potentially, inventory effects that could be there depending on whether and in line with maintenance as well. So I wouldn’t draw a lot of conclusions now in terms of the improvement in the margin for the year, clearly the answer is yes, right, I mean - because the first quarter is the weaker quarter, we had volumes that were flat in cement; cement is our - clearly has the highest margin contribution, has the highest operating leverage within the business. So clearly as we proceed during the year and get closer to our guidance, hopefully for volumes in cement, that will have a very positive impact on the EBITDA margin clearly.

I guess, maybe the simpler way to ask if I may is if you're looking for mid-single digit volume growth in the US and your tracking at better than mid-single digit price increases, if you could talk a little bit about where you think EBITDA margins might be in the US in your seasonally stronger quarters?

I mean we don't - we don't guide, I mean what I can point you at frankly is the only thing that we have given out publicly ensured that would help you in that area is what we said about full year EBITDA for the US. I mean which we said that it's going to be in excess of $600 million for the year and so you can extrapolate from where we are in the first quarter, you could look at seasonality to second and third quarter are the best quarters for us typically during the course of the year unless we have some exceptional weather on the end caps of the year. And you would get an idea of where EBITDA margin is likely to be towards the end of the year but clearly it's going to be an important level higher than it was in the first quarter.

Understood, thank you.

Okay, thank you.

And the following question comes from Alvaro Garcia from BTT [ph].

Hey guys, good morning, congrats for the results. Two questions, first on taxes, I mean the guidance came down marginally, I was just curious what was driving that, one. And two, on the Federal Highway Program in the States, you mentioned spending as far can be flat throughout the second half of the year and the continuation of that, is there any risk that might not be the case and just a general outlook on the infrastructure space in the US would be great. Thanks.

In the case of taxes there are two reasons; on the one hand we are respecting lower taxes in many forward regions than what we estimated late last year or early this year plus there is also some impact because of - we have weaker currencies and that has some effect in our estimates. And talking about the US, I mean infrastructure in particular, despite the fact that we had fairly flattish performance, actual highway and bridge spending is actually up about a couple of percentage point’s year-to-date. And we believe the thing that is going to be further kind of adding to that growth is what's happening by with TIFIA. 13 of the TIFIA projects for value of slightly more than $20 billion, about $22 billion are in our markets. So, yes, we don't expect out of the ballpark performance but we do expect things to get better during the course of the year and again I would really point to some of the weather effects that we have seen. And also let's not forget that in Florida, one of our most important markets we had very important projects that had been completed the Tampa Waterway, but when we look at our backlog of projects throughout our four big markets, we're quite encouraged frankly with the outlook and being able to kind of get back on trends where we expect growth of the year to be for the infrastructure segment. Again, we don't expect out of the ballpark, we do expect residential to be the very large contributors and industrial and commercial to be the largest contributor. I don't know if that addresses all of your questions?

No, no, that's very clear, thank you very much Maher.

Great, thank you.

And the next question comes from Yassine Touahri with Exane.

Couple of question, first a question on the United States, I understand that volume in Texas in January and February for the market were down approximately 10%, what kind of trends have you seen in March on that field and in terms of these trends, how confident are you about your ability to increase prices in Texas, that would be my first question. And the second question on the improvement of your results in Northern Europe which were quite impressive. Is it fair to achieve that approximately $15 million improvement in EBITDA was related to the German disposals, and that most of the improvement elsewhere comes from the UK? Fernando Angel González Olivieri: Regarding your second question, the main - the explanation for the variation comes mainly from the UK. In the UK, the business perform much better and on top of that there is a time issue with our maintenance of our main or largest cement plant in the UK probably which last year happened in the first quarter and this year is going to happen most probably during the second quarter. But most of the explanation for the variation comes from the US and to some extent due to the German - the divestment of our Western German assets, but again, it's mainly the UK.

Thank you.

And Yassine, regarding your question on Texas, if we exclude oil well related cement and I'm talking about here specifically oil well cement meaning cement going to oil well construction and then grey cement going to projects that are related to oil well construction, if we exclude that then volumes would be flat for us. Now official data on the Texas market unfortunately is only available for the first two months of the year and that shows actually growth of 2% for the state, not necessarily for us, right. Now we do happen to have the largest exposure to the oil well market and that has already corrected significantly, so we don't expect frankly material corrections from here on. We talked about bad weather which we think - that's hopefully, I mean nobody has a crystal ball about the weather but hopefully we'll get better weather during the course of the year but I would say that probably a better - as it is for the rest of the US, I would say a very good indicator of growth is what's happening on ready-mix. I mean for the whole country, ready-mix for us was up 15% and when you were just for the swap that we did with Vulcan, it would be about 13% growth. We have a similar kind of healthy growth in Texas, Texas ready-mix volumes are up 14%. So, again, not to - I don't want to say there is a 100% correlation but clearly when you take a look at the markets where we're integrated that were not impacted by weather, the growth is very healthy, it's double digits. So, now to go back to your question on pricing, I mean Texas, we need to still remember despite all of these dynamics continue to be sold out and actually continues to be slightly net importer of cement, so even - so supply demand dynamics continue to be actually quite positive and we're quite encouraged by the reception of the pricing increase since the beginning of this month.

Okay. And approximately the wrath [ph] on Germany, you mentioned that German disposal was approximately 50 basis points of margin expansion. Is that correct? So it means that it was - Germany posted a $15 million EBITDA loss in Q1 last year?

No, it doesn't - that amount it doesn't sound like not even close to what it was - I don't have the specific number with me but we will come back to you with the specific number on that on the impact of those assets. Fernando Angel González Olivieri: Yassine, I'll get back to you on the follow-up question on Germany after the calls, if you don't mind.

Thank you. Fernando Angel González Olivieri: Thank you. Did we address all your questions, Yassine?

Yes, you did. Fernando Angel González Olivieri: Thank you very much.

We have time for one more question and that question comes from Lillian Starke from Morgan Stanley.

Hi, good morning and thank you for taking my call. I was just wondering on the Columbian pricing, if you could give a bit more color where did you see that pricing take phase and as well in terms of the market share, if there was a specific region where you saw more pressure on volumes? Fernando Angel González Olivieri: Well, don't have any additional information on pricing on top of what we have already disclosed. And again on market share we do have indications but we don't have formal information about the market performance for the quarter yet. What I've been explaining is that the process that we normally go through when we initiate and leave price increase, and the impact which is material compared to last year volumes of minus about 15%, to some extent it has to do with the impacting volumes because of our price increase initiative this year but it also has a very significant effect because of the comparison to last year in which exactly the opposite happened. So definitely we shouldn't expect volumes dropping as much as first quarter for the rest of the year and even our volumes in March and the part of April we have gone through are much better than January and February, but again, unfortunately, we don't have data to share on the specific numbers in March at this point in time.

Okay, thank you very much. Fernando Angel González Olivieri: Thank you.

Thank you.

And we have no further questions at this time, and I will turn the call over to Fernando González. Fernando Angel González Olivieri: Well, thank you all for your time and attention. We look forward to your continued participation in Cemex and please feel free to contact us directly or visit our website at any time. Thank you and good day.