GCC Reports a Decrease in First Quarter Net Sales

Grupo Cementos de Chihuahua, S.A.B. de C.V. announced its results for the first quarter of 2019. The company reported consolidated net sales decreased 1.9% to $163.4 million in the first quarter compared to the prior-year period. This was primarily due to lower cement and concrete volumes in the United States, which was partially offset by higher cement and concrete volumes in Mexico and a favorable price environment in both markets.

“The underlying trends in our business are strong in each of the markets where we operate in the United States and Mexico,” said Enrique Escalante, GCC’s chief executive officer. “The U.S. operations slowed with severe inclement weather continuing into the first quarter. However, there is a strong backlog and we are picking up the pace as the weather conditions improve. We expect to end the year in line with our guidance as the first quarter historically represents around 12% of the results for the year.”

U.S. sales, which represented 63.2% of GCC’s consolidated net sales, decreased by 6.9% to $103.4 million, due to a 7.3% decline in cement volumes and a 17.0% decrease in concrete volumes. This was partially offset by a 3.1% and 0.4% increase in prices, respectively. Excluding acquired operations, U.S. sales would have decreased by 9.9%.

Cement sales volumes were primarily impacted by adverse weather conditions including severe rains, snow storms and a longer than normal below-freezing temperatures in nearly every U.S. market in which GCC operates, contributing to the decline in sales volumes. Excluding acquired operations, cement sales volumes would have decreased by 12.4% and cement prices would have increased by 4.6%.

Mexico sales, which represented 36.8% of GCC’s consolidated net sales, increased 8.1% in the first quarter 2019, to $60.1 million. This was due to a 3.8% increase in cement volumes and a 0.9% increase in concrete volumes, with a 7.1% and 10.7% increase in prices, respectively. Escalante noted that Chihuahua market continues to outperform, driven by “robust mining shipments, industrial maquiladora plants and warehouse construction and middle-income housing starts.”

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