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Sun 20 Nov 2005 04:00 AM

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Cemex set to ready-mix it

Francisco Perez, regional director of Cemex Gulf States — sponsors of last week’s Construction Week awards — talks to Zoe Naylor about the company’s growth, activity and success in the region.

|~|96int200.gif|~|Perez: “We are proud to have been the sponsor of the CW awards 2005.”|~|What does it mean for Cemex to have been the main sponsor for the 2005 Construction Week Awards?

Firstly, we would like to congratulate all the winners of the CW Awards 2005 and thank all the participants who joined us in this annual tribute to the construction industry’s best of the best.

We are very proud to have been the principal sponsor of the CW Awards 2005. We believe that it is essential to celebrate excellent accomplishments in the construction industry and to recognise outstanding achievements in that field.

What is the background history of Cemex?

Cemex is the world’s largest cement and ready-mix concrete
company with operations in 53 countries and annual sales of over US $15 billion.

It is also the world’s biggest trader of cement and the most profitable cement company. We have the capacity to manufacture 97 million tonnes of cement per year, 77 million m3 of ready-mix, and 195 million tonnes of aggregates.

Where did Cemex originate and how did it become such a giant in the building materials industry?

Cemex was founded in 1906 in Mexico. In 1989, it entered the southern US market. Then in 1992 Cemex made two major acquisitions in Spain that gave it an important foothold in Europe, where its major global competitors were based.

In the mid-1990s Cemex made several acquisitions in
various Central and South American countries, making it the world’s third largest cement producer, with a solid presence in Latin America. Cemex entered the southeast Asian market in the late 1990s, a region with a high cement consumption potential.

The acquisition of Egypt’s Assiut Cement in 1999 helped to strengthen its Mediterranean system. And in 2000, the company acquired Southdown in what became the biggest acquisition by a Mexican company in the history of the US.
Cemex then became the market leader in North America.

This year, Cemex acquired the UK-based RMC Group, which expands the company’s reach to more than 50 countries and transforms it into an even more competitive player — given RMC’s leading positions in ready-mix, in aggregates and
in Europe.

How did Cemex enter the UAE and the Gulf region?

We had been studying the region for quite some time. However, the RMC acquisition propelled Cemex into the region.

Even prior to the acquisition, RMC was the leading ready-mix company in Dubai and was an important player in the Abu Dhabi market.

What are the company’s competitive advantages?

Its broad geographic diversification in markets with different economic cycles, which enables it to sustain consistently profitable growth. This also gives Cemex the financial strength and flexibility to take advantage of market opportunities.

This globalisation strategy represents challenges and to overcome them, Cemex relies on its multicultural human talent — which I feel is the best in the industry.

We also rely on a single, global IT platform to support standardised processes that we refer to as ‘The Cemex Way’. Timely and accurate information empowers our managers to make the right decisions and to therefore be one step ahead of the competition.

What is Cemex’s profitable growth business model based on?

It is based on five elements: (1) we focus on our core cement and ready-mix concrete franchise; (2) we minimise our production costs and maximise our operating efficiency; (3) we create value around our brands; (4) we optimise our logistics and regional cement systems; and (5) we allocate our capital efficiently and effectively.

This model has produced good results in bad times, and great results in good times with strong dynamics relative to our competitors. Our average EBITDA margin for the period of 1990 to 2004 is a phenomenal 31%, while our cement capacity compound annual growth rate is 10% for the same period.

Over a little more than a decade, Cemex has consolidated its business model and achieved leading positions on four different continents; produced and sustained high growth; generated high and stable margins and robust cash flows.

In doing so, we have created value through one of the highest and most profitable growth rates in the industry. Cemex’s average annual free cash flow rate is 19% — the highest in the industry.

What are the major construction projects that Cemex has recently been involved with in the UAE?

From 1994 to 1996, Cemex (then Topmix) supplied 75 000 m3 of concrete to the development of the Jumeirah Beach Hotel. In 1999, Cemex (then RMC Topmix) supplied 50 000 m3 of high quality durable concrete to piling, raft and basement building of Burj Al Arab. In 2002, we supplied plaster ‘Turath’ for the Royal Mirage - Arabian Court Residence as well as for the flagship Madinat Jumeirah development.

Cemex also supplied 6000 tonnes of GGBS for piling, raft foundation and retaining walls of Union Tower; and 78 000 tonnes to build the Conference Palace Hotel in Abu Dhabi.
We are also the sole supplier of concrete for the Dubai International Airport expansion mega-project that is still
ongoing today; and is the largest project of its kind in the world, with 2.5 million m3 of concrete being supplied over a two year period.

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