Although a Challenging Environment 2025 Guidance Was Reiterated

• Although the environment was challenging (still bad weather conditions and higher comps), the Cement companies under coverage reiterated their 2025 guidance, anticipating a gradual improvement in EBITDA during 2H25.
• Total revenues in 1Q25 decreased by 8% YoY, while total EBITDA dropped by 17% YoY. As a result, the implicit EBITDA margin in the sector contracted 2.0 pp on a YoY basis to 17.3%. In that context, GCC posted the lowest EBITDA margin contraction (-0.6 pp), while CEMEX's EBITDA performance accounted for an 18% YoY drop, resulting in a 2.1 pp contraction in its EBITDA margin. Please note that the sector's solid financial position remained strong, with low leverage debt ratios.
• We reiterate our positive outlook for the sector. Current prices offer an attractive potential upside for long-term investors, supported by appealing valuations. Our Outperform ratings and PT are reiterated.

1Q25 in a Nutshell. The quarterly figures of CEMEX and GCC came in line with our estimates, but slightly lower than the consensus expectations. Total revenues in 1Q25 for the sector dropped 8%, while total EBITDA was down 17% YoY, implying a 2.0 pp YoY contraction in the EBITDA margin. GCC posted the lowest EBITDA margin contraction (-0.6 pp), while CEMEX's EBITDA performance accounted for an 18% YoY drop, resulting in a 2.1 pp contraction in its EBITDA margin. It is worth noting that a favorable price environment partially compensates for lower volumes.

2025 Guidance. Overall, the companies' guidance for 2025 was reiterated, and they are still maintaining a positive outlook for the rest of the year. Although the environment will remain challenging, both companies are anticipating a gradual recovery in volumes during 2H25, with the US market being one of the main markets with volume recovery. From the pricing perspective, it will maintain its positive trend with mid-single-digit growth. Related to potential tariff implementation in Mexico, it is still too early to say what the impact would be for both companies. However, the top management of CEMEX and GCC remained optimistic regarding their operating leverage, which would result in a gradual EBITDA margin expansion during the rest of the year.

We reiterate our positive outlook in the sector. Current price levels offer an attractive potential upside for long-term investors, supported by appealing valuations. CEMEX 2025 EV/EBITDA of 4.8x has a 49% discount against international peers, while GCC’s 2025 EV of 5.1x implies a 46% discount vs international peers and a 65% discount against US companies.