Although a Challenging Environment, the 2H25 Would Have Positive Recovery

• Although the environment was challenging (still bad weather conditions, higher comps, and weak demand), the Cement companies under coverage anticipate robust 2H recovery results.
• Total revenues in 2Q25 decreased by 5% YoY, while total EBITDA dropped by 11% YoY (a lower decline rate compared to 1Q25). As a result, the implicit EBITDA margin in the sector contracted 1.4 pp on a YoY basis to 21.0%. In that context, CEMEX (CX) posted the lowest EBITDA margin contraction (-1.2 pp), while GCC's EBITDA performance accounted for a 12% YoY drop, resulting in a 4.6 pp contraction in its EBITDA margin. 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 rating is reiterated for CEMEX and GCC, while our 12M price target in CEMEX was increased to P$19.0 (from P$15.0), and GCC's PT was down to P$210.0 from P$247.0 per share.

2Q25 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 2Q25 for the sector dropped 5%, while total EBITDA was down 11% YoY, implying a 1.4 pp YoY contraction in the EBITDA margin. CX posted the lowest EBITDA margin contraction (- 1.2 pp), while GCC's EBITDA performance accounted for a 12% YoY drop, resulting in a 4.6 pp contraction in its EBITDA margin. A favorable price environment partially compensates for lower volumes.

2025 Guidance. CX reiterated its 2025 guidance, anticipating a gradual recovery during the 2H25. In contrast, GCC revised its EBITDA guidance downwards, anticipating a mid-single-digit decrease from a previous expectation of mid-single-digit growth. Although the environment will remain challenging, both companies are anticipating a gradual recovery during 2H25.

Positive 2H25. According to our estimates, we anticipate that total sales in the sector would increase +3%, while total EBITDA may advance by a solid +9%. CEMEX should post the strongest recovery, with an implicit +3% YoY in total revenues and a robust 10% gain in EBITDA, mainly explained by a low comparison base, and a gradual improvement reflecting its cost savings program. On the other hand, in GCC, we have a conservative estimate. Total revenues may gain +3% YoY, while EBITDA may remain flat in comparison to 2H24, but improving sequentially after a 12% drop in the 1H25.