Multinational cement company Cemex will continue to roll out price increases and expand its use of alternative fuels as it expects full-year energy costs, including from petroleum coke and coal, to post a sharp increase in 2022.
Cemex expects that full-year energy costs, including fuel and electricity, will rise by 35pc per tonne of cement produced in 2022, similar to the 37pc year-on-year rise in energy costs the company experienced in the first quarter.
Across the group, first-quarter cement prices increased by 12pc compared with the same quarter the previous year and prices were up by 7pc from the fourth quarter of 2021. Higher prices fully offset the group's rise in variable costs and imports in Cemex's earnings before interest, taxes and other effects (Ebitda) calculations.
But Cemex's Ebitda margins fell by roughly two percentage points on the year. The company's pricing strategy in 2022 is based on regaining 2021's margins, Cemex's chief executive Fernando Gonzalez said.
Following a January price increase in some markets, and an April increase in others, additional price increases are in the pipeline for the summer months. Cemex has also advised US customers that further price hikes beyond the summer months may be necessary.
First-quarter cement volumes fell by 1pc to 15.8mn t compared with the previous year, while revenue rose by 12pc to $3.77bn year-over-year.
"Pricing, however, is not the only lever," Gonzalez said. "We remain focused on costs. Our diversified energy supply chain and climate action strategies are paying off."
Cemex increased its use of alternative fuels in the first quarter to 33pc of its fuel mix, a new high for the company, including 65pc in its European operations. Alternative fuels accounted for about 26pc of the cement maker's mix in the first quarter of 2021.
The company expects to increase its alternative fuel substitution rate during the year, mainly in Europe, as Cemex has completed hydrogen injection installations in its European plants to improve refuse-derived fuel (RDF) combustion. This has increased the effectiveness of RDF, the company's main alternative fuel, and reduced the need for coal and petroleum coke.
The company anticipates its European plants will increase alternative fuel use to 70pc of their mix by midyear.
Cemex expects cement volume growth to hold flat on the year, with the company taking a conservative stance because of the possibility of falling residential construction demand, although it expects "significant" growth in industrial and commercial cement volumes.
"Given the successful price traction we have seen as well as additional pricing announcements, we believe that we can continue closing the gap between cost and prices," Gonzalez said.
