Cemex

Cemex S.A.B. de C.V.

(Cemex)

Executive Summary

This paper presents fundamental and financial analysis of Cemex. The analysis is

performed by analyzing the company's financial data for the period beginning December

2002 through December 2005.

The paper introduces Cemex by presenting the company's information and a brief

summary of its main activities. Following the introduction, the paper will perform an

extensive industry and company analysis and summarize these findings in the SWOT

analysis. This will assess Cemex's strengths, weaknesses, opportunities, and threats.

The paper will then provide a complete financial statement analysis and ratio analysis.

In conclusion, the paper presents an assessment of the intrinsic value of Cemex and a

recommendation based on the company's valuation and findings presented in the paper.

Cemex S.A.B. de C.V. (Summary)

Corporate Headquarters Address: Cemex SAB

Ave. Ricardo Margain 325

Garza Garcia,N.L.

Mexico 66265

Web Site: http://www.cemex .com

Telephone: (81)8888-4292

Main Business: Production, distribution, marketing, and sale

of cement, ready-mix concrete, aggregates, and

clinker

Facilities: Worldwide (50 countries)

Industry: Cement

Sector: Industrial Goods

Chairman: Lorenzo Zambrano

Annual Sales: $15.3 billion

Growth rate: 15 year growth rate of 15%

Stock Exchange: NYSE (ticker symbol CX)

Shares Outstanding 732.91 billion

Fiscal Year End: December 31, 2005 (most recent

published report)

Stock Price: $33.02 per share (as of March 6,

2007)

Company Overview

Cemex is the world's third largest cement producer behind Lafarge and Holcim

(formerly Holderbank). It operates in 50 countries around the world with a concentration

on the America's and Europe. It also has a presence in Africa, Asia, and the Middle East.

In 2005, it completed a US $5.8 billion acquisition of RMC Group, one of Europe's

largest producers of cement and aggregates and the world's largest supplier of ready-mix

concrete. This acquisition doubled the size of Cemex. In October of 2006, it put in a

hostile bid to acquire Rinker Materials Corp. (NYSE: RIN) for $12.8 billion. This would

nearly double the size of the company again. This possible acquisition will play out in

the second quarter of 2007.

Cemex is a vertically integrated company that mines the aggregate and uses this

material in the manufacturing of portland cement. The cement and additional aggregate

material is then used at a ready-mix plant. The ready-mix plants combine these materials

to customer specifications and deliver the concrete to the end user. The company also

has import/export terminals to ship cement to a region that needs the additional supply of

cement. This will allow maximum cement production of their cement plants if a slow

down occurs in one area of the world.

Cemex S.A.B. de C.V. posted record financial results in fiscal year 2005. Diluted

earnings per share rose to $2.15, and increase in 55% compared to the previous year.

Gross and operating margins also significantly increased, reaching 69% and 34%

respectively. Cemex has a solid balance sheet with stockholders equity of $9.826 billion

and total assets of $26.763 billion. Stockholders equity increased 25% while total assets

increased 54%.

The cement industry is currently undergoing a consolidation. As previously mentioned,

Cemex is trying to acquire Rinker Materials Corp. Vulcan Materials (NYSE:VMC) has

acquired Florida Rock Industries ( NYSE: FRK). The Vulcan Materials acquisition was

at a 44 % premium while