Anne Milne

Anne Milne from Bank of America asked about the company's financial strategy following the redemption of its 9.125% perpetual notes, including plans for other notes and potential new financing.

Answer

CFO Maher Al-Haffar stated that the primary goal is reducing interest expense through continued deleveraging. He confirmed that perpetual notes remain part of the capital structure and they will monitor markets to refinance the called notes at a lower cost. He added there are no immediate plans to call the other perpetual note and that the company is exploring refinancing options for some euro-denominated debt.

Anne Milne from Bank of America asked via webcast about CEMEX's current export levels from Mexico to the U.S. and how potential tariffs on Mexican imports could impact operations and product flows.

Answer

Executive Lucy Rodriguez stated that Mexico's exports to the U.S. were about 5% of its volume in 2024, with plans to reduce this to 2.5% in 2025 for economic reasons, independent of tariff discussions. She noted that broad-based tariffs would likely be positive for domestic pricing by raising import parity, while targeted tariffs would have a neutral effect.

Anne Milne asked about the primary drivers behind CEMEX Europe meeting its emission targets ahead of schedule and whether other regions were on a similar trajectory.

Answer

Executive Fernando Olivieri attributed the success in Europe to the 'reduce before capture' strategy. Key drivers included high usage of alternative fuels, achieving a clinker factor below 70%, and using decarbonated raw materials. He noted that progress is company-wide, as CEMEX has already surpassed its 2025 global target for sales of its lower-carbon 'Vertua' products, indicating that other regions are also contributing significantly to decarbonization goals.

Anne Milne of Bank of America Merrill Lynch inquired about the current status of gasoline and diesel prices in Colombia and the expected impact on the Fuel Price Stabilization Fund (FEPEC) balance going forward.

Answer

An executive explained that recent fuel price increases have helped reduce the FEPEC balance, which stood at COP 2.5 trillion at the end of the first half. They noted discussions are ongoing for further diesel price hikes in early 2026. The company expects the year-end FEPEC balance to be around COP 5 trillion, supported by timely payments from the nation.

Anne Milne asked about Brazil's strategic importance, valuation changes for Argentine assets, potential operator roles in Argentina, and financial details regarding further bond buybacks and minimum cash levels.

Answer

CEO Felipe Bayon confirmed the primary focus remains on Colombia and Argentina, with Brazil under review. CFO Jaime Caballero Uribe addressed the financial questions, stating the current cash position of $266 million is strong, well above the $30-40 million minimum operational need, which provides ample flexibility for organic CapEx, M&A, and potentially opportunistic debt repurchases.

Anne Milne inquired about the drivers of higher 2024 cost of sales and the outlook for 2025, long-term production potential for 2026-2027, and the sales destinations for production from Colombia, Ecuador, and Canada, including the potential impact of tariffs.

Answer

EVP and CFO Ryan Ellson responded, stating that costs are expected to decrease in 2025 as production ramps up, particularly in Ecuador. He projected a potential 5-10% production growth rate post-2025, contingent on capital allocation. Regarding tariffs, Ellson explained that Gran Tierra is well-insulated and could be a net beneficiary, as tightening differentials in South America would more than offset any negative impacts from tariffs on its Canadian production.

Anne Milne asked about Gran Tierra's confidence in meeting its 2024 EBITDA guidance, the timing for 2025 guidance, the expected increase in 2025 CapEx, the outlook for oil price differentials, and the long-term production mix between Canada and South America.

Answer

EVP & CFO Ryan Ellson expressed confidence in meeting 2024 guidance and said 2025 guidance will be released in early January. He anticipates Canada will be cash flow neutral in 2025, with CapEx driving production growth. He attributed wider differentials to market competition, partly from Canada's Trans Mountain pipeline, and confirmed South America will remain the majority EBITDA contributor for the foreseeable future.

Anne Milne requested an update on global supply and demand dynamics, particularly regarding China and potential capacity shutdowns, and asked about the status of the due diligence by the Kuwait Investment Authority.

Answer

Executive Pedro van Langendonck Teixeira de Freitas confirmed that the Kuwait Investment Authority is the only party currently conducting due diligence. On market dynamics, he noted a more balanced polyethylene market but sees new polypropylene capacity coming from China. He highlighted that players like Sabic and Exxon are reducing production in Europe and that Braskem has idled a PP line in the U.S., with a slow global recovery expected.

Anne Milne from Bank of America requested an update on global supply and demand dynamics, particularly regarding new capacity from China and the Middle East, and asked about the status of the Kuwait Investment Authority's due diligence on the company.

Answer

Executive Pedro van Langendonck Teixeira de Freitas confirmed that the Kuwait Investment Authority is the only party currently conducting due diligence and the process is ongoing. On market dynamics, he noted a better balance in polyethylene but sees more polypropylene capacity coming from China. He observed players globally reviewing assets and pointed to low operating rates in China (under 70%) and production cuts in Europe. He expects a slow recovery with global PE and PP rates remaining around 80%.

Asked for an update on global supply/demand dynamics, particularly regarding new capacity and shutdowns in China and the Middle East. Also inquired about the status of the due diligence by the Kuwait Investment Authority and if other potential buyers have emerged.

Answer

The executive noted that polyethylene supply/demand is more balanced, but polypropylene faces new capacity from China. The industry is responding with low operating rates and asset reviews globally. Braskem has hibernated one PP line in Marcus Hook. Regarding the sale process, the Kuwait Investment Authority is the only company currently conducting due diligence, and the process is ongoing.