Q3 Preview: Weaker Margins. How Much Further Will They Fall?

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Cemex has formally reduced its guidance from an H2 EBITDA of around $1.6bn to about $1.5bn and highlighted the uncertainty about Q4.

Our trading update discussions with other companies have caused us to cut our full-year estimates more broadly.

Higher costs, particularly for energy are exceeding price increases. We expect the resulting downward pressure on margins in Q3 to continue in Q4 and our 2022 forecasts remain under review.

Substantially greater price increases will be required in 2022 to avoid a further reduction in margins. Near double-digit percentage price increases may be required, well above the average 2-5% increase in recent years.

Customers are already being informed about next year’s planned larger price increases, but will they hold? This year’s attempt at raising prices further, as costs have continued to increase, appears to have only had limited success.