CEMEX Presentation - encontroderi.com.br · Internal distribution of analyst reports on CEMEX and...
Transcript of CEMEX Presentation - encontroderi.com.br · Internal distribution of analyst reports on CEMEX and...
Leading global construction materials player with $15 Billion in sales in 2011
Current market capitalization of approximately $6 billion with $8 billion in
bonds outstanding
Consolidated home market in Mexico and then began international
diversification
Multinational player with operations in more than 50 countries
Major markets include Mexico, U.S., Europe and South and Central America
Who is CEMEX?
2
EBITDA 2011 (US$2.3 Billion)
45%
19%
16%
17% 3%
Mexico
South/Central America
Northern Europe
Mediterranean Asia
SALES 2011 (US$15.1 Billion)
24%
12%
32%
12% 3%
Mexico
South/Central America
Northern Europe
Mediterranean Asia
17% U.S.
Global leader in building materials
24%
12%
32%
12% 3%
17%
3
Lagging share price despite strong performance
Capital intensive industry and capital constrained home market
Perceived as a Mexican/Latam or Emerging Market company
Valuation driven by Mexican or Latam flows
Difficulties with Mexican GAAP
Limited disclosure
What were the challenges?
5
SEC registration and listing on the NYSE
Increased commitment to the IR function
Crafted a compelling and differentiated story
Initiated investor targeting and contact management strategies
Enhanced disclosure and transparency
Financial branding
Initiated retail effort
IR plan - actions taken
6
Our goal has been to target global funds, anticipating the rotation of our
shareholder base, diversifying away from dedicated EM money
IR Plan- Actions taken
-Investment driven by
geography
- Highly sensitive to
region- specific macro
events / outlook
-Investment driven by
fundamentals
- Low sensitivity to
region- specific macro
events
MEXICO
LATAM / GEMS / BANKS (20%)
CEMEX
(2000 -2003)
CEMEX
(2003 -2005)
CEMEX
(2006 +)
Money available for investing +
Pro-active targeting effort leading to orderly rotation
-
CEMEX
(- 1999)
GLOBAL
GEMS / GLOBAL
7
Investor Relations activities
Institutional Investor
Relations
Analyst Relations
Retail Investor
Relations
Internal
Communication Effort
Quarterly Reporting
Process
Financial Press
Releases
Annual Shareholders’
Meeting
CEMEX Day
Other Investor and
Analyst Events
Other Activities
Institutional Investor
Surveillance
Investor Targeting
Effort
Investor
Relations
Activities
8
Target key investors
Build investor profiles
Assess possible reactions
Anticipate stock / bond price changes
Know your investors
It is essential to know what drives investors into your
stock/bonds and how their behavior affect their value
10
Investor concentration
A small number of
investors are responsible
for most of the price
change of a stock
11
Key investor targets
Investors who own comparable names
• Industry peers and companies in related businesses
• Investment style and turnover
• Similar valuation metrics, leverage, geography
Current investors willing to buy more
Past shareholders / bondholders
Investors that buy on the basis of technical or strategy change
Investors who are short the stock / bonds
12
Drivers
Time horizon
Portfolio composition
Building investor profiles
Key questions
Knowing what drives an investor helps
us tailor the message to that investor
13
Develop robust contact management and surveillance system
Allows for seamless account coverage among IR team members
Evaluate effectiveness of strategy
Managing investor contacts
What can’t be measured can’t be managed
14
CX investor snapshot
CEMEX Investor Breakdown
(percentage of total shares outstanding*)
U.S. Retail
Unidentified Inst.
Institutional (Rest of World)
Institutional (U.S. + Canada)
Mexico 43%
30% 27% 22%
28% 28% 33% 33% 32% 34% 27%
25%
34% 35% 41%
42% 37%
41% 47% 48% 47%
52%
9% 11% 14% 14%
11% 12%
7%
6% 8% 9% 10%
5% 7%
12% 16% 12% 4% 5% 3% 4%
3% 5%
7% 7%
7% 6% 7% 10% 7% 7% 7%
20% 20% 12% 9%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Banks
*Total shares issued and paid less shares in subsidiaries as of December 31, 2011 16
Top 50 ownership
Percentage of shares held by our top 50 Institutional Investors
28%
37% 38%
42% 42% 40%
44%
49%
46%
51%
57%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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Institutional shareholders by investment style
Momentum 6% Growth 13%
Value 57%
Income 1%
Specialty 4%
Index 16%
GARP 3%
Based on top 100 Institutional Investors
As of May 2012 18
Deepens natural demand and liquidity
Most educated investor base – better valuation
Lower turnover institutional investor profile
Greater likelihood of shareholder activism
Higher demand for predictability
Greater disclosure and transparency
Senior management participation
Implications of increased institutional ownership
19
Ownership of U.S. Retail Investors (millions of ADSs)
Success of cross-border retail strategy
9
19
29
36 34
47 47
53
76
66
71 74
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
20
Long-term, low-turnover holders
Provide stock price stability
Complement commercial PR campaign
Fragmented decision making
Important for financial branding
Increased administrative cost in managing retail ownership
Importance of retail ownership
21
Top 50 investors ownership (million ADSs) 255 (38%) 570 (57%)
Retail ownership (million ADSs) 29 74
Outstanding ADSs (million) 648 1,008
Average daily volume traded (US$ million) 25 91
Notes outstanding (US$ million) 0 7,250
Convertible notes outstanding (US$ million) 0 2,700
Roadshows / conferences North Am and Mexico 20 29
Roadshows / conferences Europe and South Am 6 10
Total investors met 500 700
Number of analysts covering CEMEX 13 39
People in IR team 9 7
2003 2011
Investor Relations team and coverage
IR team split between New York and Monterrey
IR developed a Fixed Income coverage initiative in 2011 with Fixed Income representing 45%
of CEMEX’s total enterprise value
Excluding index and passive investors 22
PEERS EV/EBITDA
CEMEX 9.1x
Lafarge 6.7x
Holcim 7.1x
Heidelberg 6.2x
Vulcan Materials 14.1x
Relative valuation
Based on sell-side 2012 EBITDA and Net Debt consensus
As of June 26 2012
24
27
Investor contact efforts include:
• Participation in conferences, roadshows, and investor meetings in our offices
• CEMEX events including CEMEX Day and others
Anticipate reactions from investors to different news and events
Prioritize calling effort on current and potential investors based on targeting
• More frequent contact with higher-ranked investors
The area has increased the number of shareholders and attracted several billion
dollars of new shareholders, diversifying shareholder base by geography and type
Institutional Investor Relations
IR activities
Link between CEMEX and all research analysts that cover CEMEX and influence
buying decisions through written research
• Discuss main issues surrounding CEMEX
• Provide feedback on their models and assumptions in their reports
• Circulate research reports to management
Manage information flow to and from analysts
Analyst Relations
IR activities
Retail Investor Relations
Effort to raise retail awareness started in 2001
• Now considered a leader among ADS issuers in developing retail ownership
U.S. retail holds about 7% of CX shares, up from 3% in 2001
• Relatively high percentage for ADS issuers
• Participation was about 10% in 2008, prior to crisis and dilution from equity raise
Marketing done via
• Presentations to certified financial analysts (“CFA”) and brokers in U.S. and
Canada, reaching 600-700 brokers
• One-on-one meetings with brokers and high net worth asset managers in the U.K.
• Directed advertising campaign to approximately 2,000 brokers in the U.S.
Effort requires ongoing commitment to communication with retail investors
IR activities
Internal communication effort
Regular feedback from analysts and investor community to Senior Management
• At least once a month to Chief Financial Officer during monthly meetings
• Additional feedback e-mails and calls to Senior Management
Periodic presentations to Board of Directors and Executive Committee
Internal distribution of analyst reports on CEMEX and other industry-related reports
IR activities
Quarterly reporting process
Preparation of public documents and filings with SEC and BMV
• Quarterly Report with financial results, operating results and other activities in the
quarter
• Presentation developed to support script during video webcast
Additional set of documents to support quarterly results and post-results investor
conferences and meetings
31 IR activities
Financial press releases
Preparation of financial press releases and participation in other press releases in
coordination with other areas
Anticipation of market reaction to press releases
• Develop Q&A and message tracks
IR activities
Annual Shareholders Meeting
Responsible for proxy voting process for ADS holders
Activities
• Review and approval in coordination with Legal of proxy voting information
• Answer investor questions on items to be voted on
• Website information including Convocatoria, dividends, increase in stock, etc.
• Related press releases and filings
33 IR activities
CEMEX Day
Annual event where senior management present business outlook and strategy to
the financial community
Held in accessible location to maximize attendance (eg. NY area)
Invitees include top equity and fixed income investors, other target investors,
analysts, banks and rating agencies
IR activities
Other investor and analyst events
Facilitate analysts’ understanding of CEMEX through various events, plant visits and
interaction with senior management
Previous events include:
• Aggregates presentations and FEC quarry visit after Rinker acquisition (Miami)
• Energy roundtables
• Victorville plant visit and presentation by ARTBA (Los Angeles)
• Visits to various facilities, typically with analysts and their investors
IR activities
Other activities
Annual report
20F
• Provide IR-related information
• Support with reviewing and commenting on the document
• Printing of the document
Provide support in marketing efforts and documentation of M&A and capital markets
transactions
Maintenance of IR section on website
IR activities
Institutional investor surveillance
Objective: to monitor changes in our shareholding base
External provider tracks investor holdings
• U.S. investors primarily through SEC required quarterly holding disclosure
• In other countries through direct requests (disclosure is voluntary so information is
incomplete)
• Daily settlement information of CEMEX stock among principal custodian banks is
also followed
37 IR activities
Investor targeting effort
Effort to identify our target institutional investor market and provide a quantitative
means to assess our investor relations efforts
Investor targets current and potential investors based on relevant metrics, investment
profiles and other criteria
IR team’s success in meeting with target list priority 1,2 ,and 3 names are criteria in
annual performance appraisal
IR activities