CEMEX, S.A.B. de C.V.
Q4 2009 Earnings Call Transcript

Published: 27 Jan 2010

[Operator:]

Good day ladies and gentlemen and welcome to the fourth quarter 2009 the next earnings conference call. My name is [Shansa Le] and I’ll be your be your facilitator today. At this time all participants are in a listen-only mode. We’ll be facilitating a Q&A session towards the end of this conference. I would now like to turn the presentation over to your speakers for today’s call, Mr. Hector Medina, Executive Vice President of Finance and Legal and Chief Financial Officer Rodrigo Trevino. At this time Mr. Hector Medina, you may proceed. Hector Medina

[Rodrigo Trevino:]

Thank you, Hector. Good morning everyone and thank you for joining us on this call and webcast. Our performance during 2009 reflects the continued general slow down in the global economy. In fact the decline as a result of lower volumes, which were partially mitigated by a resilient pricing environment in local currency terms (inaudible) markets except the U.S. and Spain. On a like-to-like basis, that is adjusting (inaudible) effects, the appropriation of Venezuelan operations and the divestment of our Australian and Canary Islands and other assets, EBITDA was down 39% during the quarter and 25% for the full year. EBITDA margin declined to 18.3% during 2009 from [23%]in the previous year, adjusting for Venezuela, Australia, the Canary Islands (inaudible) allowances, EBITDA margin had a slight decline of 0.4% points despite a 19% decline in sales on a like-to-like basis. Our cost reduction initiatives, partially mitigated the effects of the volume declines seen during the fourth quarter and the full year 2009. SG&A expenses as a percentage of sales increased by 1.5% points during the quarter and by 1.2 points during the full year 2009 versus the comparable periods in 2008. This is the result of economies of scale due to lower volumes. In addition, we have had higher transportation cost since with the closing of some of our facilities, (inaudible) travel long in terms to serve our customers. These negative effects of our SG&A were partially upset by savings from our cost reduction initiatives. During the quarter our (inaudible) after maintenance capital expenditure reached $401 million, 15% lower than the same period of 2008. For the full year 2009, free cash flow after (inaudible)capital expenditure was $1.2 billion down from $2.6 billion the year before. The lower free cash flow generation is due mainly to lower EBITDA generation, higher financial expenses, and higher investment in working capital. These results were partially offset by lower maintenance capital expenditure. Of the $662 million invested in working capital during the first nine months of 2009, we recovered close to $500 million during the fourth quarter. We expect free cash flow for 2010 to reach about $1 billion. Practically flat versus last year (inaudible) is equal to sale of Australia. During this year, we expect to have higher (inaudible) capital expenditure which will be partially mitigated by lower investments in working capital. Regarding our input calls during 2009, our chunk fuel and electricity cost on a per ton of cement produce basis declined by 16% versus 2008. For 2010, we expect this cost to increase by approximately [0.5%]. We continue to develop new ways to lower our energy input costs and to make them more predictable. We remain committed to increasing the use of alternative fuels in our operations and we continue pursuing clean development mechanism projects, such as the wind driven 215 mega watt power plant in Wahaka, Mexico. The increase in financial expenses during the quarter reflects the new terms of the financing agreement. During the quarter, we recognized an exchange gain of $48 million, mainly as a result of the appreciation of the Mexican Peso. We also recognize a gain on financial instruments of $21 million resulting from an improvement in the [multi]market of our equity derivatives. Other expenses during the quarter were significantly lower in the fourth quarter of 2008. These include goodwill impairment, which was $40 million for this past quarter and other charges related to the refinancing. The income tax line for 2009, shows a positive contribution, reflecting the effect of tax losses in many of our operating jurisdictions, due to reduced operating volumes, combined with local currency exchange losses. In relation to Mexico’s recent fiscal reform, we estimate the impact of the changes in the rules in Mexico for good tax consolidation to be about $799 million, which will be payable over a 10-year period. Accordingly, fourth quarter we have (inaudible) a liability for this amount in our balance sheet. It’s important to note, however, that we have also recognized a deferred tax asset for $628 million resulting from the losses from prior periods that are being deconsolidated, due to the (inaudible). The difference between the tax, asset, and liability of a $171 million is being recognized as a reduction in retained earnings. And as a result no impact on our income statement. In 2010, the expected impact on cash taxes from this tax rule change is about $30 million. During 2009, our majority net income from continuing operations was $418 million versus $47 million in 2008. Lower foreign exchange losses, lower losses on financial instruments, and lower impairment (inaudible) objectives more than offset, lower operating income and higher financial expenses during the year. In December, we issued $4.1 billion basis or approximately $320 million in a convertible securities transaction. (inaudible) to exchange outstanding Certificados Bursatiles into new mandatorily convertible securities. Upon conversion, these securities will be settled approximately $17.5 million ADSes. Also in December, we returned to the international (inaudible) income market and issued notes in excess of $1.7 billion including a seven years U.S. dollar tranche or $1.25 billion with a yield of 9.5%. And an eight year (inaudible) for 315 million Euros with the yield of 9.58%. In January, we re-opened the $2016 U.S. tranche and issued an additional $500 million with yield-to- maturity of 8.47%. During the quarter, we also issued short-term notes on the (inaudible) program. The outstanding amounts of these notes was PESOS 800 million as of December 31st. The current holding cost of these special instruments is below 5%, a drop of more than 600 basis points compared with the past six months ago. It is important to note that with the proceeds from the equity offering we completed in September, the sale of our Australian operations and the issuance of notes, we have accumulated prepayments in access of the first financial milestone under the financing agreement of [$4.8 million]. As Hector mentioned, we expect to use about $600 million from our free cash flow to reduce that this year. With our planned debt reduction and EBITDA generation for the year, we (inaudible) compliance with our total funded debt to EBITDA covenant ratio of (inaudible) [75] times by the end of the year. In order to improve the margin for compliance, we will be implementing a number of initiatives and at further strengthening our capital structure. Our priority in the short term continues to be to pay down debt. To do this, we will aim to improve our working capital management and continue to implement our global cost reduction and right sizing initiatives. Finally, (inaudible) I have been asked to remind you that any forward looking statements we make today are based on our current knowledge of the markets in which we operate and could change in the future due to a variety of factors beyond our control. Thank you for your attention and now we will be happy to take your questions. [Shansa Le] Question-and-Answer Session

[Operator:]

Yes, sir. [Operator instructions] And your first question comes from the line of Carlos Peyrelongue of Merril Lynch. Please proceed.

[Carlos Peyrelongue:]

Thank you. Good morning gentlemen. Two questions if I may, first one I apologize I was not able to hear the guidance you probably provided for sale and EBITDA for 2010?

[Hector Medina:]

I have provided only guidance for EBITDA in terms of approximately $2.9 billion.

[Carlos Peyrelongue:]

Perfect thank you. And the second, related to the U.S.-- the federal support programs for infrastructure and having met with the difficult fiscal situation at the state level, and as you mentioned housing remains in a difficult situation and commercial construction is still falling. When would you expect cement volumes for your operations to start showing a positive growth on the year-over-year basis?

[Hector Medina:]

Well as we mentioned in the -- in our guidance, we would expect this year to show positive and substantial volumes, but that would certainly be not loaded in the year, or as we want [throughout].

[Rodrigo Trevino:]

Well may be just to complement that -- of approximately $15 billion allocated to the states we are in, about $13 billion has been obligated and only 11% has been spent. And so clearly we do expect significant additional moneys to be spent during 2010, when compared to 2009.

[Carlos Peyrelongue:]

From the (inaudible) implementation of this moneys in the second – probably in the second half of the year, that will than turn volumes positive on the year-over-year basis.

[Hector Medina:]

Yes, that’s what we expected for our markets.

[Carlos Peyrelongue:]

Thank you.

[Rodrigo Trevino:]

Well and also in the case of the US it is important to note that we do respect significant growth in the residential sector for the full year as well.

[Carlos Peyrelongue:]

Okay, Thank you.

[Hector Medina:]

Thank you Carlos.

[Operator:]

Our next question comes from the line of Gonzalo Fernandez of Santander Investment. Please proceed.

[Gonzalo Fernandez:]

Hi, good morning every one. I also have a two questions, and I know these are unusual (inaudible) will be doing the operating margin and the EBITDA margin and significantly and in (inaudible) profits, I don’t know, if you can explain and [point] with that and if you can repeat your target, level of acquisitions for the end of 2010 and thank you.

[Hector Medina:]

You take the first part of the question.

[Rodrigo Trevino:]

Yeah. The major difference that explains the light fluctuations between the fourth quarter of 2008 and the fourth quarter of 2009, has to do with the sale of additional allowances that took place during that fourth-quarter of 2008, and we can help you reconcile that Gonzalo.

[Medina Hector:]

As for the leverage ratios, we mentioned that it is actually in compliance with our leverage target ratio of 6.75 for the year -- end of the (inaudible).

[Gonzalo Fernandez:]

I think I …

[Rodrigo Trevino:]

I think with the expected usage of approximately $600 million of free cash flow to be around that and with the EBITDA guidance of $2.9 billion for the full year, you can easily calculate the leverage ratio year end and this will allow us to be in compliance with our stated governance by the end of the year and throughout the year.

[Medina Hector:]

That would be in fact closer to EBITDA. (inaudible) double than to EBITDA.

[Gonzalo Fernandez:]

Okay, and you are relying to use $600 million of free cash flow to pay that debt, correct?

[Medina Hector:]

That’s correct.

[Gonzalo Fernandez:]

Thank you very much.

[Medina Hector:]

Thank you.

[Operator:]

Your next question comes from the line of Vanessa Quiroga from Credit Suisse, please proceed.

[Vanessa Quiroga:]

Good morning. Thank you for the call. I have a question regarding your view on the demand-supply balance achieved for that different markets where you operate, I was wondering if you could give a small color on any opening of plans, if any that you are planning to do this year insofar your competitors are moving in defense and any indication of a possible price increases in your markets and my other question would be regarding your capital structure strategy. You are still have to comply with the milestones for December 2011 and I was wondering if you could give us any details on what would be your preference between asset sales with markets for (inaudible) with this milestone. Thank you.

[Rodrigo Trevino:]

Sure. Let me take the first part of the question on (inaudible) which is supply-demand dynamics in some of our markets. I guess the most important one is the U.S. where we are seeing some capacity increases in 2010 as a result of construction that is being -- of a new plant -- but (inaudible) expansions. And this is in the region of around 5 million tons. In 2010, they would come on line, but they would probably [measured] by our transporters and we would expect that the net increase to be practically zero. And then of course, as demand shows some strengthening, as we have mentioned in the later part of the year, there might be some additional plant re-openings or [key] re-openings but nothing that is significantly (inaudible). I would -- the expected the capacity would be fully utilized that is the one that remains open. Now there are other markets are very important to us in which we don’t see any major addition of capacity like the case of Mexico or Spain or the U.K. So we believe that the industry keeps a very rational attitude to take the next. Regarding the second question what will be the milestone for 2011. Of course, we expect an addition as we mentioned in our opening remarks, in addition to using most of our free cash flow to pay down debt and continue to repay some of these re-financed debt. We also expect to implement the other de-leveraging initiatives such as (inaudible) sale of assets that may not be generating EBITDA, that can help us to significant de-lever in terms of both the amortization of the debt as well as the actual leverage ratio. And we expect to implement those not only throughout 2010, but also during 2011. Clearly, we have not provided guidance for 2011, but should the recovery continue, we would expect to see growth in free cash flow for 2011 as well. And of course, we will be proactive in dealing with the milestone of 2011 well before we get to that point. Very important to know however, that it is a milestone. It is not an amortization of the debt. We have practically complied (inaudible) with 97% of the debt amortizations on the re-finance debt through December of 2011. In fact, the amounts of re-financed debt that becomes due in December of 11 today is less than $200 million and it is important to highlight that.

[Medina Hector:]

I have just a little bit of additional information for the first of the question and I think that is important and is that over the (inaudible) 2009 we saw a net reduction of capacity in the U.S. of 5 million tons which of course it is a key indication of the rationality of the industry, as for capacity utilization.

[Vanessa Quiroga:]

Thank you very much.

[Hector Medina:]

Thank you Vanessa.

[Operator:]

And our next question comes from the webcast.

[Rodrigo Trevino:]

Yes, I believe the question comes from Mike Betts from JPMorgan, and the question is how much scope is there to (inaudible) working capital. It was reduced by (inaudible) million in the fourth quarter, but was still up for the year despite the 19% reduction in sales. How much of a reduction in working capital have you assumed in your 2010 free cash flow estimate?

[Rodrigo Trevino:]

We actually haven’t assumed a reduction in the working capital for 2010, but we do expect that we will have a significantly lower investment in working capital during 2010. And this of course, is before additional initiatives that we would expect to implement to help us to better manage our working capital and hopefully reduce the investment in working capital, but we do believe there is a significant room for improvement as conditions normalize and as access to the credit markets improves for all of our counter parties--both suppliers, customers, and everybody else that contributes to the working capital.

[Operator:]

Your next question comes from the line of Nick Sebrell of Morgan Stanley. Please proceed.

[Nick Sebrell:]

Hi, gentlemen, two questions. First, if you could discuss the tax credits, I was wondering if you could tell us some normalized basis with (inaudible) operations that will be the same and if it would be the same then may be, describe what is in there and what we can expect to see in terms of tax rate, going forward and the second question is just with respect to the US margin and second question is with respect to the U.S. margin upon negative EBITDA margin this quarter in the U.S. and obviously there is some operating leverage there, but how quickly do you think this will reverse? Do you think we might expect in the first quarter of 2010? It could also be difficult, a negative margin there again.

[Rodrigo Trevino:]

Maybe, I can answer the second question. Nick, in the case of the U.S. more than a 100% of the drop in margin leading to the drop in--slight drop in EBITDA for the quarter, had to do with volume decline. And superiorly to the standard volumes begin to come back into the U.S. market, we would expect our margins to begin to improve. Now as we mentioned, we will continue to implement cost reduction initiatives, right sizing initiatives, to make sure we are adapting to the operating environment we are in and all of that will also contribute to margin recovery, but clearly the biggest component to margin recovery in the U.S. will be volume driven as the sharpest reason for the contraction has also been volume driven.

[Nick Sebrell:]

Very nice, good.

[Medina Hector:]

When we go to the first part of the question in terms of (inaudible) we see the major change in our tax situation, except for the tax consolidation rules are changing in the case of Mexico that we already discussed in the remarks and would have an impact on cash factors for 2010 of about $30 million. We don’t see any other major impact in 2010.

[Nick Sebrell:]

Okay and then the tax credit itself, you saw this quarter what exactly is in there? I am trying to understand…[what is the current $15 million]

[Rodrigo Trevino:]

If you are referring to the deferred tax asset that was created, it has to do with expectation that as a result of the losses that we have in several of our subsidiaries, that will no longer be consolidated. It may result in lower cash taxes in the future and this is the estimate that we have as of today.

[Nick Sebrell:]

Right. Okay thanks.

[Rodrigo Trevino:]

Thank you Nick.

[Operator:]

And your next question comes from the line of Christopher Buck of Barclays Capital. Please proceed.

[Christopher Buck:]

Good morning. I am wondering if you can walk us a little bit through the from the cash flow for the quarter and particular whether or not you realize both that $1.7 billion in cash from the Australia sale and the bond as well as the 1.75 there and if I add those up, I mean it is actually $3.5 billion but I just saw a net reduction in debt of --again net debt about of $2 billion. I am just trying to understand the rest of those numbers.

[Rodrigo Trevino:]

Well we did significantly improve our liquidity position during the quarter. We did use the proceeds from the sale of Australia also to pay some other short term obligations that were coming due. And we did have to pay some of the expenses related to the re-financing of the debt during the fourth quarter as well. We can help you reconcile the specific amounts from the starting point to the end of the year.

[Christopher Buck:]

Okay, but both of the $1.7 billion from the sale of Australia and $1.75 billion from the bond were both realized during the quarter?

[Rodrigo Trevino:]

The, you said from the sale of Australia. Yes, of course the issuance of the bond doesn’t reduce that. It just helps you pay older debt with the new debt that was issued. With the new debt that was issued, it also will very partially replenish our liquidity during the quarter.

[Christopher Buck:]

Okay, fair enough. Thank you.

[Operator:]

And our next question will come from the webcast.

[Rodrigo Trevino:]

Yes, the question comes from [Rahul Ghosh from Austin], you see volumes increasing in the US in 2010, what are your assumptions regarding pricing? Are you seeing price pressure?

[Hector Medina:]

So, as we discussed, there is at least in our markets, as expectations that we will see in positive volumes in 2010 as we mentioned, but most likely backlogged at the end of the year and that, well of course, it’s based on the fact that we believe that some of the infrastructure spending, (inaudible) are reaching the market as we speak and also a significant decrease in housing construction. Now, I think the (inaudible) inflation in the US, of course, is to be expected with the very significant volume declines has been affecting some of the prices, but from input across the inflation recovery is expected in the market, so we would expect prices to more or less hold stable.

[Operator:]

And your next question comes from the line of [Diablo Tureg] of ING. Please proceed.

[Diablo Tureg:]

In terms of the tax cashes for 2010, do you any figure yet in terms of which will be the total amount of – that it will be disbursed.

[Hector Medina:]

Yes, we expect a slight increase in the consolidated cash taxes paid for the company as a whole, from 2009 to 2010.

[Diablo Tureg:]

Perfect. And I also --shall we expect which would be that amount of cash on hand for (inaudible) at end of 2010. Does that amount will be close to the $1 billion that you have right now or you expecting something less or more?

[Rodrigo Trevino:]

Well it should be relatively similar since we have the agreement with a financing agreement for the cash (inaudible) Any funds in excess of $650 million must be used to prepay part of the refinance debt, and so we expect the ending cash balance to be similar for 2010 versus 2009.

[Diablo Tureg:]

If the financial agreement has got the cash [slip] it should be there cash balance moved towards the 650 instead of that 1 billion.

[Rodrigo Trevino:]

Well, it’s not the cash balance as defined by the accounting. Cash balance is another definition of cash. So always the accounting definition of cash is slightly higher than that is freely available to be used to prepay the (inaudible) and yes we did have a slightly higher than that amount for December 31st and of course, the cash we have during the month of January to settle and so we would expect to use some of that cash that we ended the year with, to be used to prepay some of the refinance debt during January. In fact, it already has been and that is why we stated that we have met the first milestone of paying $4.8 billion as of now. That was not the case as of December 31st, but it is as of today and that means we have paid more than 30% of the debt that was refinanced during the second half of last year within a relatively short period of time, that is, six months.

[Diablo Tureg:]

Perfect. Thank you.

[Operator:]

Your next question comes from the webcast. Please proceed.

[Rodrigo Trevino:]

Yes the question comes from [Matthew Riner] of (inaudible).

[Operator:]

Your next question comes from the line of Stephen Trent of Citigroup. Please proceed.

[Stephen Trent:]

Good morning gentlemen. Most of my questions have been answered at this point. Just one quick follow up, if I may. We saw sale news in some of the press over the past several weeks that certain regulatory authorities in the EU, I think particularly in Spain and Poland have been looking into price fixing (inaudible). I think several cement players and I am wondering if you have any comment or additional color on this. Thank you.

[Rodrigo Trevino:]

Sure, Steve. Thank you for the Thank you for question. We have certainly the (inaudible) all over the legal proceedings that we are involved in our current documents. But I would just point out the fact that in the case of the European Commission, the recent investigations, and then this we are cooperating with the authorities in this investigation. There are no new developments, except for the ones that have been already disclosed. I mean, there is a complete legal disclosure in our bond offering memorandum, which is the last document that we published. But again, I mean, we are cooperating with the European Commission in connection with this investigation as no major other (inaudible) back in this – in this investigation.

[Stephen Trent:]

Fair enough, thanks very much.

[Rodrigo Trevino:]

Thank you.

[Operator:]

And our net question comes from the webcast.

[Rodrigo Trevino:]

Yes the question comes from Olivier Tabouret from AL CENTRA. What is your capacity utilization currently and target for 2010? And, could you clarify the cost reduction amount, how much of (inaudible)?

[Hector Medina:]

Globally, I would say that the CEMEX aims to maintain this capacity of utilization at a good rate, I mean, full capacity utilization was in terms of (inaudible) utilization was about 88% in the US, for example. But that means, what is the hours that we use our kilns, the number of hours our kilns are available (inaudible). So this is the rate that we would seek to maintain all throughout our operations and I guess that would be a global figure that you could use of around 80% to 85%.

[Rodrigo Trevino:]

And regarding the cost reduction initiatives that we achieved during the year.

[Hector medina:]

Good.

[Rodrigo Trevino:]

Well we did implement the close to $900 million of cost reduction and expense reduction initiatives during the year and we expect to maintain 60% of those on a recurrent basis. Clearly some of those have to do with right-sizing and as volumes come back we would expect some of these expenses to come back, but then it would be because of EBITDA and free cash flow is growing as a result of that.

[Operator:]

Your next questions come from the line of Nicolas Godet of BNP. Please proceed.

[Nicolas Godet:]

Yes, good morning.

[Rodrigo Trevino:]

Good morning.

[Nicolas Godet:]

I wasn’t connected during the call. So maybe you have that already (inaudible) provided a guidance of $2.9 billion. How much is that if you would do incremental cost cutting measures?

[Medina Hector:]

What?

[Nicolas Godet:]

…cost cutting measures.

[Medina Hector:]

Well there is to specific initiative in this case, but we have every one of our markets are operations on the constant monitoring of the way the demand develops and of course, we are adjusting our cost when we see that the demand is still weak. So there has to be significant right pricing in our market. In some of them because we are seeing the possibility of volume increases for (inaudible), for [segment] cost increases would occur as the volume happens, but then some of the operating leverage that we have achieved during the past months will then also kick in. So, in a way you would see in some of our markets, as we told that will show some volume increases is more than the effect of current cost cutting rather the effect of cost cutting that we already did.

[Rodrigo Trevino:]

And I would say that, as guided, we have guided for approximately 4% growth in volumes globally, in cement and this is one of the biggest drivers of the recovery in the operating cash flow for the year as a whole. As you know we have seen most of the drop in EBITDA these years also as a result of the dropping volumes that we have seen from that period to now.

[Nicolas Godet:]

Okay, you also said that (inaudible) should be of (inaudible) them any further questions (inaudible)

[Rodrigo Trevino:]

I would like to increase in the cost of production of cement as a result of energy that is fuel and electricity of approximately 5% for 2010 versus 2009 and we intend during the summers day to get it to greater details in the supply-demand dynamics and how this may affect prices but of course, prices is the most difficult part of the equation to forecast. So, whenever we prepare our budget (inaudible) it is not reasonable to assume that the components of the growth will commence a result of price increases and we have not in this budget exercise.

[Nicolas Godet:]

Last question from me. In future you have 25 the real impact of (inaudible) in your whole on your margin could you quantify again if there is a (inaudible)?

[Rodrigo Trevino:]

So you could you repeat the question there is a little bit of noise in the (inaudible). Yes. Could you repeat the question?

[Nicolas Godet:]

I mean if you have [regions] for investors in the U.S. this fall it had an impact on your margins, could you quantify this impact?

[Rodrigo Trevino:]

We will have to follow up with you as we cannot understand the question, the audio is not very good on our side.

[Nicolas Godet:]

Okay, I will call you back then. Thank you.

[Rodrigo Trevino:]

Thank you.

[Operator:]

Your next question comes from the web cast.

[Rodrigo Trevino:]

Yes the question comes from John Kohler from HSBC Securities and he says good morning as you need your debt amortizations under the new bank agreement, so that free cash capacity under the facility, whether the size of the facility decline as payments are made?

[Rodrigo Trevino:]

Yes, and as we amortize the debt, the size of the facility declines. This is not a revolving credit facility. This is a term facility that goes to February of 2014. And what we have done with by meeting the milestone is we have taken care of the maturities for 2009, 2010, June of 2011, and practically all of the December 2011 and so as we generate free cash and as we apply some of that to further pre-pay, this refinance that facility, we would expect to meet the amortization commitments well before the dates that we have agreed with the banks.

[Operator:]

And we have time for one final question and that question comes from the line of Carlos Hermosillo of Vector

[Carlos Hermosillo:]

Yes, good morning. Just quick question regarding the operations in Venezuela, I don’t know, if you could provide those with an update with the proceedings, you are having there. The legal proceedings and also we saw a significant decrease in the net asset values you are reporting on this operations. I would like to know if that has to do with the asset impairment process, that you effected in the fourth quarter. Thank you.

[Rodrigo Trevino:]

For the legal proceedings several of these dates are continuing. We have started the process, the panel has been named, there is some process to confirm the panel members, but that goes on. We continue to suffice the requirements of the panel. That is for your information and at this --what is happening there is no significant change in that process. As to the asset value, mostly we can give you some information now talk with you later. I don’t have any…

[Rodrigo Trevino:]

But the reduction during the quarter has to do mainly with the sale of Australia, of course.

[Carlos Hermosillo:]

No but, I am talking about the specifically the amount you recorded in the asset value of Venezuela.

[Medina Hector:]

Venezuela.

[Rodrigo Trevino:]

We will have to follow up with you on that Carlos.

[Carlos Hermosillo:]

Thank you.

[Rodrigo Trevino:]

Well thank you very much and closing, I’d like to thank you all of you for your time and attention and we look forward to your continued participation in CEMEX. Please feel free to contact us directly or visit our website at any time. Thank you and good day.

[Operator:]

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a wonderful day.