Cemex SAB de CV (ADR) (CX), James Hardie Industries plc (ADR) (JHX), CRH PLC (ADR) (CRH): Are These Cement Companies Investment-Worthy?

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Poor performance will continue

In the first quarter of 2013, CRH PLC (ADR) (NYSE:CRH) posted weak results, mainly due to extremely cold conditions and a weak European economy. As a result, housing construction was halted in the same period. The company’s sales in the material segment declined by 17% in the first quarter of 2013, year-over-year, and overall sales of the company in Europe were down by 13%. According to the European Commission, investments in housing may decline further, negatively affecting the performance of the company. Due to these factors, CRH PLC (ADR) (NYSE:CRH) lowered its EBITDA outlook for the second quarter to $535 million, down by 17%, year-over-year.

To offset the weaker economic conditions of the European countries, the company will continue its cost reduction program in Europe. Construction output in the European region fell 8.4% in May 2013, year-over-year. However, CRH PLC (ADR) (NYSE:CRH)’s cost-reduction measures saved $222 million in the previous year, and the company will continue this program. Additionally, the company is expecting to save around $590 million until fiscal year 2015 by improving its workforce flexibility, mobility, improvements in its logistics network, integration of back office operations, and higher use of alternative fuels. These cost reduction measures will increase profitability while the business goes through a tough phase.


Cemex SAB de CV (ADR) (NYSE:CX) is betting on the recovery of the U.S. housing market, and its capacity expansion will set the perfect platform for the company to grow. I recommend investors buy this stock.

James Hardie Industries plc (ADR) (NYSE:JHX) is expecting growth opportunities from the U.S. market, but adverse results from a New Zealand court will offset the profits of the company. CRH PLC (ADR) (NYSE:CRH) is facing tough conditions in the European market. Moreover, the company is also estimating lower revenue for this year. I recommend investors hold both of these stocks until further improvements by the companies are evident.

The article Are These Cement Companies Investment-Worthy? originally appeared on Fool.com and is written by Shweta Dubey.

Shweta Dubey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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