January 21, 2003

CEMEX, S.A. de C.V. (NYSE: CX) announced today that its consolidated cement sales volumes for the fourth quarter were 15.6 million metric tons, up 5% compared with the fourth quarter of 2001, while ready-mix volumes were 10% higher, at 4.9 million cubic meters.

Fourth-quarter net sales declined 3% in dollar terms, compared with the year-earlier period, to US$1.6 billion. While sales in Spain increased, the decline was mostly due to lower sales volumes in the U.S., as well as the difficult operating environment in Venezuela, which affected our cement production and distribution in that country. In real peso terms, quarterly net sales remained flat, at MXP16.8 billion.

Fourth-quarter free cash flow was US$304 million, up 43% compared with the fourth quarter of 2001. Quarterly EBITDA (operating profit plus depreciation and amortization) was down 20% to US$417.5 million. Our consolidated EBITDA margin fell to 25.8%, from 31% in the fourth quarter of 2001, mainly due to our investments in information technology, our increased effort to strengthen CEMEX's commercial and distribution networks worldwide, lower average prices in some of our markets, and changes in our product mix. In real peso terms, EBITDA was MXP4.3 billion, 17% lower than the fourth quarter of 2001.

Hector Medina, Executive Vice President of Planning and Finance, said, "A difficult macroeconomic environment-coupled with deflationary pressures-limited our top-line growth and made it harder for us to sustain pricing in constant terms in some of our markets. Nonetheless, we are pleased that, in the face of this adverse climate, our business model delivered modest system-wide volume growth versus 2001, and we ended the year with close to a billion dollars of free cash flow."

Fourth-quarter operating income decreased 31% in dollar terms, to US$256 million. In real peso terms, operating income fell 28%, to MXP2.7 billion.

Due to our lower EBITDA, cash earnings dropped 25% year-over-year, to US$279 million (US$0.92 per ADS).

Fourth-quarter majority net income declined 56%, to US$165.6 million (US$0.54 per ADS), versus US$372.3 million a year ago. The decline was primarily due to non-cash items, such as foreign exchange fluctuations; we recorded an exchange loss of US$5 million, compared with a gain of US$157 million in the year-earlier period. In real peso terms, quarterly net income declined 54%, to MXP1.7 billion (MXP 1.13 per CPO).

During the quarter, we used US$265 million of the US$304 million in free cash flow we generated to pay down debt. However, our net debt decreased by US$189 million during the quarter as a result of foreign exchange movements in the amount of US$76 million. Foreign exchange movements, however, also resulted in gains of US$185 million directly in our equity accounts as we translated our net foreign assets position into our consolidated accounts in Mexico.

Lower interest and preferred dividend expenses resulted in a stronger interest plus preferred dividend coverage ratio (EBITDA divided by interest expense plus preferred dividend, all for the last twelve months) of 5.2 times, versus 4.4 times a year ago; interest and preferred dividend expenses declined US$151 million during 2002, equivalent to a 29% reduction. However, the reduction in EBITDA led to a financial leverage ratio (net debt plus preferred equity to trailing twelve-month EBITDA) of 3.2 times, versus 2.7 times last year.

CEMEX's Mexican operations reported net sales of US$635 million in the fourth quarter, a 3% decline versus the same period of 2001. Quarterly domestic cement sales volumes increased 6% for the quarter and 4% for the year. In 2002 the main drivers of demand were public works and residential construction, as well as a stable self-construction sector. Ready-mix volumes grew 9% for the quarter and 10% for 2002, driven by increased government projects.

In the United States, CEMEX's net sales were US$392 million, 13% lower than the fourth quarter of 2001. Quarterly EBITDA decreased 30% year-over-year, to US$86 million. Cement sales volumes decreased 8%, compared with the year-earlier period, and fell 5% for the year. During the quarter, the main factors affecting cement demand were a soft industrial and commercial sector and poor weather conditions. Ready-mix volumes rose 5% for the quarter and remained flat for the year.

In Spain, the company's net sales and EBITDA grew 26% and 29%, respectively, compared with the fourth quarter of 2001. Domestic cement volumes increased 6%, and ready-mix volumes grew 7%. For the year, cement and ready-mix volumes rose 2% and 6%, respectively. Public works spending and residential construction continued to be the main drivers of cement demand in Spain.

CEMEX Venezuela (which consolidates the company's operations in Panama and the Dominican Republic) reported a 39% decrease in domestic cement volumes, compared with the fourth quarter of 2001, and a 21% decline for the year. Ready-mix volumes dropped 42% for the fourth quarter and 23% for the year. The country's political and economic climate continues to affect overall economic activity, and has impacted our ability to produce and distribute cement and ready-mix.

CEMEX Colombia's domestic cement volume was 20% higher than the fourth quarter of 2001 and increased 2% for the year. Ready-mix volumes grew 18% for the quarter, but fell 3% for the year. Cement demand was primarily driven by public works construction, which increased toward the end the year, and by our increased penetration in the residential construction sector.

CEMEX Philippines' domestic cement volume increased 25%, versus the fourth quarter of 2001, and 36% for the year. Lower cement imports into the Philippines led to our increased market participation.

CEMEX Egypt recorded a 20% growth in cement volumes during the quarter, versus the same period a year ago, and an increase of 18% for the full year 2002. Demand from the self-construction sector, as well as our higher penetration in Lower Egypt, mainly drove cement demand.

CEMEX is a leading global producer and marketer of cement and ready-mix products, with operations concentrated in the world's most dynamic cement markets across four continents. CEMEX combines a deep knowledge of the local markets with its global network and information technology systems to provide world-class products and services to its customers, from individual homebuilders to large industrial contractors. For more information, visit www.cemex.com.

This press release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of CEMEX to be materially different from those expressed or implied in this release, including, among others, changes in general economic, political, governmental and business conditions globally and in the countries in which CEMEX does business, changes in interest rates, changes in inflation rates, changes in exchange rates, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein.

EBITDA is defined as operating income plus depreciation and amortization. Free cash flow is defined as EBITDA minus net interest expense, capital expenditures, increase or decrease in working capital, cash taxes, preferred equity dividend payments, employee profit-sharing payments paid in cash, U.S. dumping charges paid in cash and other cash items. Net debt is defined as total on balance sheet debt plus preferred equity and capital securities minus cash and cash equivalents. Cash earnings is defined as EBITDA minus net financial expenses, cash taxes (including statutory profit sharing), income attributable to minority interest (including preferred dividends) and other cash expenses. All of these items are presented under Mexican generally accepted accounting principles.

Contact Information