VENEZUELAPublished by MAC on 2007-08-28
Mexico's Cemex Seen Unaffected by Venezuela Threat
28th August 2007
MONTERREY, Mexico - A threat by Venezuela of "corrective actions" against a local subsidiary of Mexican cement maker Cemex will not hurt the company much because its sales there are small, analysts and traders said Monday.
President Hugo Chavez on Sunday ordered authorities to carry out an inspection of a Cemex facility in Venezuela and evaluate its environmental impact following a complaint that pollution from the operation was harming local residents.
Venezuela this month ordered the "forced acquisition" of the assets of a Colombian cement maker, and Chavez in April threatened to nationalize the cement sector as part of a campaign to boost the government's role in the economy.
"Investors aren't worried. With Cemex growing ever larger through aquisitions, the Venezuelan assets are less important. We are talking about 4 percent of Cemex sales coming from the country," said Gonzalo Fernandez, a cement analyst at Santander.
Cemex, based in Monterrey in northern Mexico, has operations in more than 50 countries. The company declined to comment Monday. Shares in Cemex fell 1.03 percent to 34.75 pesos in Mexico City, but traders said this was due to a fall in US home sales in July and in line with other large companies on the Mexican market. Its New York-listed stock fell 1.7 percent to US$31.34. "Venezuela has really nothing to do with it," said a trader in Mexico City. The United States is Cemex's top market and its July acquisition of Australia's Rinker for US$15.3 billion increased its share of the building materials market in the world's biggest economy.
That takeover came as a mortgage crisis in the United States has depressed the US housing market and knocked Cemex's stock. Venezuela remains a profitable market for Cemex and the company has shown itself adept at treading carefully amid Chavez' self-styled socialist revolution, switching its sales focus to the domestic market, cutting exports and increasing its social program to help low-income families build homes. (Reporting by Robin Emmott)