building a STRONGER foundation - Cemex

For the year ended December 31, 2009, cement represented approximately 70%, ready-mix concrete approximately 24% and
our other businesses approximately 6% of our net sales of our operations in Asia before intra-sector eliminations within the segment
and before eliminations from consolidation, as applicable.
Our domestic cement volumes from our operations in the Philippines increased approximately 9% in 2009 compared to 2008.
For the year ended December 31, 2009, the Philippines represented approximately 2% of our total net sales in Peso terms, before
eliminations resulting from consolidation. Our average domestic sales price of cement from our operations in the Philippines increased
approximately 7% in Philippine Peso terms in 2009 compared to 2008. As a result, net sales of our operations in the Philippines, in
Philippine Peso terms, increased approximately 15% in 2009 compared to 2008. For the year ended December 31, 2009, cement
represented 100% of net sales for our operations in the Philippines before intra-sector eliminations within the segment and before
eliminations from consolidation, as applicable.
Our ready-mix concrete sales volumes from our operations in the Rest of Asia, which include our operations in Malaysia and
China (representing nearly all our ready-mix concrete sales volumes in the Rest of Asia region), decreased approximately 18% in 2009
compared to 2008 due to the finalization of large infrastructure projects and reduced exports. The average sales price of ready-mix
concrete remained flat, in Dollar terms, during 2009. For the reasons mentioned above, net sales of our operations in the Rest of Asia,
in Dollar terms, decreased approximately 18% in 2009 compared to 2008. For the year ended December 31, 2009, cement represented
approximately 28%, ready-mix concrete approximately 58% and our other businesses approximately 14% of our net sales of our
operations in the Rest of Asia before intra-sector eliminations within the segment and before eliminations from consolidation, as
applicable.
For the reasons described above, net sales from our operations in Asia before eliminations resulting from consolidation, in
Dollar terms, decreased approximately 4% in 2009 compared to 2008.
On October 1, 2009, we completed the sale of our operations in Australia to a subsidiary of Holcim Ltd. for approximately
$2.02 billion Australian Dollars (approximately U.S.$1.7 billion). Our consolidated statement of operations present the results of our
operations in Australia, net of income tax, for the nine-month period ended September 30, 2009 and the twelve-month period ended
December 31, 2008 in a single line item as “Discontinued operations.” Accordingly, our consolidated statement of cash flows for the
year ended December 31, 2008 was reclassified. See note 3B to our consolidated financial statements included elsewhere in this
annual report.
Others
Our Others segment includes our worldwide cement, clinker and slag trading operations, our information technology solutions
company and other minor subsidiaries. Net sales of our Others segment decreased approximately 45% before eliminations resulting
from consolidation in 2009 compared to 2008 in Dollar terms, primarily as a result of a decrease of approximately 54% in our
worldwide cement, clinker and slag trading operations and a decrease of approximately 17% in sales of our information technology
solutions company. For the year ended December 31, 2009, our trading operations’ net sales represented approximately 48%, and our
information technology solutions company 32%, of our Others segment’s net sales.
Cost of Sales. Our cost of sales, including depreciation, decreased approximately 9%, from Ps154.0 billion in 2008 to Ps139.7
billion in 2009, primarily due to the decrease in sales volumes mentioned above. As a percentage of revenues, cost of sales increased
from 68% in 2008 to 71% in 2009, mainly as a result of lower economies of scale due to lower volumes, especially in the United
States, Spain and Mexico. In our cement and aggregates business, we have several producing plants and many selling points. Our cost
of sales includes freight expenses of raw materials used in our producing plants. However, our costs of sales excludes (i) expenses
related to personnel and equipment comprising our selling network and those expenses related to warehousing at the points of sale,
which were included as part of our administrative and selling expenses line item in the amount of approximately Ps11.1 billion in
2008 and Ps9.3 billion in 2009; and (ii) freight expenses of finished products from our producing plants to our points of sale and from
our points of sale to our customers’ locations, which were included as part of our distribution expenses line item (except for
distribution or delivery expenses related to our ready-mix concrete business, which are included in our cost of sales), and which, for
the years ended December 31, 2008 and 2009, represented expenses of approximately Ps13.4 billion and Ps13.7 billion, respectively.
Gross Profit. For the reasons explained above, our gross profit decreased approximately 19%, from Ps71.7 billion in 2008 to
Ps58.1 billion in 2009. As a percentage of revenues, gross profit decreased from approximately 32% in 2008 to 29% in 2009. In
addition, our gross profit may not be directly comparable to those of other entities that include all their freight expenses in cost of
sales. As described above, we include freight expenses of finished products from our producing plants to our points of sale and from
our points of sale to our customers’ locations within distribution expenses, which in aggregate represented costs of approximately
Ps24.4 billion in 2008 and Ps23.0 billion in 2009.
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