Good morning, and welcome to the CEMEX Second Quarter 2013 Conference Call and Video Webcast. My name is Lalaine, and I will be your operator for today. [Operator Instructions] Our hosts for today are Fernando González, Executive Vice President of Finance and Administration; and Maher Al-Haffar, Vice President of Corporate Communications, Public Affairs and Investor Relations. And now I will now turn the conference over to your host, Fernando González. Please proceed. Fernando A. González: Thank you, operator. Good day to everyone, and thank you for joining us for our second quarter 2013 conference call and video webcast. After Maher and I discuss the results of the quarter, we will be happy to take your questions. During the second quarter, our operating EBITDA increased by 4% compared to the same period last year and by 2% when adjusting for the number of working days. We are pleased to report that this is the 8th consecutive quarter with a year-over-year growth in operating EBITDA. During the first 6 months of the year, operating EBITDA increased by 4% on a year-over-year basis, adjusting for the effect of the change in the pension plan in the Northern Europe region during the first quarter of 2012. Operating EBITDA margin, also on a comparable basis, increased by 0.8 percentage points. During this period, we saw improvement in pricing in several of our regions, as well as continued cost reduction efforts. Consolidated volumes for ready-mix and aggregates increased by 2% and 4%, respectively, during the quarter, while cement volumes remained flat. The higher number of working days during the quarter positively contributed in 1 percentage point to this volumes. Growth in cement volumes in the U.S., South, Central America and the Caribbean, Mediterranean and Asia regions offset lower volumes in Mexico and Northern Europe. Our consolidated…

Thank you, Fernando. Hello, everyone. Our quarterly operating EBITDA increased by 4% or by 2%, adjusting for the higher number of working days during the quarter. Operating EBITDA margin remained flat in the same period. During the first half of the year, operating EBITDA on a comparable basis grew 4% versus the same in 2012, while operating margin increased by 0.8 percentage points. This margin expansion was driven by higher prices in most of our region, as already discussed by Fernando, our continued cost reduction efforts, as well as the continued favorable operating leverage in the U.S. Cost of sales as a percent of net sales decreased by 2 percent points during the quarter. The decline includes a reduction in workforce related to our cost reduction initiatives and lower electricity costs. Our operating expenses as a percentage of net sales remained practically flat on a year-over-year basis. We also continue with our efforts to reduce these expenses. Our kiln fuel and electricity bill on a per ton of cement produced basis increased by 2% during the second quarter and was flat for the first 6 months of the year versus the comparable periods in 2012. The savings achieved from using alternative fuels during the first half of the year reached about $45 million, which is about 16% of the total cement fuel bill in the same period. During the quarter, our free cash flow after maintenance CapEx was negative $86 million versus a positive $21 million last year. The year-over-year variations in free cash flow is due mainly to higher CapEx, working capital and cash taxes, which were partially mitigated by higher operating EBITDA generation. The higher year-over-year working capital investment during the quarter is mainly a result of higher receivables, reflecting higher sales. However, days receivable declined by 2…

Before we go into our Q&A session, I would like 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. In addition, unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases, that would be referring to our prices for our products. And now we will be happy to take your questions. Operator?

[Operator Instructions] And the first question comes from Nikolaj Lippmann from Morgan Stanley.

A couple of questions related to operations. In Mexico, you are -- your decline in volumes and ready-mix is significantly less than in cement. Can you comment on what's going on there? It seems a bit odd in the light of weak government spending. So that's question number one. And question number two is related to the U.S. Can you comment on the -- it looks like you're seeing really strong pricing in ready-mix. Can you maybe talk a little bit about that and especially how much of that comes out of Florida? Fernando A. González: Sorry. Just checking your question on Mexico because the connection was not that good. Is it related to margins in cement?

Not really. I'm just wondering in the light of the weak spending from the government, it surprised me to see that ready-mix doing, say, less than cement. Can you say what's going on there? Do you have a bigger decline in cement than in ready-mix? Fernando A. González: Okay. I think part of the explanation is because there was some spending last year that was not present this year related to bagged cement, which is not -- ready-mix is not related to that sector.

And Nick, if you could repeat your question about the ready-mix in the U.S? I didn't quite get that.

Can you just comment a little bit on how much of what we're seeing in terms of the improvement in probability is coming out of the ready-mix pricing? And maybe if you can give some color on the operating environment in Florida, in particular, if you can make breakeven there, for example.

Sure. Well, I mean, Florida, for this quarter, was probably one of the best performers in terms of volume. And of course, you have to remember is that we are probably most integrated in Florida into ready-mix and aggregates. And so clearly, there is a lot of operating leverage as a consequence of the volume behavior there. We continue to see good traction for our pricing. And as we mentioned last quarter, for the first time in many, many quarters, we began to see traction for our pricing in that market. So clearly, Florida was a very important contributor. By and large, our markets, I think, are doing as well or maybe slightly better, I would say, than some of the other markets that we're not in. And in terms of ready-mix pricing, frankly, because of the significant underinvestment historically in the area at the margin in order to justify investments, there's definitely pressure on pricing. And so we're seeing very important, I would say, price support from most of the players in the market in general as -- because of that dynamic. And we think that, that's likely to continue or should continue.

That's good news. One final question, if I may. Just in terms of the tax amnesty in Mexico, are you decreasing an existing liability on the basis of that?

Are we what, sorry? Did you say...

A decreasing -- you mentioned a tax amnesty in Mexico. Is that causing one of your tax liabilities to basically to decrease? And how much would that be? Fernando A. González: I'm not sure I got the question correctly. We're not having a good line, but...

Yes. I'll send an email after the call. Fernando A. González: Okay.

Our next question comes from Vanessa Quiroga from Credit Suisse. Vanessa Quiroga - Crédit Suisse AG, Research Division: My first question is regarding Mexico. This quarter, we saw similar trends in volumes and prices compared to first quarter, and yet EBITDA margin was lower both quarter-on-quarter and year-over-year. Can you explain what's happened there? Fernando A. González: Yes. In this second quarter, on top of, as you mentioned, the trends we saw in prices and volumes in the first quarter, what we have is 2 additional kiln maintenance. So this is a one-time effect that is due to this factor. The rest of the impact is quite similar to first quarter, meaning prices and volumes. Vanessa Quiroga - Crédit Suisse AG, Research Division: So could you quantify the effect of this one-time maintenance cost? Or would you say that the margins would have been similar quarter-on-quarter? Fernando A. González: Would be similar, I think the impact in margin terms of this maintenance is about 3 percentage points. So it's most of the variation compared to last quarter -- to first quarter. Vanessa Quiroga - Crédit Suisse AG, Research Division: Okay, great. My second question is regarding the savings that you announced on the presentation. This $100 million savings, are those for the first half -- sorry, for the second half only? So annualized, are we talking about $200 million savings from now, I mean, sustainable? Fernando A. González: Well, it's clearly $100 million for the second half of the year. And then given that none of them are recurrent, then not necessarily we can translate the $100 million to, let's say, full $200 million for next year. Some of these savings are related to the volume impact we have in the first half. And as we have commented, we do expect that trend in volumes to reverse during the second half. So we cannot say that you can multiply $100 million times 2 in order to get the savings for next year. Vanessa Quiroga - Crédit Suisse AG, Research Division: Okay, great. And then my third question about the U.S. pricing. So far, you have announced price increases totaling on average maybe 8%, 10% at least for each of the markets, so far. And we have seen 3% to 4% year-over-year increases. So would you say that your average seed ratio or success ratio is more or less 30%, 40% of the announcements and that success ratio should increase as utilization rates increase? I mean, I just want to understand how to model basically your price increases. I mean, how much of that is actually reflecting on your operation?

Yes. That's a very good question, Vanessa. And I think it's very important to keep in mind that if we take a look at our January pricing increase, that probably affected about 3/4 of our markets in the case of cement. And it probably affected a little bit more in the case of ready-mix. In the case of ready-mix, you need to take into consideration, of course, that we have a little bit under 1/2 of our businesses is a contract-based business. So the pricing taking into effect will happen over time and it should accelerate during the course of the year, everything else being equal. The April price increase, as Fernando mentioned, covers a little bit under 1/4 of our markets. And again, as Fernando mentioned, we think as -- and we've gotten traction on these pricing increases pretty much in all of our markets. So we're very happy with what's going on in all of our markets. The other thing, of course, is that we've announced a second set of prices. So we should definitely be extracting more pricing growth in the markets in the U.S.

And our next question comes from Gordon Lee from BTG.

Just a couple of quick questions on Mexico, following up on the margin question. The -- so let's say, 3/4 of the sequential contraction has to do with the extraordinary maintenance on those 2 kilns that you mentioned. Have you identified any additional such extraordinary maintenance that you might have to do on other kilns? In other words, is this going to be somewhat more recurring this year? Or is this about it as far as extraordinary maintenances that you have identified at least so far? And then the second question is on prices in Mexico, which were down 2% sequentially, obviously reflecting the impact of the introduction of the Fortaleza capacity, I would assume. But will the increase -- will the decreases in pricing concentrate on the Central region? Or did you see pressure on pricing in other regions as well? Fernando A. González: On your first question, Gordon, I think there might be one additional maintenance, meaning additional to the number of maintenance we did last year. So it might not be that relevant. The other thing I should add on margins in Mexico is that, to a lesser extent, during second quarter, there was also an impact on all the strategy in introducing our special cement products that will not be repeated, not to the level that we did during the second quarter. So we shouldn't expect a significant impact on margins moving forward because of these issues in Mexico.

And on the pricing -- could you repeat your question on the pricing? I think you had a...

The question on pricing was basically pricing fell 2% quarter-on-quarter, first quarter versus second quarter in Mexico in local currency terms. My question is was that concentrated, that decline, concentrated in the Central region? And you could assume it has entirely to do with the Fortaleza expansion being absorbed during the -- the Fortaleza greenfield being absorbed during the quarter. Or did you see generalized pricing pressure across the country? Fernando A. González: It is generalized. It's not specific to a region. It's generalized and it's mainly because of the dynamics in the market. When volumes are adjusted, they're going down. So nothing particularly specific to any region.

And we will now take a Web question from the Web.

Yes. The question from the website is from Yulia Veselova from Credit Suisse. And the question is, please could you explain the drivers behind an 18% year-on-year cement volume increase in the quarter in Egypt? Please could you tell us how tight energy supply impacts your operations in the country? Fernando A. González: Well, the 18% growth is mainly due to informal construction, informal housing construction in general terms. Now to some extent, as you know, because of the energy supply issues the country is going through, part of this increase in the case of our volumes is because of a combination of factors. Some of cement companies in the North of Egypt, our cement plant is located in the South are suffering from shortages, particularly from gas. And in our case, we aren't. I think we commented before, we have a combination, in the case of our plant in Egypt, that we use fuel oil, which as of today, it continues, available in that part of the country. And we have complemented the -- our energy strategy in Egypt with the use of alternative fuels. So our use of alternative fuels in Egypt in the second quarter was -- for the whole plant was close to 20%. So that combination is allowing us to do cement without any disruption or any negative impact because of the shortages of energy in the country.

[Operator Instructions] And our next question comes from Mike Betts from Jefferies.

Yes. I had 2 questions, if I could. The first one, I think, was on Slide 9, where you talk about Northern Europe and you talk about sequential pricing. It's at the bottom there, minus 3% cement sequentially Q2 versus Q1, minus 4% ready-mix, minus 7% aggregates. Is that all mix? Or is there really being -- given the weakness in volume, I see that there may have been some real weakness in pricing. So maybe just a little bit more on that. Are you talking about country mix? Are you talking about product mix? How confident are you that there's no real underlying deterioration there? And then secondly -- and I have to admit, I was hoping I'll be a bit later on the questions because I've just seen the data on the website. But you've changed your volumes down for Mexico, the guidance to the year. You've reduced it for the U.S. I'm still trying to work out how you've managed to keep the group volumes constant. So maybe you could summarize that in terms of cement. Fernando A. González: Okay. On prices, Mike, it's definitely a mixed effect because as we mentioned, the volumes in the U.K. grew less than volumes in Germany and Poland. And as you know, the U.K. has the highest prices, so there is an impact because of the mix in these regions. So it is basically mix. Now versus first quarter, for instance, in Poland, prices increased 3% and the U.K. and Germany were flat. So we can attribute that to mix.

Okay. And then my second question was the flat group volumes of cement guidance or plus 1%, which is what it was before, yet you've lowered the Mexican and the U.S. numbers. Where is the offsetting increase? I guess, I can go through it number-by-number. But overall, where is the increase? Fernando A. González: Can you repeat the question? Particularly in the case of Mexico, I'm not sure I got the...

Yes. I've just seen the slide. I think it's 26 on the website, which shows the new volume forecast by country. And as you said you've left the overall group of volume of plus 1%, but you have significantly lowered the Mexican forecast and the U.S. I'm struggling to see there where you've raised the forecast in other countries to offset it. Because, for example, I'm looking at Spain, it was minus 17%, it's now minus 25%. So I'm trying to work out which countries are offsetting the weaker outlook, particularly for Mexico and for the U.S. in terms of the 2013 cement volumes.

Yes, maybe I can... Fernando A. González: Yes, go ahead.

Mike, we're -- I mean, we were very pleasantly surprised with what happened in the U.K. So in the second quarter, as you saw, our volumes were up close to about 9%. And so on back of that, we improved our guidance from minus 2% to flattish guidance. So that was very helpful. And then of course, in Egypt, on back of the performance in the second quarter, we improved our guidance from the minus 7% to the minus 2%. And then in the Philippines, we also improved the performance from plus 4% to plus 5%. And we feel reasonably comfortable that those changes plus -- and of course, in the U.S., both in the U.S. and in Mexico, we're talking about ranges, right? So we think at the end of the day, the combination of our expectations from Mexico, U.S. plus the increases in these other countries, we should be flat in our volume performance for cement on a consolidated basis.

And in Mexico -- because obviously you need a quite a catch-up in H2 in Mexico to meet that guidance. That's primarily because of the lower base? Or it's the infrastructure program getting off? Or what's behind the confidence that you move from minus 7%, minus 8%, I think it was, in Mexico to down flat to low single-digits? Is it the base effect? Fernando A. González: Well, I think that the same way we have -- we did communicated in our first quarter call, and now this time on the impact on government expenditure. Clearly, by now, we can see a material change regarding expenditure. So in the case of infrastructure, for instance, with information we have available, April and May, it has increased 22%. So that's very material. And in the case of an internal indicator, which is our ready-mix contracted volume for infrastructure, since March, it has increased 14%, which is an increase of about 80% when compared to last December. Then we have the announcement of the national infrastructure plan and some of those projects are already projects that are developed as projects and they are having some traction. So that program, as you know, is about 50% higher than the previous program, the one under Calderón's term. This is in nominal terms. Then you have the impact in housing. Again, with information available, April and May, compared to the previous quarter that are -- like 20% additional mortgages. This is also a very positive indicator. And we're seeing that the industrial, the commercial sector in Mexico should continue behaving similar to previous quarters, meaning growth of 30%. So all combined, regardless of the reduction of volumes during the first half, that makes us believe that second half will be much, much better.

And maybe, Mike, if I can add also. I mean, if you do the arithmetic, we need about a mid-single-digit growth in the second half year-on-year in volumes and to get somewhere in the middle of the range of our guidance. And to your point about basis comparison, if you take a look at average amount of shipments per day in the second half last year, they were definitely weaker than the first half, so not only we feel that due to all of the reasons that Fernando mentioned but also the growth that is needed to get to our guidance is relatively manageable and the base comparison is going to be a little bit easier.

And we will now take a question from the webcast.

Yes. The question from the webcast is from Phil Dumas from Geode Capital. And the question is, any update on plans to address the convertible note maturities? Fernando A. González: We have not changed our minds. I think what we have communicated so far is that we did request authorization from our shareholders in the last AGM in order for us to be able to execute any type of transaction. But this is -- the first convertible is due in March 15, so we still have the time to see how it goes and act or react if needed. Our best case is that those convertibles are going to be converted. But anyhow, we do continue monitoring the situation, market conditions. But we have not changed our plans regarding those convertibles.

And we have time for one last question from Santiago Perez from Credit Suisse. Vanessa Quiroga - Crédit Suisse AG, Research Division: This is actually Vanessa. Santiago had to step out. Well, we just had probably one last question. Just to be very clear about the taxes, what kind of legal proceedings have to be solved to get to your guidance of a relatively stable cash tax payments for the full year?

I mean, we have a -- as you know, we've had a change in tax legislation, which was retroactive in Mexico. And we've been going through legal proceedings to address that. We will probably get resolution one way or another by some time in the fourth quarter of this year. Now we have gotten almost a unanimous opinion from our legal counsel, giving us the very strong comfort that the conclusion should be in the way that we understand it, which is favorable to us at the end of the day. It's difficult to comment on more details as this is an ongoing legal process, so it's difficult for us to do that. But we do expect -- we're quite comfortable in believing that we should get a resolution in our favor sometime in the fourth quarter. And to the extent that, that happens, then we should be comfortably meeting our guidance for the tax bill for this year.

I would now like to turn the call over to Fernando Gonzales for closing remarks. Fernando A. González: Thank you very much. In closing, I would like to thank you all 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.

Thank you. Thank you for participation in today's conference. This concludes the presentation. You may now disconnect. Good day.