Fernando Gonzalez: Yes.
Maher Al-Haffar: Yes, Alejandra, we’re very pleased with announcing the transaction, and we’re expecting closing by the end of the year. In terms of the impact, I mean, of course, you saw in the press release that we issued, the implied enterprise value is about $800 million. And if we take a look at based on last year’s valuation. We’re talking about a little bit over — in terms of multiples, a little bit over 20x — 21x, 22x. And in terms of impact on us, I mean we have debt that will be assumed around $345 million, $350 million and then cash of about $360 million, $365 million. And so you’re talking about the total amount about $708 million. Again, we don’t know what the impact on leverage is going to be by the end of the year.
But Ceteris Paribus kind of conditions by the end of the year, this should have about 0.2 of a turn positive impact, assuming everything is impacting leverage, of course, without taking into consideration what the use of proceeds would be in all of that. In terms of working capital from a trading perspective, it should be fairly limited because of the relatively low operational level that the business has at this point. And of course, closing is subject to customary regulatory approvals by the end of the year.
Alejandra Obregon: Perfect. Maher, just to make sure I got it right. What was the impact on potential impact on leverage. You mentioned 0.2 turns. How much for that, I’m sorry?
Maher Al-Haffar: Again, Ceteris Paribus conditions, meaning everything is being applied to either cash or reduction in debt, the impact on leverage would be around 0.2 of a turn.
Alejandra Obregon: Got you. Perfect. That’s very clear. Thank you very much and congratulations again.
Maher Al-Haffar: Thank you, Alejandra. Great to hear from you.
Fernando Gonzalez: Thanks, Ale.
Operator: And the next question comes from Pablo Ricalde from Santander. Pablo?
Pablo Ricalde: Hello, Lucy, Fernando and Maher. Thanks for taking my questions. I don’t know if you can provide more color on the U.S. volume performance we saw in the quarter. I know you explained there were like less working days in the quarter, but maybe talking a little bit about market share or regional performance, that would be super useful.
Lucy Rodriguez: Thanks, Pablo. Yes, we did have a reduction in the decline in volumes in both cement and ready-mix, while we had an increase in volumes in aggregates. The weakness in cement and ready mix is why the difference in product. It’s primarily because, first of all, footprint. The footprint that we have in ready-mix was heavier hit by precipitation in those markets and the same in cement. It really reflects our footprint. Aggregates, the reason why we’re seeing growth there is because, first of all, it’s less vulnerable to weather because, of course, you can inventory aggregates, you can also even lay them without much impact if it’s raining. And also in terms of the actual geography. The growth in ags that we’re seeing came from infrastructure, particularly, it’s primarily base material.
Now in terms of what’s responsible for the volume decline, it’s not an exact science, but we do believe that about 50% of the decline relates to weather. In states that represented 75% of our cement volumes, we saw an average 35% increase in precipitation in the quarter. I’m going to highlight Texas, in particular, where we’re exposed in the South in the Houston area. In Texas, it was a 45% increase in precipitation year-over-year. And if you look at just January in the Houston market for ready-mix, there were only eight days in that entire month that weren’t affected by weather. And then to your point, we did see probably about 30% of the volume decline that came from a market softening, primarily in commercial and residential in places like San Francisco and in Arizona, we have seen some softening in terms of market demand.
And of course, we also did have market share loss that we highlighted last year. That is pretty much stabilized, but we’re still seeing the year-over-year impact. And of course, we have said that we will — we are aiming to responsibly recover that market share. And finally, we also had some projects that were ending for about 20% of the volume decline. Arizona, in particular, there were two chip manufacturing, semiconductor chip manufacturing facility projects that have paused there. As Maher mentioned — no, I guess, Fernando mentioned in the call. Since February, we have seen an improvement. Volumes have been recovering both on a sequential and a year-over-year basis. And in fact, March was actually positive year-over-year. So we are optimistic going forward in terms of demand.
But hopefully, that covers it for you, Pablo.
Pablo Ricalde: Perfect. Lucy, thanks.
Lucy Rodriguez: Okay. Great. And the next question then comes from the web. It’s from Paul Roger from Exane. CEMEX has previously said carbon capture is a 2030 story. Is that still the view despite some big peers now suggesting it will come earlier this decade?
Fernando Gonzalez: Well, Paul, thanks for your question. Let me clarify our position on carbon capture. Maybe the reason why you’re saying is a 2030 stories because the way we have defined our road map to Net Zero and the emphasis that we are making in different steps in the process. We’ve been since we started our newer strategy, the Future in Action strategy launched in 2020. We’ve been focused on reducing our carbon emissions scopes at a much faster speed than we used to do it before. The reduction that we have done is about 13%. And every year, it continues reducing or we’ve been reducing like three and fraction close to four percentage points. We are highly focused on traditional levers to comply with our 2030 commitment.
Commitment that is aligned with the scenario of the 1.5 degrees already certified by SBTI, meaning our target by 2030 for the time being is not assuming a contribution from carbon capture. Now at the same time, we’ve been developing carbon capture and storage or use projects, we have publicly announcing — we have already announced six projects, four in Europe and two in the U.S. At an industrial level, with proven technologies and with already on in most of the cases already with the consumptions needed to capture to transport and to start or use. If we can do or develop or put in place these projects before 2030, and we are trying to do that, it will be much better. But again, regarding our commitments as of right now, we are not including this carbon capture contribution.
Now the — at least the way we see it all over the world, the traditional levers can be applied in the cement industry. There might be some rules and regulations to be improved in Global South, but it can be done. But what we see — and in your question, you are referring to big peers suggesting that it’s coming earlier and it’s coming earlier. But it seems like that is coming in Europe and the U.S. And that’s about 10% of total cement capacity all over the world. So we are all interested in reducing carbon capture, reducing even more and reducing it faster. But we are very pleased with the strategy of reducing almost 50% using 1990 base by 2030 without those contributions. So reduction is extremely important, as you can imagine, if you reduce up to 50%, the projects needed to capture the rest should be smaller and more convenient.
And so — we are one of the ones developing this type of projects as fast as possible. And again, but this is a European and U.S. proposition for the time being. Canada, maybe three or four countries. But we need to find a solution for our company in other geographies and for our industry in other geographies. So that’s what I can comment on your question.
Lucy Rodriguez: Thank you, Fernando. The next question comes from Adrian Huerta from JPMorgan. Adrian?
Adrian Huerta: Hi, thank you, Lucy. And hi everyone. My question has to do with Mexico, both on volumes and on prices. In the case of prices, you tried to increase prices in January in Mexico, but it seems that prices were flat sequentially in local currency, but peers actually didn’t had a 4% increase in the quarter. So if you can make any comments on that and if we should expect given that you did not have a price increase in the first quarter, expect one in the coming quarters? And regarding volumes, how much was in the first two months of the year started to be strong. We don’t have data yet for March volumes. And in the new guidance that you have, what type of deceleration are you assuming for the second half of the year on — especially from infrastructure?
Fernando Gonzalez: Would you like me to explain it that or…
Lucy Rodriguez: Yes, go ahead.
Adrian Huerta: Go ahead.
Maher Al-Haffar: Yes, Adrian. I think if we take a look at sequential pricing in local currency terms for Mexico, actually like up 3%. So we did put a — announced in January a national pricing increase for bags, 12% for bulk, 15%. And it was — we believe, quite successful given the demand dynamics that we’ve had. As you saw volumes in the first quarter for cement were up 7%, and that’s before you start adjusting for the two less working days. If we take a look at average daily sales, volumes in cement are up 10%. And this was, of course, what — between that and decelerating inflation is what drove the record performance. And definitely, volumes did get better towards March. And we think certainly the first part of April continued to be doing quite well as well.
So we’re happy about that. And so we believe that the success of our pricing strategy in Mexico should continue. And then if we take a look at margins, as you saw, we had a very positive expansion in margins because of the pricing and because of the cost deceleration. Bag cement grew by like 5% on an average daily sales basis on back of lower inflation, easier comps, more remittances, the formal sector was really was — what was really driving growth enormously. I mean we saw the formal segment, bulk cement demand up 16%. And then if we take a look at ready-mix and ags, we were up 5% and it’s almost more than double that on an average daily sales basis. So I think the demand dynamics are very positive. The cost dynamics are quite positive. And we’re expecting them, frankly, to continue to do that.
And as we see, some conclude — potential conclusion of some of the large infrastructure projects by the middle of the year, we continue to see other projects that are actually starting and should continue to give us very good momentum into the back half of the year. So right now, we’re not looking at any major deceleration during the rest of the year. And bag cement should continue to with — in the rest of the year, we’re expecting it to be actually a little bit better. Of course, coming from a much higher level because of the disproportionate growth in infrastructure and industrial and commercial. That’s the other segment that also continues to do extremely well because of the onshoring and near-shoring. I mean if we take a look at industrial, it’s roughly 60% of our demand, infrastructure, I didn’t mention, but it’s about 15% of our demand.
And those two businesses continue to do extremely, extremely well. And that’s why we if you take a look at our implied volumes for the rest of the year, it’s significantly higher than what we saw — what the total guidance is.
Lucy Rodriguez: And significantly, I mean, our implied guidance for the rest of the year is 1% to 4%, right, versus the 7%, just to be clear. Okay. Adrian, does that answer your question?
Adrian Huerta: Yes, that’s fine. Yes, thank you.
Maher Al-Haffar: Thanks, Adrian.
Lucy Rodriguez: Okay. And the next question comes from Alberto Valerio from UBS. Alberto?
Alberto Valerio: Thank you, Lucy and CEMEX team. My question is about the Philippines divestment. I would like to know if you have — you mentioned that you leverage the [indiscernible] that if you have any other options for the use of proceeds of this transaction? And if you can see the stellar movement for the Colombia assets where you made our offer for the shares and we may be best following the strategy that you mentioned in the CEMEX Day of trending one, you cannot mistake when you say that we want to be more focused on developing world and the emerging markets.
