Quick Succession at Mexican Cement Giant Cemex After Sudden Death of CEO
Monterrey, Mexico-based cement giant Cemex moved quickly to name successors and reorganize after the sudden death, on May 12, of longtime CEO Lorenzo H. Zambrano, 70, who transformed it from a small family business into the world’s third-largest producer.
Seeking to reassure investors about the publicly traded firm's future (NYSE: CX), Cemex elevated Fernando Gonzalez, 59, to replace Zambrano. He waexecutive vice president of finance and administration and joined the firm in 1989.
Rogelio Zambrano, 56, a cousin of Zambrano, was named chairman.
Lorenzo Zambrano died in Madrid. The company did not disclose the cause of death. He had been CEO since 1985, additionally serving as chairman for the past 19 years.
In a May 23 webcast with analysts, Gonzalez said Cemex did not need “to change strategy, recruit new people or invest in new markets, we just need to execute.” But he said the firm might consider new acquisitions in emerging countries and predicted double-digit earnings growth rates in 2014 and 2015.
Cemex also named several new hires in its executive suite, but regional presidents will remain unchanged. By midday on May 27, stock was trading at $12.95, well above a 52-week low of $8.78. .
The 108-year-old, 43,000-employee company, founded by Zambrano’s grandfather, had $15.23 billion in sales last year.
Cemex is Mexico’s first true multinational company, with production facilities in 50 countries on four continents. “Mexico has lost an extraordinary businessman and a great Mexican,” said Finance Minister Luis Videgaray in a Twitter message, calling Zambrano “a man of great commitment and love for Mexico.”
Zambrano, who joined the company in 1968, spearheaded Cemex’s global growth through 16 mergers and acquisitions, including the $5.8-billion purchase, in 2005, of London-based RMC Group, which increased the firm's European market share while ratcheting annual cement production, to 97 million tons.
Zambrano also paid $14.2 billion in 2007 for Australian-based Rinker Group Ltd., which required selling 40 facilities to clear U.S. Justice Dept. antitrust charges.
An ensuing global economic meltdown pushed Cemex to sell off, in 2009, its Australian operations to Swiss-based rival Holcim for $2.2 billion, thereby helping refinance $14 billion in accrued company debt from Zambrano's buying spree.
The company was recovering at the time of Zambrano’s death. “We are encouraged by the positive outlook and the improving business environment in the markets where we operate,” said Gonzalez in a statement. “We have the best people in the industry who can [ensure] our continuing success.”
In announcing its first-quarter 2014 results on April 30, Cemex noted that net sales had risen 8%, to $3.6 billion, from the same period a year earlier. Earnings rose 3% in the quarter, to $535 million, from the same period in 2013.
Earlier this month, Cemex announced the start of construction of a $55-million cement grinding plant in Managua, Nicaragua, that it set to increase production capacity in that country by about 104%.
To be completed in two phases, the plant is expected to reach an estimated annual cement production capacity of 860,000 tons by 2017.
