CEMEX, S.A.B. de C.V. (CEMEXCPO) Earnings Call Transcript & Summary

My name is Lucy Rodriguez, and I am the Chief Communications Officer for CEMEX. First and foremost, after 1.5 years of quarantine, it is wonderful to have everyone together again, albeit both virtually and physically. A very big welcome to CEMEX Day 2021 Part 2, our first hybrid Analyst Day. I have a few housekeeping items before we begin the formal program. Slides for the event are available on our website at cemex.com. Except for our CEO, Fernando Gonzalez' introductory remarks, each presentation has a Q&A built into the session. We will conclude the event with a Q&A with our CEO. [Operator Instructions] We are pleased to be here today at the New York Stock Exchange and grateful to the Exchange for once again making their premises available to us during the pandemic. So let us begin. As you may remember, due to the pandemic, we split up our usual annual Analyst Day into 2 separate events. The first, a financial and strategic review that took place in June; and today's event that is more granular and focuses on the regions, the climate action road map and our digital strategy. In today's event, our CEO Fernando Gonzalez, will begin by providing a brief overview of operation resilience, our digital initiatives as well as our climate action commitments. That will be followed by presentations from regional presidents, who will provide an update on recent market trends and medium-term outlook of their regions as well as our climate action road map and our digital strategy. We have with us today our full Executive Committee, who will be available for the Q&A. There is so much happening today at CEMEX between our ambitious climate action targets, our growth investments, our digital engine driving customer centricity and the organic growth prospects of our markets. I think you will hear interesting insights into what is happening in our regions and how we think about future growth as well as our purpose and how we intend to build a better future. And now for a quick disclaimer. 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, public -- price increases or decreases refer to prices for our products. And now it is my pleasure to introduce our CEO, Fernando Gonzalez.

Good morning to all, and thanks for participating in this second section of CEMEX Day, either presentially or through the webcast. I hope you and your loved ones are healthy. And we will spend a few hours commenting on the agenda you already know. But before getting into the main content of the agenda, we thought it was a good idea to kind of review things that we have been communicating is our north, which is expressed in what we started calling Operation Resilience in September last year. Briefly, let me go through the process because there has been several surprises in this pandemic process. March last year, because of the dominant scenarios then, which most of them were disastrous, we reacted boldly, precisely because we thought we were headed into a disastrous scenario. Now you know the story, we took bold actions, savings, postponing CapEx, eliminating, getting as much cash as possible, developing 52 healthy -- health protocols to protect our employees, all that stuff. But you know the second surprise is that instead of a disastrous scenario, at least in my case, it's the first time that I see a V-shape recovery, 3 months, 4 months at the latest. And there was a full recovery of our business activity in our sector. It didn't happen in others, but in ours, construction was declared essential almost all over the world. So we managed to recover. And the next surprise was that instead of moving and recover to pre-pandemic levels, in our markets, we saw growth. Again, another surprise. We were not expecting such a positive scenario by then. And that has been the case since then until the info we have already reported in the second quarter. So we summarize all our actions during all this rollercoaster because of the pandemic into this operational resilience. So let me go through -- briefly through the elements so we can move to the main content of this event. Let me start with EBITDA growth through margin enhancement. We commented. We wanted to have -- we target margins above 20%. As of -- during the first half of the year, it's slightly higher than that, supported by market growth, by our actions, cost and expense reductions and all the like. Now before moving into the other 3, the other 2 are still just a review of operational resilience. The last one is one of the main contents of this CEMEX state. But before moving to those, I think we have to acknowledge that lately impacted because of the Delta variant and perhaps some modern issues, what we've seen -- and lately, meaning 2, 3 months. What we're seeing is this super-hot scenario moving into a hot scenario, meaning there has been some slight decline in global GDP, which is still around 6%. There has been a reduction, for instance, in relevant markets for us in U.S. GDP by 0.5 percentage point. So seems like there is a surface slowdown of the -- of these scenarios that were dominant during the first half of the year to a slightly lower growth, but still pretty relevant. The -- it was not the idea for this CEMEX Day to get into expectations and short-term issues. That's supposed to be done 3 weeks from now, in our third quarter call. But we thought it was convenient to address a few issues. First, a set for weather issues, and we have had some in the U.S. and Mexico and Europe. This slight decline in GDP growth in different markets has not been translated into less growth in our cement, ready-mix and aggregate volumes. Our expectations are still holding. They might have an impact afterwards, but so far, we have this expectation similar to the ones we have been communicating before. What has changed is inflation. We thought we were going to have inflation, but not as much as we've seen, particularly fuels, electricity, maritime transportation, in particular. So we've been impacted because of inflation. And another impact, which is related to several variables, but referring it to inflation, we've seen in our sector, no different to others, there is an impact because of supply chain issues, constraints. There is scarcity of certain goods. We needed to buy at spot prices, certain issues, that's more expensive than what you really prepare to spend. But -- so it's been impacting us to some extent. There is another variable. It's not huge, but remember that our expectations were expressed at FX prevailing in -- at the end of June. So by now, we have some impact because of FX, particularly mainly because of the Mexican peso. And another impact, and because that's the other variable related to supply chain issues, is that we've seen some delays in the execution of our growth projects, meaning goods are taking longer. It's like cars are taking longer to give it to you. By the way, we've been responding to all of this, meaning now our pricing strategy is completely different, as you can imagine. We are increasing prices in a much more frequent basis, and we are understanding the dynamics -- or the competitive dynamics in different markets. We are doing as much to continue with our policy in pricing, which is gaining back inflation we have in our cost structure. So all in all, we believe in a sort of preliminary basis, meaning preliminary because we don't still have the full data for the quarter. Again, we will comment that during our call. But we believe that all these variables can impact our EBITDA for an amount of around $100 million. So that's what we wanted to comment. We thought it was -- we thought you were expecting some -- us addressing somehow this situation. We will need to better understand, again, we've been surprised several times in the process. We don't want to be surprised again. But we are prepared. We have changed our pricing strategies. We have changed or we have taken, again, measures on postponing cost and whatever investment can be postponed. So we are doing all of that. So we will have better information during our third quarter call in 3 weeks. One piece of info that I can tell you is that all contribution margins in all our products, well, it's cement, ready-mix and aggregates, in all our regions, with the exception of the margin we make on imported cement in the U.S., are holding or growing in the first 8 months of the year. So that's already 8 months. So what we're saying, lately, we've seen this trend. We see what's happening. We are reacting. We will need some additional time to go deeper and communicate what we believe is going to be the impact, at least for this year. So let me move on to the next element of operational resilience. What can I tell you, you know all the measures growth. EBITDA growth has been relevant for us to delever the financing. We change the free cash flow we are generating. All in all, it's helping us to move to our aspiration or previous target of having a leverage ratio below 3x. And now once we achieve it, now we are setting the target of gaining investment grade. As you know, Standard & Poor's just changed our outlook, and they did mention the parameters that they think we should comply with in order for them to keep an upgrade, a notch. So we are very vigilant on that part. The third one is optimizing our portfolio for growth. If you remember, early -- even before the pandemic. In early 2020, we made some adjustments to our strategy, and we decided to start investing in businesses we knew were attractive businesses, small businesses, all around our business activity, mainly in the U.S. and Europe, to some extent, in Mexico. I mean everywhere, but these type of businesses. Now we know that it was really true that there was an opportunity that we didn't manage to tackle before because we were using all our resources to reduce debt. And now we have very interesting, low-risk, profitable projects for investments of about $700 million. These investments are really small, meaning from $5 million to $30 million. Some are even less, a few are even more, but that's the range. And we are executing. So we do expect that by 2023, if we manage to execute this $710 million in these projects timely, I already warned on the supply chain issues we have. For instance, we are ordering ready-mix trucks in advance. We don't want to be in a position where markets are growing, and we cannot take advantage of it because we don't have the trucks. So that's the type of measures that we've been taking. So these investments should generate around $300 million, $320 million, $330 million of EBITDA by 2023. And that's a figure that we will continue updating as long as we understand how effective or how impacted this activity could be because of supply chain issues. And now let me move to sustainability agenda. In particular, I have to clarify that at least the comments I'm going to make are, in particular, oriented into a lower carbon economy. There are others that are very relevant. Today, at least in my case, Juan Romero is going to elaborate much more, but we are going to be focused into CO2 or low-carbon economy. You have the data on the second quarter, so that's a reduction, 1%. When you mentioned short periods of time, that's not that sizable. But again, it's indicating that we are moving forward according to the plans that are going to be deeply explained to you. Briefly, this is a very long story. Yes. And I have 15 minutes. So Lucy told me several times, it's 15 minutes. No, but I think I can summarize it. I can summarize it. Climate change is not new. It's not new for us and for other companies. So what is the fuss? What -- why is it that we want to -- we want you to listen to us on what we have to say? Well, our way to put it is that we serially started working in climate change since 1990 after the Kyoto protocol, and it was not just us. It was the whole industry. It's been 30 years. In 30 years, we have managed to reduce our CO2 emissions by 20 -- I never remember 22% or so percent. Juan is going to mention that. The reason we are addressing this now is because climate change is in the new momentum because of evidences, precisely on climate change and because of how many some traditional, some new stakeholders, have engaged in the last 12 to 18 months into climate action. So that makes this a completely different game. It's not different rules. It's a different game. And that's why we wanted to adjust our strategies, our targets and everything towards this new momentum, which is different in how much is demanded and how fast is demanded. I know you all read things same -- most probably the same articles that I read, but I cannot help, but I remember Greta Thunberg saying 2050, come on. You have to act as if your house is on fire. So it's different. And nowadays in this momentum, it's not only Greta. It's a critical mass of stakeholders expecting and demanding us to change and to adjust. What is -- what has been our response? And as you see in the middle of the chart, 2020 and '30 is a decisive decade. The first part of what makes it decisive is that we have changed our stand. We have changed our aspiration. We started by stating 250 carbon neutral ready-mix in the market. So our customers could build with low-carbon products. But afterwards, we subscribe to the well below 2-degree scenario, which is the one that is aligned to the Paris Agreement. After subscribing to this scenario, SBTi certified that the specific numbers, the specific targets we are now proposing or committing by 2030, are the ones that are precisely aligned into what is needed for the temperature not to go above 2 degrees. This scenario, nowadays, you -- there are ways for -- SBTi in this case has certified, but there are ways in which you can subscribe and define the specific targets to it. After doing that, we subscribe to the 1.5 degree scenario. We mean business and UN, the race to Zero, which means right now, there is not a way to define specific criterias or numbers, but is the intention of going even deeper in the reduction. And right now, there is a process in which this scenario is going to be specifically defined for different industries. We are very pleased because we were invited as part of the committee that is going to be defining this scenario for the cement industry. So the previous targets we used to have for 2030, we move them forward, 2025. And the new ones, Juan is going to elaborate on all of them, are the ones aligned currently to the Paris Agreement. Another important comment is, most probably, this will continue being a moving target. Who knows what is going to be coming out from Glasgow, okay? We're paying attention. But for the time being, this is as far and as ambitious as we can be. Now I'm not going to get deeper into precisely what Juan is going to be commenting. A few issues, key variables for us. Low-carbon products, we need to better serve the construction industry, our customers. We need to provide them with a much more comprehensive value offer on low-carbon products. We're doing it. Our Vertua family of products, yes, but we need to do much more. That's one thing. Another thing is we need to take more advantage of a circular economy. We have been taking advantage of the circular economy. Let me give you a piece of info. Last year, our reduction of CO2 in Europe was 35% when compared to 1990 Kyoto protocol. The rest of CEMEX, 20%. My explanation of the difference, it is not that we were paying more attention in Europe and less attention in U.S., Mexico and other markets. It's circular economy. So household and industrial waste recovering the energy content it need instead of landfilling it, that's an example. Using waste from other industries, fliers, slack, alternative raw materials that could be wastes from other industries. Availability of clean energy. So all those issues that are related to circular economy are key in this effort. And the other one is innovation. And I think we will need to make much more emphasis ourselves through association and other industries on trying to move public policy into facilitating this process. Now the good news is that in order to achieve our targets, we are not dependent on any changes in public policy. We are not dependent on any new technologies that are not available today. We have what we are calling our road map from today to 2030, plant per plant. And what we need to do is to do -- is doing more and faster than what we have done. We have cement plants in Europe using 90% of alternative fields. Not all our plants are using 90% alternative fuels. Okay. So okay, that's the gap that we would be covering. And again, Juan is going to be detailing that. Innovation. We engaged like 4 years ago. Our corporate venture entity, CEMEX Ventures, is now one of the best-known open innovation networks in the construction industry. And through them, through CEMEX Ventures, we have detected, we have invested, and we have worked with a number of start-ups related to the new technologies that we will be needing in the next few years. At the latest, in 9 years, before 2030. And then with the road maps, with innovation, and hopefully, with some success in public policy, we will move to the last phase of our decarbonation strategy after 2030. And I will leave it like that. So Juan, again, is going to comment us on more specific issues in this regard. Last one is technology, digital technology. We've been talking about this already. Now it seems like we knew the pandemic was coming. We developed CEMEX Go before the pandemic. That is not true. That was not the case. But it happened that it was very convenient that we finish developing a full digital commercial platform. When I say full, I mean, from leaf to cash is the whole process. It's not pieces of it. It's not tracking the trucks. Yes, we do that. But it's not only that. It's not just ordering. Yes, we do that, but not only that. It's invoices. It's reviewing. It's delivering. It's the whole spectrum of the commercial relation. And we have that for cement, for ready-mix, for aggregates and is available all over CEMEX markets. There is a small reception there because of IT issues, but it is available everywhere. It took us 2 years to develop the platform and to launch and replicate the platform all over CEMEX. Nowadays is a reality that has been enriched precisely because customer feedback because new technology is applied to it. So we are very pleased with this IT platform, we believe, is the first full digital platform in our industry. We've seen different efforts. I think, clearly, it is a trend now in -- not only in our industry. This is -- I see it as a recent trend in the business-to-business type of digital platforms. Of course, this is not new for us when we get into Amazon, stop by and I get the great cut and the end of the story. But a business-to-business digital platform is a completely different story. If you want to integrate everything, even confirming, even delivering and doing everything. Now that is -- I'm making much more emphasis in this part, although we have 3 because of 2 reasons. I believe that digital technologies have proved to be the technologies with the highest power to transform business models. And either in all the cases or in most of the cases, that transformation happens when customer experience is improved. So those are the main reasons why making that much emphasis in our digital commercial platform. We decided to develop a superior customer experience when compared to the experience you used to provide to customers and hopefully, superior to whatever experience is available in the market. When we started enabling that experience with the digital platform, we also started measuring our Net Promoter Score, NPS, which is a very well-known methodology. When we started, we were below 50 points in NPS. Last review, last quarter, 70 points. It's been a very material improvement on customer experience. We are very pleased for 2 reasons. First one because 70 points is big leap, as far as I understand, when compared to other industries. But I'm particularly pleased because of all the feed that we get from customers through the use of this methodology. So our detractors -- you are familiar with that way to measure. Our detractors are telling us, I don't appreciate you not being on time or X. So we get lots of feedback from our customers, and that is helping us to continue improving that relation. The other 2 are also very important, creations and digitization of managerial processes. Again, they are also very important. It will help us to be more efficient, to reduce cost, to be more agile, to better respond to internal customers on financial info and a number of processes. But again, I have to make emphasis, particularly in our desire to develop a superior customer experience enabled by this very comprehensive digital platform. And I think I have to stop here. Hopefully, I did it well with my minutes. I don't know. I was not looking at my -- but as you know, we will continue with the band. I will be around. And at the end, I will be available for conversations, Q&A. Thank you.

Thank you very much, Fernando. And now we're going to move on to the regional presentations. First, joining us virtually, I hope, technology-permitting is Sergio Menendez, President of EMEA. Thank you.

Thank you, Lucy. Hello, everyone. My name is Sergio Menendez. I am the President of CEMEX in the EMEA region. Let me start by sharing with you the results of the first half of this year. Yes. Thank you. We had a strong performance in the first half of this year, growing as a region, 25% compared to the first half of the previous year. And in comparable basis, around 16%. We had a strong recovery in volumes, as mentioned by Fernando, and pretty much across all our markets. We are -- and this despite a harsh winter in the first quarter of this year in Central Europe. So volumes are recovering well. We expect to reach 2019 levels by the end of the year. So most of our markets with strong fundamentals. Prices are also moving well. For the first time in many years, we have implemented a second round of price increases in most of our markets, and that is helping us offset significant input cost increases, especially in electricity and fuels in some of our markets. And we expect in the coming months to continue working on this and fully recover the input costs, as mentioned by Fernando as well. If you look at the fixed and other costs, we continue to drive efficiencies on top of the performance of last year. In absolute terms, we continue to drive efficiencies in cost despite the inflation. And all in all, we are achieving a 50 basis points margin improvement in the first half of the year. And it's important to note as well that last year, we have several one-offs included in our results that are not happening this year. For example, the 4 blocks, some government incentives and so on. So when we do the like-for-like, considering this, we would be growing 7 points more than last year. So it would be something around 32% or around 23% like-for-like. You move to the next slide, please. Now in terms of our portfolio on the left side of the slide, I would like just to remind you, EMEA is composed of 11 countries. And we have really a balanced portfolio, where 4 of our countries represent around 20% of our EBITDA: Philippines, the U.K., France and Israel, and it's complemented by the countries in Central Europe and Egypt with the rest of the contribution. Now the second pie chart on the bottom explains 80% of our portfolio is developed markets, mainly Europe and Israel. So in that 80% of our portfolio, we do have a balanced portfolio in terms of business lines, for example, aggregates and organization solutions represent 50% of our EBITDA in that part of the portfolio, complemented by cement and ready-mix. And there are some countries, for example, in the U.K. or Israel, where urban solutions represent more than 25% of -- for EBITDA already. Now on the right hand of the slide, talking a little bit about the outlook of the different countries. Well, first, in the case of Europe, let me share that we have completed our One Europe reorganization. We used to have an organization that was based on countries, was a geographically-based organization. We moved to a product-based organization, driving significant efficiencies and a most lighter organization across the continent. So we manage Europe as one unit. And it's also giving us much more efficiency in terms of implementation and execution of projects. As part of this reorganization, we completed divestments of around $1 billion in peripherical assets. We also mothballed kins in Spain, Croatia and U.K. in anticipation of the Phase 4 of the European Trading Scheme. So all of these actions have delivered our target. When we started this in 2019, we had an objective of achieving 150 basis points in margin improvement, and that is done as of today. Going forward, we see positive demand fundamentals across Europe, strong public spending plans that I will detail in a minute. And also, we see high utilization rates, Central Europe has very high utilization rates. The U.K. has very high utilization rates. So that bodes well as well for our efforts to recover input cost increases. And something that we're also working strongly is on a pipeline for bolt-on investments and margin improvement. We have identified over 100 projects that we are already executing. So in the next 3 years, we already earmarked around 300 million and have identify around 500 million for reinvestments across the region and highly profitable projects that have, on average, 4, 5 years payback. Very attractive complement to our portfolio. In the case of Israel, the market is super-hot, strong for all our business lines, and we do see attractive growth opportunities as well. Egypt had an important piece of news a couple of months ago. The government announced a new regulation that restricts capacity. So we see this as the beginning of the recovery. We expect a gradual recovery in the industry and for Egypt to take a larger part of contribution in our portfolio in EMEA in the coming months and the coming years. So this is very positive news for the industry in Egypt. And in the case of the Philippines, it's also a sold-out market. Philippines is around -- the total demand in the Philippines is around 7% higher than 2019 already, despite being one of the countries most heavily affected by COVID. We see a strong public infrastructure plans. And also next year, there are presidential elections in the Philippines. So fundamentals for our portfolio in EMEA are positive, and we see EMEA as a growth engine for CEMEX going forward. If you move to the next slide, please? This is just to illustrate the infrastructure pipeline that is already being built in Europe. There are EUR 1.4 trillion earmarked for infrastructure projects up to 2030, and this includes around EUR 750 billion for the EU Renovation Wave that aims to renovate around 35 million buildings by 2030. And this projects, for example, includes on the left, the Olympic games in Paris, the Grand Paris Express, a full revamp of the Metro in Paris, the HS2 train in the U.K., high-speed train over GBP 100 billion. All of this is already ongoing, and we are participating in most of these products with our 4 business lines: cement, ready-mix, aggregates and some of our additives, mortars and so on. In the case of Germany, Poland, Croatia, all across Europe, we see several very relevant projects. And these are multiyear projects. And on top of this, we are starting to see more and more climate-resilient projects to protect coastal areas, rural banks, water preservation and so on. So we see -- these are part of the fundamental supporting the growing demand in Europe in the coming years. You go to the next slide, please. And just finally, this slide is just to share with you the progress that we have in Europe on climate action. We are very proud of the progress that we are achieving. In the last 3 years, we have accelerated the speed of reduction of CO2 emissions. We have reached, as you know, already a 35% reduction in CO2 emissions versus 1990. This is 10 years ahead of our original target for Europe. And as I mentioned, 25% of that reduction happened in the last 3 years, thanks to dozens of projects that we are implementing to accelerate as much as possible. And this is also a result of the implementation of One Europe, in which we are managing all these projects centralized in Europe and moving at the same time across geographies in our 7 geographies. And also, as a result of that, we have updated our target and our new target is 55% reductions. We're the first company in Europe to match the European Union aspiration of 55% reduction in emissions by 2030. This is already public, and we have a plan to achieve that part of the plans certified by SBTi that Fernando mentioned. And just to illustrate as well some of the specifics that are delivering these results. For example, we were the first company to introduce hydrogen as part of the combustion process in all our cement plants, and this happened in a matter of 12 months. We expect also to reach a new record -- internal record on alternative fuels, we expect it to reach around 70% by the end of the year. This compares to around 45% of the average of the industry in Europe. So we are among the highest, if not the highest, in alternative fuels. And this is helping us turn one of the largest input costs into an income stream. We already have 2 cement plants where fuel is an income stream in Europe. And by the end of the year, we will have 2 more. So that means 4 plants were fueled is actually an income stream, and we expect this to happen in all of the plant -- or plants in Europe going forward. We are also the first company in Europe to introduce a carbon-neutral concrete. This was in January 2020 on their Vertua run. And we're already supplying significant projects. For example, one of the latest one is the Manchester arena. We're supplying 3,000 cubic meters of carbon-neutral concrete. And this is part of our full suite of Vertua products that are designed for renovation, for sustainable construction and so on. It includes not only concrete, but also cement. For example, we have a high-strength blended cement that was introduced this year in the market across Europe as well. We introduced it in all countries at the same time, thanks to our One Europe organization. Also in the case of aggregates, we have recycled aggregates that are used in cement, that are used in concrete. Mortars, also additives that help reduce CO2 in construction, special concrete products, for example, in Solaris that helps reduce energy consumption in buildings. So it's a full suite of sustainable products that we are developing. We -- and that we are innovating as well. We launched more than 20 products in the last 18 months in our 4 business lines. And just to complement, today, more than 60% of our cement sales are low-carbon cements, are blended cements. And for example, countries like Spain are already more than 80% of the cement we sell. And this has changed significantly in the last couple of years. We used to be below 50%. Now it's more than 60%. In the case of Spain, it was around 50%. Now it's 80%. So it's moving really fast across Europe. And all of this is also helping us build a portfolio of CO2 allowances, we used to have until 2025. Now it's until 2026. So we continue to build that excess portfolio of allowances. This means that we don't need to buy CO2 credits in the market at least until 2026. And we expect to continue to develop this portfolio through the reductions that we are achieving across our operations. And linked to this, we have more than 50 ongoing climate and innovation projects. And one of the most visible ones is the ones in our Rüdersdorf plant in Germany. This is one of the largest cement plants in Germany. And there, we have launched a flagship project to achieve carbon neutrality by 2030. We have signed alliances. We have over 20 partners, public and private, and we are running demonstration projects. The objective is by 2025, to have an industrial demonstration project, where we are capturing and using CO2 and to have a full-scale implementation by 2030. That is ambition. That is the target for our Rüdersdorf plant. So I wanted to share with you this summary as well. We are leading the industry in Europe and also leading in CEMEX. All of these actions are being shared across the company. And we're also learning from other actions that are implemented elsewhere, but this is one of our highest priorities going forward. So with that, I would like to stop and just happy to take your comments and questions. Thank you.

Thank you very much, Sergio. We're going to take the first question from the room. And Paul Roger, please go ahead.

It's Paul Roger from Exane BNP Paribas. I've got a couple of questions on the impact that CO2 permit prices at 65 might have. Obviously, you're long to 2026, but quite a lot of your competitors are not. Do you expect capacity closures? And also, what impact could it have on exports?

Thank you, Paul. Yes, we expect some additional closures. When you see the capacity that you have in places like Spain, Italy and so on, it has been happening. There has been more plants, kilns mothballed, but we expect a bit more of that. We do expect to have an impact in exports in the short terms, export for European markets. And that translates into a tighter market for clinker and cement that we're already starting to see not only for increases in shipping costs, also because of the demand recovery in Turkey. So right now, the overall market for clinker and cement exports is tight, and this will contribute to that, less export from European markets.

And now the next question is from the webcast, from our virtual audience, sorry. Francisco Suarez, please go ahead, from Scotiabank.

Congrats, quite impressive substantial results you have achieved. What can you tell us about the possible headwinds on logistics and how you are able to cope with the sourcing of the alternative fuels? Does that has an impact in your margins? Or that can actually be compensated by the value-added products at a low-carbon tax?

Francisco, thank you and thank you for the question. On the logistics and, let's say, other input costs on one side, you see a fuel price increase and also shortage of drivers, as we have seen lately in the U.K. and so on. Now that part is not affecting our alternative fuels strategy. We have long-term contracts when -- because this is also tied up with investments. So we have long-term contracts. And many times, the processing facilities are close to our operating facilities. So that hasn't really been an issue. And there's huge pressure to continue advancing on reducing landfill in Europe. Landfill in Europe, there's a lot of progress, but still, it's around 40%, 50%. There's still a lot of landfill -- landfilling happening in Europe, and the goal is to reduce that significantly. So we expect to have more availability of alternative fuels going forward in the case of Europe.

Thank you, Sergio. Any other questions from the audience? Okay. If not, thank you very much, Sergio, for joining us from Europe and great presentation. Thank you.

And now we're very pleased to move on to the U.S. and Jaime Muguiro, President of the United States, will be speaking, but not President of the United States, sorry.

I definitely don't want that job. I'm good leading the U.S. -- CEMEX U.S. team. Very good morning. I'm very glad to be here. Thank you, Lucy. As you all know, during the first semester, our EBITDA grew by 13%, and our EBITDA margin expanded by 0.7%. This EBITDA performance was mainly driven by very strong cement and ready-mix volumes. We also saw contributions -- positive contributions from manufacturing, variable and freight costs and from the price increases that we implemented during the first semester. Let me give you some color of the context in which we have operated in the third quarter and how we see the short term. With regards to the demand, the demand continues to be very strong. And across most of our states, supply and demand is pretty in balance. However, during the summer, we lost a lot of volume incremental opportunity to very bad weather, extremely rainy weather in Texas. We also lost incremental volume because of a few days lost in the mid-South and in Florida because of hurricanes and tropical storms. But when it's not raining, the demand continues to be very strong, and supply and demand continues to be very tight. What has changed, though, is the very significant headwinds of very rapid inflationary pressure. We didn't face those in the first quarter. We began to show them in the second quarter. As you can see in the first semester, we had a negative impact to EBITDA growth of $41 million coming from incremental cement volume, incremental clinker imports, at much higher cost. Only in the second quarter, that affected our margins by 3.2 percentage points. Let me talk to you about 2 of the -- of where we see that inflation happening very rapidly. One is fuels. In the U.S., natural gas, coal and petcoke prices are very, very high. And there are disruptions to supply chains of petcoke from local refineries. That is affecting us. The other one, for a great reason, very strong demand, we continue to increase our imports. But when we had to tap the spot market, we found that shipping rates increased on average 104%. So today, the landing cost of a ton of cement across the U.S. in our markets is $35 higher than it was a year ago. And as you can imagine, that is having an impact. What are we doing about it? During the summer, we successfully implemented a second round of price increases across the board, across most of our states in cement and in ready-mix. You already saw a sequential increase 3% in the second quarter in cement prices. That was pretty good. Please do expect sequential increases from June to December. Had we not faced this dramatic inflation, I would have said that our pricing performance would have been damn good, but I must tell you that it's not enough. And those will not yet allow us to pass on to end users the inflation that we see. And we do see these headwinds well into 2022 because my expectation is that shipping rates don't look like they're coming down anytime soon. As a result, we are very much focused to passing on to end users this inflation through next-year's price increases. The markets continue to be very tight. Supply and demand is in balance. And as a result, together with very high import parity cost, we do see great momentum for our price increases. This year, we were able to increase prices twice. The last time that we did that was 15 years ago. We expect to replicate that strategy next year. Let me give you now moving forward, some color about how we see the U.S. mid-cycle. And I'm very excited, I'm very positive about it for the following reasons. First, with regards to the residential segment. It continues to fly. It's very strong. However, I do expect a moderation in its growth rate going forward. Across our states, there is still pent-up demand. The economy is creating jobs. Consumer confidence is high. And inventories of existing homes for sales are extremely low a month, much lower than historical levels. And also, newly constructed single-family homes are at very low inventory levels, relative to historical. So we do expect a moderate growth going forward. But still, still residential will contribute to significant demand for our building materials at a very strong level. With regards to the industrial and commercial segment, this is the segment that underperformed in the last 2, 3 years. But I see a turning point. With regards to the industrial segment, we see very strong construction of warehouses, logistics hubs and e-commerce-related infrastructure. With regards to commercial, the increase in vaccination penetration and the fact that soon, we will see much less restrictions to traveling, including international traveling and with the conversations we're having with developers, they are telling us that they are beginning to think to resume commercial projects, particularly in the tourism sector. And we're very excited about that because we're exposed to 2 large commercial markets in the U.S., Orlando and Vegas. And finally, with regards to the infrastructure segment of the market that, as you know, accounts for 55% of the cement demand, I'm pretty positive. I guess as excited as you are to see the House of Representatives finally approving the $1.2 trillion Infrastructure Bipartisan Bill that was approved by the Senate back in August. If approved, there will be an incremental funding right of around 550 -- close to $550 billion that will indeed have a positive impact to demand. Within that number, I like the line about bridges, highways, streets and roads, accounting for $110 billion. That $110 billion will increase cement demand by around 33 million tons at least. Why? That's the most cement-intensive, and the ratio we -- I'm using is an increment of 300,000 tons for every $1 billion of incremental funding. But that's not the only thing because in that bill, you've got 2 other lines: transit, airport sports and water management infrastructure. And both, they account for 200 -- around $200 billion. They will also, although at a lower cement intensity, add demand for the U.S. in the mid cycle. So the U.S. mid-cycle looks very positive. Demand will continue to be strong. Supply and demand pretty much tight. And it's, in that context, that I want to share with you how excited we are, my team, with our bolt-on investment portfolio that's going to support EBITDA growth in the next 3, 4 years. We're investing $410 million in the next 3, 4 years. Up to 50% of the portfolio relates to our aggregate business. There, we're not only replenishing mineral reserves. We are also commissioning new aggregate quarries. Let me give you a few examples. 2 sun mines in Florida that we will be commissioning end of next year in 4 corners. Upgrade of capacity in Balcones that's going to allow us to increase supply of lime feed to a new line kiln that a customer is setting in their vicinities. We are opening a hard rock quarry in Central Alabama, and we just acquired a rail connected aggregates yard in Atlanta. We continue to invest to strengthen our supply chain. In this respect, we upgraded terminals across Florida, particularly one in Pensacola. I'm very excited about that. That is going to help us fuel growth in the next years in the mid-South. We're also investing to upgrade our rail outbound capabilities out of Brooksville North cement plant so that we're going to be able to grow to the Carolinas. We just upgraded our Fort Worth terminal in Dallas. We're going to be able to dispatch 1 million tons, shipping that cement by rail from Balcones. And that's not all. We continue to leverage our unique cement supply chain capabilities out of Mexico with Ricardo and his team. It's thanks to the recommissioning of one of the lines, CPM, and then we continue to leverage Yaqui that, very recently, we were awarded 2 very large construction projects to support build 2 cheap processing factories in Arizona. We're going to be pouring 1.5 million cubic meters in just 18 months. That represents around 6% of our annual average concrete production. And we were awarded that because of that unique supply chain reliability, right, supported by the Mexican team. And because in this portfolio, we also invested in ready-mix portable capabilities. We're setting up ready-mix portable in those projects, and we're ready to do the same as soon as the infrastructure build is approved to serve remote projects. With regards to climate action, we are heavily investing to introduce blended cements, low CO2 products similar to what Sergio explained in Europe. That requires an upgrade to our grinding capacity. So we're investing in grinding capacity. And that's great because not only we're going to reduce CO2 per ton of cement, but because we're going to lower the clinker factor therefore, releasing clinker, increasing cement production, that's going to replace partially very high expensive cement imports. So that is very accretive, indeed, and we want to move very fast. We're also investing on alternative fuels. And introducing hydrogen, learning from our experience in Europe, we're now at 20%. We want to be at 45% and then get to the 90s. Why not? We are also exploring debottlenecking some of our cement plants because we think it's great business. With little investment, we will also increase clinker production in some plants and cement production. And that should also allow, in the next 3 years, to replace partially some of the very expensive imports. With regards to our Urbanization Solutions portfolio, we are heavily investing in our block business, particularly in Florida is booming as a result of the very strong single-family homes market in Florida. And we're also taking full advantage of our Admixtures investments, where we see significant EBITDA growth of -- in that business, not only supplying internally, but also beginning to supply to third-party customers. So overall, the summary is, I'm very positive about the U.S. mid-cycle. We see organic growth. The portfolio I just shared with you will also help us increase EBITDA in the midterm and in the very short term, the key is my pricing. We're fully committed to recovering and more than offset the very headwind that we found during the year because of the very high shipping rates. And that's something that, for sure, we need to accomplish. And with that, I'm open to your questions. I was so excited, Lucy, to come back, that I forgot to move -- to remove the bloody mask.

I wasn't sure if you wanted to.

I must have -- no, no, no. Sorry about that. This morning, I look good. Why should I be wearing the mask? Sorry about that.

Okay.

Questions, please.

We're going to start with Alan. Go ahead, please, Alan from Santander.

Is this on? Yes.

Yes.

This is Alan Alanis with Santander. Congratulations on the presentation and the results. Could you speak about the capacity utilization that you have right now in the United States, both for yourself and for the industry and what that means in terms of the outlook for imports? And how will you take -- yes, how will take advantage of that?

Okay. We are sold out. The industry, pretty tight. There will be a new kiln in the mid-South next year from one industry player. That's the only capacity, else -- nothing else. And with regards to imports, in the next -- in this mid-cycle, the U.S. will rely much more on imports. Year-to-date July, imports for the whole industry increased by 37%. They account for 19% of all demand, right? And in United States, it's already 24%. But back in the old days, at the peak in 2005, they accounted for 25%. 30 million metric tons were imported in the country, all right? Last year, 15 million. So that's going to happen. And the import parity cost is around $135 per ton. That's the current situation. Thank you for your question.

And the next question is going to come from the virtual audience. It is from Adrian Huerta, JPMorgan.

Talking about the import capabilities, can you tell us a little bit the capabilities that CEMEX has on the ports and how they compare to peers? And if you see an environment where soon, we can start seeing cement prices increasing strongly in the U.S., like we saw back in '05 and '06, which when we saw double-digit growth on cement prices.

Okay. Adrian, thank you for the question. Let me tell you about our capabilities. We've got almost 9 million tons of cement import capacity. Last year, we only imported 1.7 million tons. We still have a long way to go, right? And that's why we're upgrading our terminals, Adrian. With regards to your second question, which is a great question, let me give you -- I'm going to talk about my prices, right? And let me give you a few examples. Northern California, during the summer, to offset the inflationary pressures, we implemented a price increase of $13 per ton, and it was very successful. Our customers didn't push back because there is no cement. And in that market, the cement is 100% of the demand after one competitor shut down a plant, right? It's all imports. And so we did get a very good traction during the summer. As many more markets rely on imports and more industry players rely on imports as part of their total portfolio, they're going to face dramatic shipping headwinds if the shipping rates continue at those levels. So with relates to -- Adrian, with relates to our prices, in those markets where that rely a lot on imports, right, we've seen great pricing traction, right? This is the first year in 15 years that we've been able to implement 2 price increases. And we're going to do exactly the same thing next year. The only difference is going to be that next year, my price increases are going to be much higher. And because we do see supply and demand tight, we do see good momentum. In this mid-cycle, the more competitors relying on imports, the more the demand will be covered through imports. If imports continue at this high level, I'm confident that I'll be able to increase my prices materially. And I don't -- I wouldn't expect that much push back from my customers when they try to go shopping elsewhere because of the tightness of the demand. I'm sorry that I'm taking too long, but I think this is important. If you look at another market like Houston, Houston relies on import, around 80% of the whole demand. But there, our pricing, although pretty solid, was not as interesting as the one in the Northern Cal. Why? Because of the horrible weather. And in the very short term, what has happened is that the vessels, when you cannot unload, the demurrage cost is huge. It cost you, per day, $60,000, and so there were discounts in the market to try to move that cement because the demand came down because of the horrible rain. But when it's not raining in a market that relies 80% on imports and imports are going to the roof, my expectation is that I'm going to be very successful next year to increase prices very materially in those markets. That's not the situation everywhere. We need to wait a little bit more so that imports continue to increase the weight of the overall demand of the market. Thank you, Adrian, for your questions.

Okay. We have a lot of questions, and I don't think we're going to be able to get to all of them. But the next one is from the room, and Vanessa Quiroga from Crédit Suisse.

My question is regarding the capacity -- the possibilities to expand capacity, Jaime, because you mentioned lower clinker factor. How fast can you do that actually to respond to this cost inflation? And also, how probable is it to restart operations at a couple of plants that were mothballed some years ago in Brooksville and Quantum?

Right. We're not planning to recommission those plants for the time being. Our investments to debottle -- debottleneck our current plans that are running are much more accretive. Our priorities are Balcones and the mid-South, particularly the mid-South. It's going to take us 3 years, but you need to separate 2 things. One is clinker increased production. The other thing is milling capacity, right? But overall, between permits and execution and also the delays in the supply of spare parts, equipment and steel, it's going to take us some time to get there. Which means, Vanessa, that for 2022 and 2023, although you will see an increase in production, because we've been investing in the last 2 years to eliminate some obsolescence in some of our plants, right? It's going to take us 2 to 3 years, right, to see a material increase that would allow us to partially replace imports. Meanwhile, we will continue to import, and we just have to materially increase our price. Thank you for your question, Vanessa.

Okay. And now we're going to go back to the virtual analyst audience, Alberto Valerio from UBS.

A quick one on my side. Should we expect the marginal -- the incremental volume margin be lower than the previous margin like we had in the second quarter, like the marginal -- the marginal volume coming at a lower EBITDA margin than the previous one? And just a complementary. For how much we need to increase price to offset completely this if this is the case?

Okay. Alberto, thank you for your question, right. With regards to your first question, the answer is straightforward yes. Last year, in 2020, our margin of our import business was very, very good. And we see that deterioration. It incrementally adds EBITDA, but as it weighed more to the overall dispatches and we lost this $35 margin at the margin, right, you're going to see, obviously, that impact. And as I said, I'm pretty happy with the price traction, but it's by no means enough. With regards to your second question, I cannot answer it because I will be guiding you, I think, and I'd rather prefer not to, right? But please count on double-digit increases next year, every time we do a price increase. Some markets in January and July, other markets, April and the fall, similar to what we did this year. And that gives you sort of a hint to where we need to go. Thank you for your question.

Okay. I'm going to take 2 more questions. One more from the room, if anyone has a follow-up question. I think you in the back, yes. Okay. Yes. Sorry.

This is [ Petro Verte ] from Credit Agricole. 2-part question. My first question is in terms of your Urbanization Solutions for the U.S., will you anticipate developing that in the southern part of the U.S. where you guys have presence or think of moving to different areas, I don't know, the Northeast, Northwest, California? And the second question is in terms of ESG initiatives. How do you see the U.S. compared with initiatives that are taking place in Europe for CEMEX, where they spearhead most of the efforts sometimes?

Let me start with your second question, Pedro, right? We do have a very specific road map for climate action as robust as any other region in CEMEX to support, right, the global aspiration that Juan will present later on. We have very specific CO2 reduction targets for '25, '30 and then the same aspiration for carbon neutrality by 2050 across the value chain. We've got that plant by plant. And we've got an ambition investment portfolio, parts of which I explained today that will support the road map, a lot of work to do going forward. The good news is that I've got experience from Europe. I come from there, and we work as one team, and we have to learn from the experiences of Europe, clinker factory reduction, energy efficiency, alternative fuels, alternative decarbonated raw materials in the short term. And then we're doing 2 carbon capture projects, one in Balcones and 1 in Victorville. Victorville, implementing, in mind, a technology to carbon capture. That should be up and running, smallest scale prototype by 2024. And then developing membrane technology engineering in Balcones for a feasibility study, both supported by DOE grants. With regards to your first question, we're right now exploring our Urbanization Solutions portfolio across the states where we operate. We have already deployed investment for Admixtures all across our states from California to Florida. So that's almost done. With regards to blocks, we've got business in Vegas and in Florida, and we are now, as part of the investments, investing in a mortar business, particularly in Florida to start with. We will continue to extend across the states where we operate. That's our main goal right now. Thank you for your questions.

Okay. And the last question is coming from our virtual analyst, Carlos Peyrelongue from Bank of America.

Clear [indiscernible].

Carlos, we're losing you.

Very tight market by increasing -- can you hear me?

You're breaking, Carlos.

Can you see me there, Jaime?

I can see you, but you're breaking. Try again.

Okay. Let me try again. My question is related to pricing. You mentioned that the market is extremely tight with a higher energy costs and higher shipping costs. So the question is, are you now moving, I understand to a strategy of raising prices twice a year. And if I understood correctly, the increases that you will announce are likely to be in the double digits. Is that correct?

That is correct, Carlos. Let me give you one example. In -- for Florida, we have already announced, for all our customer segments, a $12 increase for January. That's in short terms, right? So that's going to be around a $14.13 on a point per metric ton for January. And we communicated to all our customers a second price increase in the month of July. So that gives you an example. And my expectation will be that it will be double-digit as well. Let's see how it goes and how much traction we get out of that announcement. And we will then move to the rest of the regions, communicating similar price increases market-by-market in April and then in the fall. And in the case of very specific markets, Carlos, such as Northern California, my expectation is a very, very solid increase. I hope that I have answered your question, Carlos.

Unfortunately, I think we have to break here. Anyone who has additional questions?

I saw Nick, and I saw somebody else. So we can talk...

Yes. I think there's opportunity to speak for the people that are in the room. And virtually, if you have additional questions, please submit them to Investor Relations, and we'd be happy to address them. Thank you very much.

Okay. Thank you, Lucy, for your time. Thank you.

And now I am very pleased to present, without a mask, Luis Hernandez, EVP of Digital and Organizational Development.

Thank you, Lucy. Can you hear me? Thank you, and good morning, and welcome to CEMEX Day. I would like to share with you the evolution of our digital strategy. As many of you know, CEMEX has seen a long history of adopting digital technology. Years ago, we were pioneers in implementing satellite communication to connect our plants, which, soon after, enable us to consolidate our enterprise management systems into a centralized data centers. And a decade ago, we created a comprehensive global service organization to provide back-office services worldwide. More recently, when Fernando became CEO, we adjusted our digital strategy to place the customer at the center, with a clear objective of building a superior customer experience enabled by technology. Today, our detailed strategy is fully embedded in our business strategy, addressing our commercial production and management process and building more value for our customers, reducing costs, and enabling profitable growth. Where our technology efforts are more visible to you are on our commercial CEMEX Go digital platform, which we launched in 2017, becoming the first omnichannel platform in our industry to cover the complete customer journey for all our customers in all geographies, seamlessly integrated with our back-end systems. It enables our customers to search for products, place orders, track deliveries, manage invoices and pay online. During the pandemic, it has proven to be an important competitive advantage. In production, we have been applying artificial intelligence and augmented reality in all business lines to enhance operational efficiency, improve safety performance and minimize CO2 emissions. On the back-office processes, we have increased the scope of centralized services with the use of automation technology. At the moment, we're in the midst of a rollout of our Working Smart initiative, which will evolve the way we deliver services globally, bringing significant savings. An effective digital transformation for any company is more than developing pieces of technology. This also requires a sound business processes and an ideal culture that can rapidly incorporate feedback from our customers and adopt best practices on a global scale. Our replication model drives standardization across our businesses, giving us speed and cost advantages that are very difficult to match by our competitors. This model allow us to accelerate our digital transformation without significantly impacting our IT spend. To give you a more visual representation of the digital solutions operating today across our businesses, I would like to share a brief video with you. Please. [Presentation]

For the portfolio of digital solutions that you've seen in the video, many of them have leveraged our ecosystem of technical partners. However, in those core processes that we believe drive our competitive advantage, we have developed our own solutions with the support of NEORIS, our IT subsidiary. One example of such solution is [ Arctic ], our cloud-based ready-mix management system that integrates with CEMEX Go. It has been in permanent evolution since its conception over a decade ago. Today, most of our ready-mix plants run on this platform. [ Artic ] combines data with artificial intelligence to enable services such as digital confirmation of orders, availability of delivery slots, smart booking, real-time logistics optimization and soon, dynamic pricing. This stack of functionality has no precedent in our industry. In a world where e-commerce is part of a daily life, this may not seem like a big achievement, but I ask you to think about the ordering and delivery process of a ready-mix, which is extremely complex. Ready-mix offerings include hundreds of different products with distinct recipes. The product we deliver is highly perishable, delivery within 3 hours or it's obsolete. Our product is part of the construction site supply chain that involves many other vendors. Finally, ready-mix orders are subject to constant last minute changes, which, in a given day, around 50% of them suffer modifications. So how are all these efforts translate into business impact? In our commercial processes, our CEMEX Go platform is used by 40,000 of our current customers, which represent 90% of our global sales volume. And this value gets manifested in the high level of adoption across all digital services, such as invoicing, oil tracking and payment. In one of the most complex services, which is ordering, over 60% of our global sales are being placed directly by our customers in CEMEX Go. The value of CEMEX Go digital services for our customers has contributed to the significant improvement in our Net Promoter Score. In our management processes, through our work in smart initiative, we're increasing the scope of the service covered, extending standardization and automation as well as further leveraging external providers. Our daily operations will be more efficient and more responsive to customer needs, and we estimate savings of up to $100 million annually when we get to steady states. In our production processes, we're implementing a number of promising initiatives within our operations. New technologies such as artificial intelligence and Internet of Things are helping run better cement plants, optimizing energy efficiency, CO2 generation and output in our kilns. They're also helping us to schedule maintenance more effectively and monitor equipment for signs of failure or obsolescence on a real-time basis. We expect all of these initiatives combined will allow us to reduce our operational expense in 10% over the next 3 years. In short, our digital strategy is helping to provide a superior customer experience to our customer while, at the same time, improving profitability and enabling growth in our core businesses. While we have been applying digital technology to improve our customers' operations, many challenges remain in the broader ecosystem. Some estimation value this potential losses related to waste, delays and logistics to be over $1 trillion. We are extending our internal innovation processes to incorporate innovative ideas from the outside through NEORIS and from open innovation efforts led by CEMEX Ventures. We're constantly mapping the emergence of new players addressing new digital businesses. We have actively invested in building a selected portfolio of start-ups and have launched new business incubations such as Arkik, which is currently running 750 ready-mix plants and being commercialized to a third-party independent ready-mix companies as a software solution. Some of the other start-ups companies include ActiveTrac, an innovative end-to-end fleet management digital solution that includes tracking, safety and vehicle telematics that today work integrated into CEMEX Go in over 3,500 trucks. Finally, recognizing the challenges faced by last mile delivery in the building material distribution market, we are investing to scale selected Uber-like start-ups in key markets. In summary, our digital strategy is an integral part of our business strategy, enabling the unique way in which we sell, produce and manage the company, and is a key source of competitive advantage. We believe that every successful company is, in a way, a software company. And thanks for your time, and now I'll be open for questions.

Thank you, Luis.

Yes.

The first question is from the real audience, Nik Lippmann from Morgan Stanley.

So if I go on CEMEX Go, to what degree can I sort of have an auction for price? Say, Benjamin and I don't -- both want to buy ready-mix concrete, but he's willing to pay x price and I'm willing to pay x plus 10. Can you have auction -- you're running out of capacity in the United States. Can you use this as a pricing tool as well as basically?

No. We do not have an action functionality today. We are working on -- and building a pricing of slots so that we can put the slots in a way or for value. If someone is willing to take a lesser-used slot, that could be priced at a different level as a high-end slot, yes, but not as an open bidding process.

Okay. I am not seeing any questions from the virtual audience. So I will take the next question from Ben Theurer from Barclays, right next to Nik, who's paying $100 a ton for a cement.

So question is within the connectivity with the customers and basically the delivery of those products, which is managed through the digital solution, how much have you actually managed to optimize the deliveries in order to reduce loss at the customer level? And how much do you think this has increased, in turn, the level of satisfactory amongst your customers just because they have less shrinkage because they perfectly know when the truck is supposed to come? That's the way I understand it. Is that correct?

Can you go back and rephrase it a bit?

Okay. Let's rephrase it.

A little more specific.

I ordered a concrete. I need it delivered at 11 a.m. because that's right when I want to pour something and I want to fill something, and you actually delivered it at 11:00, not beforehand because I need to make space and so on, and it doesn't come too late so I don't have -- I can perfectly plan around it. This, obviously, I would assume causes higher level of satisfaction amongst your customers.

Yes. Yes.

Have you tried to measure the benefit of having this on-time delivery so customers can actually better plan around and then repeat purchases and just continue to engage with you by having reduced their losses?

Yes. We have not quantified directly the savings that, that can provide to them, but we do know that it's one of the main pain points that they have when it doesn't happen. Because when you're pouring an amount of cement, the delay has all of the crew waiting, and that -- it's a significant, significant cost for them. We do know that it has a significant impact on the weighted perceiver services. I think it's one of the -- I would say, the largest factors in terms of service, arriving on time. Now on their side, it's very common that things happen on the site, and they need to move the time for the deliveries or space it a little bit more. And having the convenience to the platform to be able to, in a very short notice, reschedule, rechange -- change the timing of the deliveries from the job site directly from the foreman who is working there is also a piece of functionality that's very valuable.

Thank you. We do have some questions from our online audience. The first is from Paco Suarez from Scotiabank.

The question is about, what about the applications related with sourcing and avoiding the potential disruptions in value chains, either from the sourcing of your raw materials at mixtures, any other things that have happened in the previous year? Have you already detected some opportunities on that? And if that actually connects with what is happening with demand and the type of products that you have in your pipeline?

Yes. Yes, there are several construction software products that are looking after becoming platforms so that they can consolidate traffic from the customers in the product side of the software that they have and moving upstream so that they have the direct connection with the higher places in the supply chain. We have several projects ourselves related to that. We have a platform that I didn't mention here, that is built out of our Construrama supply. That is -- basically what it's doing is trying to solve the supply chain issues from our distribution network in the Construrama stores and building an aggregate demand so that they can buy out of that. So that's kind of an ecosystem play that you can figure out. There's -- other participants are also trying to establish themself as the leaders of an ecosystem. You have the case of Command, for example, that are moving from being a product company, they want to establish to the Command platform upstream in the supply chain as well. So you have movements like that. It's a very complex undertaking. It's very difficult that 1 player can actually do it. We're working with other partners ourselves to see if we can together build an ecosystem that can resolve a lot of the cost that is associated with the lack of orchestration in the supply chain of our construction sites. There's a huge opportunity there. Our sales, for example, and our customers, every time that we need to place an order, we have no -- they have to place an order, and we have no visibility about what's going on in the construction site. So we can open that so that there's more transparency. There will be a lot more efficiencies in the way building material companies and others can supply the products to the construction sites. So that's happening slowly, but it's happening.

Okay. And the next question comes from the audience. Alan, please go ahead.

Alan Alanis with Santander. Just to be clear, no one has dynamic pricing capabilities right now in cement and ready-mix in the main territories where you operate, is that correct?

Yes. Not that we know.

Not that you know.

Yes.

And how soon do you think you can start rolling out that capability? That will be the first question. And the second question is how do you connect that or how do you use your digital strategies to anticipate demand of cement and ready-mix, both short term and medium term?

Yes. On the first question on the timing, we're running pilots right now in different places to see how does the system works and how can we actually anticipate the costing of the different slots. So that's happening as we speak. And I think we could kind of start enlarging the pilots next year. But we'll see how far we can go in terms of scaling up globally, yes.

Because that can give you a great opportunity to gain more market share, I guess, that's where I'm going with that.

Yes. Yes. Yes. And I think you all know that a lot of the slots that are more valuable are always over demanded. And throughout the day then, you have lower demand in other slots. And having a price differential between slots can help us move some of the excess demand in some time of the day to a lesser ones.

Exactly. And the second question has to do with how do you use digital strategies to anticipate demand? Or how it gives you an advantage to anticipate demand? I think you mentioned it during your presentation.

Well, just data that is coming into the system in the way that people are buying. It can just help you out to kind of extrapolate how is demand going to evolve in the future. It just complements some of the other measures of intelligence that the operations have to make predictions about how the volume will evolve.

I think we have another question that we need to go to online. Sorry, Alan. And Adrian Huerta from JPMorgan, please go ahead.

Luis, quick question. Can you just talk a little bit how the Arkik strategy that you have -- or this subsidiary compares to Alcon where Heidelberg made an investment recently.

Yes. If you compare it product by product to the portfolio of products that they have, we believe that Arkik has a functionality that Command doesn't have. And they're working on it, but they -- it doesn't have, especially what has to do with the ready-mix business. They do have also products that serve the dispatching for cement and aggregates as well. But when you compare product to product, we believe we have a much, much better product. They -- and we know them because we are customers of them in the U.S. for now. And we can compare very clearly how our system operates in our plants in the rest of the world versus the ones in the U.S. They are very much located in the U.S. They have a good presence. But I think they're investing more of their time now in building the connects platform. And I think they're lagging a bit on the product itself. But there's a functionality that I mentioned here that it's still not being offered to customers that we know. Yes.

Okay. And any other questions from the internal audience? Yes, go ahead, please, Alex.

Alejandro Azar from GBM. Quick question. Are you seeing your smaller competitors or, let's say, the more regional ones, investing in this competence, I don't know, perhaps it's Azul or maybe Molins. And do you see -- or are you already seeing this competency in CEMEX or the larger players giving you more access to the market? Or perhaps this will allow you to gain -- is allowing you to gain market share or will allow you to gain market share in the future?

Yes. Yes. I think when you're developing a software, scales matters a lot. So the bigger you are, the more you can leverage across. And then they -- also the more standardized you are in your internal processes, the easier for you is to deploy any burgeoning that comes out there every other month to the rest of the portfolio. So for smaller players, I think it's more difficult than for larger ones. As the -- now in terms of the value, the competitive value of this, if we are providing special service to our customers, for example, through Arkik, that we are now offering them the use of this software to run their plants, so independent ready mixers are also customers of us because they buy our cement in bulk and aggregate as well. And now they have a software that they can use to improve their operations on one side, but it also help us have more visibility on the volumes that are consuming cement aggregates. We can have a more direct connection to our ordering system. So in a way, eventually, they will not need to order because we have visibility of their inventory, so we can just replenish as they consume. And that, I think, makes them more loyal and more tied to us, and that strengthen our distribution system as well. So it's a strategic value for us and it's a lot of value for them as well in the way they improve their operations.

Okay. Unfortunately, I think that we have to end with that. I can see there's still a lot of questions for Luis. He is available both during breaks. And if you submit your questions to Investor Relations, we will make sure they get answered. We are taking a 20-minute break, a much deserved 20-minute break. We will be back at 11:05. Thank you.

Thank you very much. [ Break ]

Can everyone please take their seats? Okay. Thank you, everyone. And now I am very pleased to present Jesus Gonzalez, who is the President of South Central America and the Caribbean. Please. Thank you, Jesus.

Thank you, Lucy. Good day to everyone. Another Gonzalez in the team. So maybe you are a little bit confused about so many Gonzalez. But -- okay, I'm the one in charge of the South Central American and Caribbean region, just for clarifications. Okay. Let me start with very good news. And I'm extremely proud of these results. And I think the team in the SCAC region has done a tremendous job. You see the performance so far this year, with close to 60% growth in EBITDA on a like-to-like basis and 54% on a reported basis, driven mainly by a huge increase on volumes, 28% on a year-to-date basis plus price increases. I think we have done also a good job increasing prices in the region, like other regions, 3% on a like-to-like basis. And remember, this region has, on average, a higher price compared to other regions. So that's an additional challenge. And then on the cost side, you see that both variable and fixed costs, we've been able to keep those costs flat. It's not that we don't have the inflation that other regions are experiencing. We do have that inflation, but we've been able to compensate that inflation with also additional cost-reduction initiatives. And also, we have the impact of higher imports, which I will elaborate a little more later. Of course, you may think that, okay, this is easy because last year, we had a huge negative effect in the SCAC region. Remember, it was the region that was the most affected by the pandemic. So I'm going to compare these numbers with 2019, pre-COVID levels. So compared to 2019, volumes are 3% up, so we are ahead of pre-COVID levels. Prices 9% above on a like-to-like basis and EBITDA is 35% above 2019 on a like-to-like basis, 23% on a reported basis. So this is not just the base effect. This is real growth in the region compared to pre-COVID levels. How do we see things going forward? Of course, we have the same pressure on inflation, especially on the fuel side. Fuel, we use a lot of pet coke in this region and is going up high single digits, double digits in some cases. Electricity, we are covered because we have secured long-term contracts in most of our operations. So we are not so concerned about electricity. And of course, trade costs impacting our import operations. So overall, challenging times. But I would say that in this region, higher import costs is an opportunity more than a challenge. We are a domestic producer in most of our markets. We are an incumbent. We do like higher import parity prices because that's the way we make money. So in that terms, it's an opportunity more than a challenge. So next message, our region is growing again after several years in the past cycle, where we experienced a reduction on EBITDA. And you see on the left-hand side of the slide that our bottom of the cycle was in 2019, where we were 33% below the average EBITDA for the cycle. This year or the last 12 months, we have increased EBITDA by 18% compared to that bottom. So the region is growing again. You see the performance by quarter. You see that we were growing before COVID, 5% in the fourth quarter of 2019. We had a huge decrease because of the lockdowns in our markets. In many countries, operations were shut down for several weeks, even months, and then the rebound after the lockdowns with a huge impact due to informal cement or back cement. We had a dramatic increase in consumption from the informal segment, driven by higher remittances and higher expenses. Discretionary expenses go into self-construction. And then another very important message. It's not just that the region is growing again, it's that it's a more diversified region. You see the graph comparing our portfolio today compared to 2013. In 2013, more than 70% of the EBITDA was coming from 2 single countries, okay, Colombia and Panama. You see the portfolio today is more diversified. There is no 1 single country with more than 30% of EBITDA. In fact, Dominican Republic, and I will spend a little bit more of time talking about that operation, is the highest contributor to our EBITDA in the region. So more diversified means less risk, which is also good in terms of portfolio management. Let me talk a little bit about the region. And I would like you to consider our region as a network. It's not a -- we're in 15 countries in the region, believe it or not. And it's not just a list of countries that operate standalone. This is a network. It works as a network. And that's very important because that gives us additional opportunities, additional value. And one of the advantages of this network is that it's interconnected. So for example, we're sending cement from our plants in Barbados and Trinidad & Tobago to the Caribbean islands and to Guyana. In Central America, we have a system and connect Costa Rica to Guatemala. Dominican Republic is also have to export cement into Haiti. We're going to start doing that into Puerto Rico. And very recently, in Panama, which is one of the markets that was the most affected by the pandemic, we have been able to develop an export operation. And we're exporting more than 200,000 tons as of today, connecting to the Caribbean and to Central America. So this is a network, okay? That's very important. Second, it's a network that is at very tight supply/demand conditions. Now we have to import, into this network, 2 million tons. Out of 10 million tons that we're selling, we import, cement or clinker, 2 million tons, okay? 60% are coming from overseas, the Mediterranean or Southeast Asia, and the 40% are coming from this network. So that's something that is representative of how tight the region is in terms of supply-demand dynamics. And you see some of the squares on the map with the capacity utilization. You see Guatemala, 117; Jamaica, 98; Dominican Republic, 102; Colombia, 92. The system is very tight, okay, which is good, again, from our supply-demand balance because that's an opportunity to increase prices. And because of that situation, we are doing those projects that you see on the slide to increase our capacity. In total, we are planning to increase capacity of around 2.7 million tons, it's around 20% of our domestic capacity, in projects that are very accretive, okay? On average, the additional CapEx to capture that capacity is around $66 per ton of capacity, okay? We have a big project, which is Maceo. We just need to finish that project. But the other 3 projects in the Dominican Republic, in Guatemala and Jamaica, where we're starting an old kiln in Dominican Republic. That's going to happen early next year. In Guatemala, sold out market, a new grinding mill. And in Jamaica, another fantastic market that is doing very well, we're debottlenecking our kiln. So very fast projects to implement that are going to help us to capture the additional growth that we're seeing in the market, plus offset part of those imports that I mentioned to you that we're bringing from Turkey, Mediterranean and Southeast Asia. So that's also good news for the region. And this is a competitive advantage compared to other competitors in the region. Having this network, this system is helping us to maximize capacity utilization and also has helped us a lot this year to react fast to incremental demand, instead of bringing that demand on a spot basis from overseas, paying a higher freight cost. So good news in that sense too as well. And finally, I'm going to tell you more about the secret jewel of the region. It's Dominican Republic. You always ask questions about Colombia, about Panama. You don't ask questions about Dominican Republic. I don't know why. But you should ask more questions because, first of all, it's the largest market in the region now. And second, it's a market that is very interesting. Let me give you some additional data. First, EBITDA, double in 3 years. okay? Now it's not only the largest market in the region, it's, I would say, around 4% to 5% of the EBITDA of the company. And you see the expansion in margins, 134 basis points in 3 years. This is driven by some price increases, but believe me, prices in Dominican Republic are very close to import parity. We are not talking about crazy prices. It's a very competitive market with 6 competitors, but we are the market leader, and we are the most efficient producer in the supply chain on the supply curve. So that's giving us an advantage. With regards to demand, as you can see, demand growing 9% on a compound basis. And there is a shortage of clinker in the island. I'm including Haiti because it works as a network, it's Dominican Republic and Haiti. So that is why we're starting this new kiln in the Dominican Republic. It's $15 per ton of incremental capacity. That's the investment that we're doing. With $15 per ton, we are putting 700,000 tons in the market and capturing that extra growth. Fundamentals, very strong informal market, which is 50% of the demand, driven by remittances. 10%, 11% of the GDP in Dominican Republic is driven by remittances. On the formal side -- segment, $7 billion in construction projects. Housing is bouncing back with mortgages going up 11%. Tourism is already at pre-COVID levels. This is -- GDP also of this country is driven by tourism. There are new hotels in construction. And then as well, this is a key market for our network. Remember what I mentioned about our network. We're going to start importing more into Haiti or exporting more from Dominican Republic into Haiti and displacing imports from Turkey, very expensive imports, and also complementing our clinker supply into Puerto Rico, which is right away. So lesson learned is Dominican Republic, guys, this is something that is doing very well, and that's why we're investing in this country. So that's my presentation. And now I would like to take some questions if you have any.

Thank you, Jesus. Okay, analysts, I think he is expecting some questions on the Dominican Republic. So let's get our act together. Okay. I'm going to start with a question in the room from Gordon Lee.

Gordon Lee from BTG Pactual. So I guess you're making the push to move your headquarters to Santo Domingo. One question I had. If you look at the region at the previous boom, let's say, prior to the downturn that you showed us, one of the things that I think made the downturn worse was that in that boom in various markets, and I'm thinking more of Colombia and Panama, the industry allowed imports, which made -- which were then difficult to remove. In this boom, and given how much the region generally relies on imports, what can you do as an incumbent producer to make sure that those imports are managed by incumbents and that they don't become a problem when a downturn occurs?

Okay. Thank you, Gordon. Well, what we're doing is, first of all, we have the advantage of freight cost today, which in some of these markets that you mentioned, we are a $30, $25 below import parity. So that's giving us a cushion to -- compared to independent imports. But we have to compete. The answer is we have to compete. We have to be better than importers. I think on the commercial side, Fernando mentioned this morning that our NPS has going up 30 percentage points. It's the same situation in this region. We've been able to be better than our competitors. And when they struggle supplying cement to the customers, they think twice to go and do business with independent importers. And also be very flexible. Be sure that our customers, they don't run out of cement. We need to go 1 step ahead of them. In many cases, these importers, independent importers have had very serious problems with the disruptions in the value chain, and we're taking advantage of that. So in summary, we need to beat our competitors and do better. This -- that's the secret. It's nothing more than that.

Thank you. And now we're going to take a question from the virtual audience, Paco Suarez from Scotiabank.

And no worries, Jesus, I'm not going to pop you with questions on Colombia or Panama. It's actually on the -- yes, the Dominican Republic. It's an up market. A lot of players over there, you are clearly more the most efficient player over there. You have also the logistics and the scale. So the questions for you would be, is that not a natural pathway for M&A in Dominican for you guys to consolidate that market?

Well, that part -- the M&A part, you know that is managing CEMEX as a portfolio, not a regional portfolio or a local portfolio. It's managed as a global portfolio. That's something that, obviously, our planning department and my cousin, Gonzalez, Antonio Gonzalez, is in charge of that. And we're all the time looking for opportunities on the M&A side. So if there's an opportunity, we're going to capture.

Great. And let's see, are there any other questions? Yes, Anne Milne from Bank of America Merrill Lynch.

Anne Milne, Bank of America. So talking a little bit about logistics. I know that you have a big part of it. As you said, it's the trading activity between different countries. How do you manage the costs now that we're seeing increased prices and lack of availability throughout the region? And maybe are you having to stop exporting to certain markets? Or are there some that are growing faster than others?

Well, how are we managing? Working as a network, as I explained, that's a very important concept. Each country used to be, many years ago, isolated, and we didn't have the markets interconnected. So for example, I'm going back to the Panama example. Panama has helped us to cover shortages of cement in other parts of the Caribbean and react very fast. So working as a network, we've been able to manage the storm. And you saw the impact on the cost side is very little and reacting very fast. So we are very close -- working very close with our trading arm. They are part of the team. They are always on all the meetings, and we react to it very fast. But working as a network. Now Colombia is connected with the rest, the Caribbean, Central America. And this gives us an opportunity and an advantage over our competitors that they don't have this network.

And on the shipping costs?

Shipping costs? Of course, we are exposed as others to high shipping costs. We tend to negotiate shipping costs in advance the year before. So part of the imports into the region were already negotiated at lower shipping rates. That's -- we have to renegotiate for next year. So that's part of the rationale of that incremental capacity is going to help us to mitigate that effect. But overall, again, I want to insist we have more things to win in the region with higher shipping cost at lower shipping costs. I'm extremely excited about that situation because it's going to help us to exercise pricing power, which is something that we do really need in the region. Thank you, Anne.

We have a call on -- sorry, Vanessa. We'll wait just 1 second. We have another question from the virtual audience, Carlos Peyrelongue, again from Bank of America. Okay, your camera is on. Thank you.

The question is again on shipping cost. Can you give us an idea of what percentage of the market roughly is serviced by imports? You mentioned that this potentially give you more pricing power, it's quite clear. But just to get a sense of the magnitude, what percentage of the margin is serviced by...

Well, speaking about our region. As I said, we're selling more than 10 million tons. 20% of those 10 million tons are either supplied from imports with imports or we buy clinker that we process in our brand new facilities. So 20% of that. But out of that 20%, 60% is coming from overseas, which is where we're experiencing this higher freight cost, and 40% is internal trading within the region. So overall, it's around 12% of the market that is exposed to this higher freight costs.

So there's [ no risk for you currently ]...

Sorry?

Those new risks are for your inflations.

For us.

But my question was more related to your competitors. For the overall market, roughly, do you have an idea of how much is serviced by imports, specifically the pressure from your competitors' side?

I don't have the number aggregated for the whole region. There are some markets that are less exposed to imports like Colombia. Colombia, today, there is no imports at all, some clinker, but not cement. And other markets, they can go up to 10%. So -- but the figure for the whole region, I don't have it, Carlos.

Okay. And a second question, if I may, related to growth over the medium term. You mentioned that first half, you have high double-digit growth rates. Can you comment on the sustainability of growth going forward? Obviously, you have big investments coming in, expanding your capacity by [ close to 3 million costs ]. Can you give us an idea of what are the key drivers of [ cement demand ] over the next 2 years -- say, next 2 to 3 years?

Yes. Of course, we are not expecting and that's part included -- is included in our guidance. We're not expecting to continue growing in the second half of the year at 20%, 25% growth. We do expect the informal segment to continue growing, and we still see very strong remittances in the countries where we participate. Remember that some of these countries, like I mentioned, Dominican Republic but also Central America, they depend a lot on these remittances. We still see good fundamentals in the U.S. for that. Probably we're going to, as I said, grow more on the single digit, but something that we're expecting to partially offset this potential going from very hot, as Fernando said, to hot market is the formal segment. Formal segment is rebounding. Housing in some of these markets, especially social housing is growing fast, very high in Colombia, in Dominican Republic, in Guatemala, in certain countries in Central America and also infrastructure. We have several projects in these markets that are also offsetting the potential slowdown on demand on the informal segment. So overall, again, we're not planning to continue growing at this very high levels of more than 20%, but we see a decent 3% to 4% increase going forward. And that's -- the segmentation is going to change. But still, we believe that this -- there is growth in the region. And that's why we're spending capacity not only to compensate imports but also with -- keep up with the growth.

Thank you. And do we have any more questions in the room? Okay. Yes. Vanessa Quiroga from Credit Suisse.

Jesus, given the exposure of the region, SAC to Mediterranean imports, have you seen any change in those dynamics? Any increase in supply as an indirect effect of the deceleration of the construction market in Asia?

On the contrary, they are -- because it's more difficult to get the imports from those countries, there are importers in the Caribbean that they have declared that they are going to stop business -- doing business in some of these islands. That's happening now in Trinidad and Tobago, for example. So that's why I insist on the opportunity more than the challenge of the high import cost. We haven't seen more [ product ] coming. On the contrary, it's more expensive, and importers are either not participating in the market or raising prices as well. That's happening in Central America as well. So the other thing that we're doing, we participate also in markets where we are also importers. That's a very interesting region. For example, in Haiti, everybody is importing. And what is happening is prices are going up $30, $40 because everybody is passing that cost into the market. So -- and in dollar terms, not in local currency. So again, I see good supply-demand dynamics in the region because of that.

And we have another caller -- another -- sorry, virtual analyst, Adrian Huerta from JPMorgan.

Can you comment a little bit on how prices compare across the different countries, where are they at the moment, and where do you see the largest opportunities for price increases? You mentioned that prices in some countries are below import parity prices. We have seen strong pricing growth in Dominican Republic. I think it was around 18% up in the first 6 months. Panama has been down. Costa Rica up low single digits. Where prices are right now and where do you think we can see the largest increases going forward?

Can we comment on prices by country or not?

I think it's difficult. I think you could talk supply-demand conditions maybe by country. Okay.

All right. Well, I think we have an average price in the region that is probably around $125, but you have a big range up and down that price. So there are certain countries in Central America and the Caribbean that prices are about that level, and we have the opportunity to push prices up to compensate for the additional import costs, as I explained before. And there are challenges, and I have to talk also about the other part of the equation, the countries with prices below the average, like Colombia. In Colombia, we need to -- as an industry, we need to continue looking for opportunities to raise prices and pass the input cost into the market, especially now that the import parity prices are very high. And input costs are going up as well. So that's probably the highest challenge that we have in the region. We've been able to continue increasing prices, which is something that we did in 2020. And this year, we have not been able to keep that traction. We had this big strike in May that put some kind of -- in Colombia, that puts some kind of -- the industry in standby, and we need to get back to where we were before that strike.

I'm sorry to do this, but I am going to take one more call from the virtual audience because at least the people in the room have the ability to catch Jesus during breaks. So we have a question from Arnaud Pinatel from On Field. I think you are on -- I believe you're on mute.

You're on mute. I cannot hear you, Arnaud.

Are there any problems on our side? No. Okay. If you would like to send the question via text, Arnaud, you could do that to me, if you have my cell number. Maybe he's joining -- okay. Well, so let's take one more question from the audience who has one. Alex, why don't you go ahead?

Jesus, what can you tell us about CO2 regulation in -- across your markets? And specifically, because we've been hearing about maybe import tariffs in Europe for carbon [ polyurea ] industries and California also in the U.S. So what can you tell us about that in your markets?

Well, it still is not as developed as in California and Europe, but it's coming. I would say that the most advanced countries are probably Colombia and the Dominican Republic. Colombia, there is some kind of tax into carbon, very low today. And that's why it's so important to accelerate our CO2 road map. As you know, this is not a road map for Europe. It's for all regions. And we have a very aggressive target like in the rest of the regions to get ready for that future that is coming. It's a question of time. We need to be sure that the market -- the carbon markets that they develop in these countries are the right ones. The experience from Europe is a good one to follow, and we are very actively participating in the discussions in this government -- with the government through associations and CEMEX on creating these carbon markets. But so far, just a little bit in Colombia.

And there is no time line, like, for example, I don't know, Mexico that it's piloting a program or...

Not yet. Not yet. I know there is a pilot in Mexico for 3 years. Not yet. Probably that would be the case and the right way to implement this with the -- following the approach in Mexico. I think it was a good approach. But so far, there is no certain time line in place in any country, but it will come. We're getting ready for that.

Thank you very much, Jesus. And so now given my typos, I'm just going to read the title before I fall over. I'm very pleased to introduce Juan Romero who's the EVP of Sustainability, Commercial and Operations Development. Welcome.

Thank you very much, Lucy, and good morning. Let me start by summarizing what Fernando said at the beginning. Our purpose is to build a better future. Climate change is one of the biggest challenges of our times. In the past, we have significantly accelerated our climate action ambitions due to our own decarbonization experience, technological advancements and grow with acceptance of the urgency of the climate change. We have reaffirmed our commitment to net zero by 2050 by signing to the Business Ambition for 1.5 degrees of the We Mean Business Coalition and the United Nation Race to Zero. We have also accelerated our midterm goals to be the most ambitious in the industry recently validated by the Science Based Targets Initiative. We acknowledge that our industry has an important role to play in any climate action agenda. To give us some sense of the cement industry, it is responsible for 5% to 7% of the carbon emission in the world. You like some industries with significant carbon emission. However, there are no substitute for the strength, resiliency and affordability of concrete, an instrument, an essential ingredient of the construction. Concrete is everywhere in our society and is the second most widely used material in the world after water. This implies that concrete will remain as much-needed construction material and that our industry, therefore, must come up with ways to mitigate its carbon footprint. Importantly, CEMEX and the industry recognized this responsibility early on and have been working on carbon reduction for more than 20 years. At CEMEX, we began measuring and monitoring CO2 in 1997. We recognized that a coordinated approach was needed. So in 1999, we work with other industry peers to form their cement sustainability initiative, the first industry group in the world to work together on sustainability. And in the first, did not stop here. Recognizing that measuring was the key to management, the cement industry was [ the first ] to develop a standard for the calculation of carbon emissions to monitor and publicly report the data as well as to create a global database of CO2 emissions. And CEMEX played a pioneering role in all this effort. In 2005, we established our first medium-term carbon-reduction goal. We were the first global cement player to publish an integrated report allowing our stakeholders to better understand how our climate action program contributes to value creation at CEMEX. In 2018, we helped create the Global Cement and Concrete Association, a global industry platform to facilitate a sustainable development of the cement and concrete sector, recognizing the need to extend the decarbonization effort across the entire value chain as well as the unique pathways that concrete, the end product that is used by our consumer [ over ] in the road to net zero. With this extension in the scope, CEMEX announced in 2020, our ambition to deliver net-zero concrete globally to all customers by 2050. As said, and as the pandemic made even more apparent the urgency to climate action in June of this year, we announced the most ambition 2030 targets in the industry to accelerate our path to net zero by 2050. We have signed the Business Ambition for 1.2 degrees committed -- commitment, and we have joined the rest to see the initiative, a global effort by which government and the private sector come together to create a carbon economy by 2050 -- neutral economy for 2050. To summarize these new targets, we have established in 2030 carbon emission goal for cement of 475 kilos of CO2, which is equivalent to 165 kilos of CO2 per cubic meter of concrete. We have also set a new scope 2 goals of 55% of clean energy by 2030, up from our previous goal of 40%. I am happy to report these targets have been validated by the Science Based Targets Initiative that I said before under the well-below 2-degree scenario, currently the most ambitious pathway available for the industry. All of these targets give transparency to our ultimate goal of providing net-zero concrete globally by 2050. To ensure we reach these targets, we have developed a plan-by-plan road map, which relies on proven carbon-reduction level that we have been using in Europe for many years. As Fernando mentioned, the technology, material, cost and public policy landscape necessary to achieve our 2030 targets are known to us, and it is simply a matter of execution. We are rolling out this lever across our operation as fast as possible. As you know, Europe has been our showcase for our climate action initiatives. This is a function of the leadership of European Union have shown in developing a circular and low-carbon economy. This framework has allowed us to have already reduced our carbon emission in Europe by 35% as Sergio said. It is this achievement that give us the confidence in reaching our 2030 goals. The 2 main levers in the road map are alternative fuels with high biomass content and reduction of clinker factor. There are other tools such as decarbonated raw materials, novel clinker and hydrogen injection would also play an important role. In June, we gave an initial estimate of $60 million annual spend on average to reach our 2030 carbon goals. With a more detailed road map in hand, we are updating our cost estimates and also considering the more front-ended nature of the capital expenditure. We believe the adjustment not to be material, and we will share it with you as more information becomes available. Our climate action plan must also focus on commercial offering and increasing customer preference of low-carbon products in many geographies. We have developed a family of products under the global brand, Vertua, to enable our customers with solutions to reduce the environmental impact of their projects. I am proud to say that we were the first in the industry to have introduced a net-zero CO2 concrete in 2020. Of course, local regulatory frameworks and consumer preferences in each regions are not always as supportive of a low-carbon environment as Europe. Our regional goals under the road map reflects what is possible under the current local environment. Part of our work will include advocacy and customer education. So what gives us confidence that we can deliver on this road map? We have already achieved the target level of the key CO2 reduction level in some of our local operations. Let me give you some example. For our carbon emission 2030 targets of 475 kilos of CO2, we have already reached this level at 14% of our clinker production. By 2030, 40% of our plants are expected to have alternative fuel rates below 70%. We currently have plants in Poland, Czech Republic and Germany already operating at that level. In fact, our 2 plants in Poland have a substitution rate above 90%. For our 2030 targets of clinker factor at or below 65%, we are already achieving that level in some of our plants in Mexico, Poland and Colombia. Finally, you should expect that we will use emerging technology to progress even faster toward our 2030 goals. A good example is hydrogen injection. We recently discovered a way to use hydrogen injection in our [ clinks ], allowing us to further increase alternative fuel usage while reducing heat consumption. For 2020, in 1 year, we converted all of our European plants, that means 20% of our total plants, to allow for hydrogen injection and now are rolling out through the rest of our operations. With regards to our ambition to reach the net-zero CO2 concrete globally by 2050, we have identified the levers that will help us get there. Some of these levers relies on further advancement of the same proven technology for cement and concrete that you have saw in our 2030 road maps. But importantly, the majority of the reduction needed to reach carbon neutrality for concrete relies on new technologies that are still in an early stage of development. We expect the [ larger ] contribution will come from carbon capture, utilization and storage and recarbonation. Let me explain this concept of recarbonation. As an industry, we have known for years that concrete in its [ built ] form has a unique attribute. Concrete structure actually absorbs CO2 from the air during the life cycle. In the latest United Nations Climate Change report, its top climate scientists recognized for the first time that [ built ] concrete structure operates as a carbon sink. We estimate the rate of absorbed CO2 could be between 10% to 25% of total direct emission. We include this recarbonation attribute as a lever in our pathway to net-zero concrete by 2050. And we are researching ways to accelerate this property. Finally, our 2050 road map incorporates scope 2 and 3 emission as well. We are looking at initiatives to further increase the use of clean electricity, developing energy storage technology and reducing transportation emission. In regards to our research and development effort, we have adopted an open innovation approach in which we collaborate with a wide variety of companies, start-ups and research institutions. Our CEMEX Ventures unit, which was created in 2017, and our global research and development team are leading the way in this effort. We have many important achievements today, but perhaps the most visible is Energy Vault. Our first [indiscernible] which is currently being merged into SPAC with a market capitalization of $1.1 billion. This technology uses gravity to store renewable energy via concrete blocks and will contribute to our scope 2 goals. We currently have more than 30 active research and development projects in our pipeline focused on our 2050 net-zero climate goals. We assess projects based on 2 different time horizons, the first which can be fully implemented as early as 2030 and the second with more disruptive and first of its kind of technology that has longer maturity process for development of full execution. Our approach is to establish and assess a diversified portfolio of solution as we believe that the road to net zero will include multiple technologies. The answer must factor in plant technology and location, available infrastructure, scalability and cost. We are collaborating with start-ups and other industries to tap into the knowledge base and adapt it to our production process. To illustrate the approach, we would like to highlight several of our carbon capture projects. We currently have 7 industrial-scale pilots in development that should commence operation between '23 and '24. In the case of our pilots in California, Germany and Poland, we are partnering with Carbon Clean, a company that has developed carbon-capture techniques applicable to the oil and gas, steel and chemical sector. In fact, Carbon Clean participated in one of the world's first industrial-scale, carbon-capture plant. We are working with them to transfer this technology to our cement plants and believe that at scale, this technology could deliver an operating cost below $30 per tonne. In terms of the longer-term horizon projects, I would like to highlight the Synhelion partnership. Synhelion is a start-up who has develop a unique and interesting technology to turn concentrated solar energy into synthetic fuels. We are adopting their technology to completely decarbonize our production process, eliminating fuse and efficiently capturing CO2 process emission. Once captured, the CO2 can be converted into synthetic fuels for other industries such as aviation. It is very relevant to mention that several of these projects had cofinancing arrangement in place with governments. In addition to our partnership, we are sharing the upfront cost of developing on those technologies. I hope you walk away of this presentation with a good appreciation of our ambition, the scope of our climate action targets and clear sense of our plan to achieve them. We believe strongly that our industry can make an important contribution in the transition to a circular and low-carbon economy, and we intend to be a major force in that transition. Now I'm happy to take your questions. Thank you.

Thank you very much, Juan. We could open it up for questions. Any -- okay, Ben Theurer from Barclays.

Juan, question actually is around the opportunities in emerging markets. And clearly, you've laid out all the opportunities you have already in some of the developed markets where you obviously have easier access maybe to fuel alternatives, where you actually get paid to use waste. What are the biggest challenges for you to actually source these alternatives in emerging markets, be it Central America, be it Southeast Asia, Egypt, Mexico? And how can you overcome those?

Well, we are applying different technologies that we have been discovering during the time. Probably in the emerging markets in which [ are participating ], the most advanced probably is Mexico in which we start to separate the waste and made differences in the [ landfill ], tried to obtain the ways that we can use in our claims. I think that we are really taking advantage of the experience we have in Europe in one side and the experience that we have been developing in Mexico and in other countries, trying to do as much as we can. We have developed some technologies and also the machinery to separate or to benefit in the best way, the ways of different [indiscernible]. And also, we tend to develop a long-term contract to have the -- or to secure the sources that we have today for alternative fuels. I think that we have a lot of experience. Of course, it's much more difficult for us to do these kind of things in Mexico and other emerging economies than in Europe. The waste is classified in the house and it's coming clean in some way. But we have been developed different technologies. It's easy to manage up today. Just to have an example, we have plants today in Mexico over 40% use of alternative fuels. That is increasing, mainly speaking about [ human ] waste as the main source.

We aren't going to split up the dynamic duo. I think Nik Lippmann has a question. So if you could just pass him the mic.

A couple of questions. It seems like there's a shift in demand. It's very much demand driven the sort of the [ green ] cement, the Vertua product. Can you talk a little bit about in which regions you're seeing this in particular, also how you're pricing the product? How much of a premium do -- what is the range perhaps in terms of price per tonne? And then finally, you have a slide with some percentages, you've shown the product. What -- and sorry to be slow, what do the percentages represent? What do they say?

The percentages of the slides?

No, the percentage of Vertua, I mean it could be 20% or 40% or 50%?

Okay. This is the percentage of product of our total sales that we are selling today as a Vertua. That's the percentage. Just regarding the Vertua product, of course, the places in which we had a higher level of the money is in Europe, in which people buy more by the time that they have been working in environment, in CO2 reduction, the other ones -- but also we have been having the money in other countries. It just depends on what we are talking about. We have been with very high level of Vertua products in cement in developed countries because it's, in some way, easy to sell blended cement in the emerging [ ports ] in [ bag ] cement than in other. But we have, in all of us, also in the U.S., the demand of those products is starting to grow. We have many customers asking for Vertua products and trying to see how they can really contribute to have a more sustainable buildings and different [ things ]. The demand is coming from all countries. Also in South America, the demand is increasing in some countries like Colombia and in Mexico, so we are really growing much faster than we were thinking at the beginning. All those products are, in some way, mainly in ready mix. So all those products have a price premium that cover much more than the price of that [indiscernible]. In many situations, we are coming from our customer price premium to consider the [indiscernible].

Is the price premium doubled?

No, no, it's not doubled. We are speaking about...

Can you talk about the verticals, the -- is this a residential product? Is it for certain corporations that have a green profile and they're building a warehouse, et cetera?

No, no, it's for all customers. We are having a request of Vertua products for all of them.

There's no bias in terms of demand, but it comes [ more than the ]...

No, no [ demand ].

I'm going to take a question online. [ Paco Suarez ] from Scotiabank.

You mentioned that one of your levers to meet your targets for 2030 relates with clinker factors. So what about the challenge on the lower availability of slag, fly ash and other components for that admixtures? And if you can actually answer this question in the sense that for sure, in the U.S., that's the low-hanging fruit. But in other places, we already have a very robust clinker factor. So how you're going to replace the fly ash, slag and other components that are going to be there and that may be economical to do so?

Yes, there are different things. As you said before, I think that [ everything ] -- it will be much more [ scaled ], the slag or maybe the fly ash. There is a lot of fly ash in [indiscernible] in many different plants. But otherwise, what is coming is mainly limestone and pozzolan and over like [indiscernible]. I think that there are different substitutions that we can use to make -- or to produce the blended cement in different part of the world. Some of them has -- we have a lot of experience [ with ] pozzolan cement. In Mexico, we have been developing pozzolan, for example, more than 30 years probably. And it is what the strategy we are following also in the U.S., not trying to say -- in the first step, all those cement -- of that cement that are authorized in the country. As you know, in the U.S., they have not one regulation for the whole country. You have local regulation, government by government. And in major part of them, we can use the limestone cement, the type 1 limestone cement. That is the first one that we are introducing in the U.S. right now. And in also, the -- we can use also the pozzolan cement, the type 1P cement that is also today, authorized in many different countries -- in many different governments, and we are expecting that others will do that just to reduce the footprint of those products. But there are different possibilities to do that, for sure.

And we'll take another question from the audience. Anne Milne from Bank of America, please.

You've recently announced the investment that CEMEX is going to make in all of your sustainable efforts of $60 million a year. I guess the question is, where will most of that be spent? Or maybe what are the top areas? What are -- how comfortable are you with that $60 million figure? And are there risks that it could cost substantially more than that?

Well, different things. As I said before, the main investment is just to facilitate the strategy we have. The first one is regarding alternative fuels in which we need to invest in different things in our [indiscernible], just to increase the level of consumption we have of alterative fuels today and going forward then to increase the level of those one as a waste. And all those have -- that had a higher level of biomass inside. And also, in -- we have -- the other important investments are coming from the reduction of the clinker factor in which we need to manage different other materials. We have said before, to do that. Those was the main investment we have. We have some other investment like hydrogen injection that we have -- we finished Europe but we're starting right now with Mexico and the U.S. and anywhere -- and other countries. This is another investment, and other investments that are coming in different things, but they are the most relevant ones in some way. If I -- there are something relevant. We are now prioritizing all the investments we need to do within the next 9 to 10 years, okay? The prioritization process is coming to the different things. First one is what of these investments have the high impact in CO2 reduction? And also, one of those investments have the best return for our company because really something that happened is that is that all of them -- almost all of that have returned. That is more relevant thing. That means that we are not only investing to do something that it will be an incremental cost. We're investing in something that we produce [ a benefit ] for the company and savings in the short term. Okay? That's the benefit. If I am comfortable with the $60 million average, I'm comfortable right now. As I said before, I think that we are under review many different things, prioritizing different things, but I think that if there are some changes, it will be nonmaterial. Otherwise, we will know, but it will happen with technology and probably in some years or maybe months because the technology is moving much faster than we are thinking. Maybe we will discover different [ things ] to do in this regard. And we will see what happened there. But I don't really think that the level of investment will change in material way. Thank you.

And maybe I would just add to that, Anne, that as Fernando told us this morning, climate action is evolving very, very quickly. So with this most recent road map, that $60 million, as Juan was saying, we are currently looking at the cost of this new road map. So there will be some adjustment in -- I think, in general, that -- these investments will be under review all the time based on what's happening. Okay. Thank you. I think we have time for one more question. Vanessa Quiroga from Crédit Suisse.

Juan, this could be a very quick one. When do you expect to have to buy carbon credits in the future?

When?

Yes.

Well, in Europe, we are covered until 2026. That means that from now to 2026, we don't really need to buy any credits in Europe. Up today, because if we can save more during today to '26, maybe we have the possibility to go further to buy some additional credits. And in other countries, we will see what happened. Up today, we don't need to buy credits. We are mobilizing different things. We have some credit that we have from -- for free in Mexico for the electricity plan that we have. There are some possibility to use part of them. But up today, we don't need to have any credits to buy up till 2026 in Europe. And we will see what's happened with the regulation in other countries because as Jesus said before, up today, we don't really have a visibility what will happen in the next future. But for sure, something will happen in all countries.

And I think Juan made a very good segue into Mexico, which is next. So I'm pleased to present Ricardo Naya, President of CEMEX Mexico.

Thank you, Lucy. And by the way, congratulations Lucy. You're doing a terrific time managing our agenda. You were right on time. And it is a pleasure to be again in front of you. Last time I spoke with you was back in early 2019. And back then, I had been recently appointed to this position, and I still remember the phone call that Fernando gave me early in 2019, telling me that I was going to join the team. That was the good news. But the other news is that in 2019, we were going -- we were expecting already a very challenging year. And it ended up being much, much harder than that in 2019. And then the pandemic hit us in 2020. So it has been quite a journey. But more than talking about the journey that we have experienced or that I have experienced since the last time I was in front of you, I want to draw your attention to these 2 extraordinary events that took place in Mexico. The 2019 downturn and then the pandemic which you can draw 2 conclusions. On one hand, and very importantly, is the resiliency of the Mexican industry, but most importantly, our ability to execute regardless of the context. So I think now similar to my colleagues, I'm going to start with our performance so far. And in this graph, I think that you can see the essence on how we manage the business because we are able to deliver good results in very adverse conditions such as the first half of last year. And we're also able to deliver great results in good conditions, such as the first half of this year. And how do we do that? By simply focusing on the variables that are under our control. I think we have a tremendous team that is very focused and is able to deliver despite of the circumstances. But let us not forget of what happened last year because It was quite shocking experience in the pandemic. Our organization, our team, our customer base was heavily impacted by the pandemic. But this extraordinary team adapted very quickly. We prepared for the worst, but we also stayed tuned to capture any potential opportunity as they emerged. And as demand conditions started to improve, I think that we were able to capture a lot of opportunities that are reflected and behind the tremendous growth that you see on this slide. So the type of actions that we have implemented so far and that I want to highlight is, first, our pricing strategy. It's not new that in Mexico, we have been able to deliver a successful pricing strategy. We have a commitment to maintain sustainable and healthy price levels. But as conditions change, such as the inflationary environment that we're facing, our tactics must also evolve, which are aligned with our value-creation mindset. So again, when inflationary pressures are presented, we need to move in that direction. We're happy with our performance so far because so far, we have implemented a price increase close to 7%. But we know that there are still headwinds. And those headwinds, we are going to mitigate the efforts in the next rounds of price increases towards the end of the year and also very importantly, preparing for 2022. The second thing that we are very proud of how the team responded was on cost-containment efforts. We have done an amazing job trying to mitigate all those inflationary pressures. And I think that the team has done a fantastic job. And let me give you one specific data point. During the first half of the year, for the first time ever, we were able to experience deflation of our distribution costs under a very difficult environment because we were running at very high utilization levels, and it was quite challenging to experience deflation in our distribution costs for the first time ever. So that is a very concrete example on how we manage our cost base. But third, we're also addressing our operating model. We are transforming how we run the business from back office to front office or middle office, and we're learning how to work remotely, how to work more efficiently, and we're learning how to do it, leveraging the use of technology. And we are capturing savings in fees, rentals, travel expenses, so on and so forth. And we're also learning new ways of working that we believe that is going to make our operating model leaner and faster and more nimble. And last but not least, which is not seen in this graph, is that we're taking this opportunity to take even further and faster the execution of our strategic priorities. As you know, customer centricity is our most important priority after the health and safety of our employees. And we are happy to also share, similar to our colleagues, the tremendous performance that we have been able to deliver in our customer centricity priority. Since we started measuring the Net Promoter Score, we have been improving quarter after quarter after quarter. And this year, we're, again, breaking records of the Net Promoter Score. But when you look beyond the Net Promoter Score, we look at other commercial KPIs, such as the CEMEX Go online order adoption, on-time complaint resolutions or on-time deliveries. We have tremendous performance in most commercial KPIs. Now this does not happen by chance. It is a massive efforts of hundreds of colleagues that are constantly focusing on micro improvements over time. And this is how we move the needle, by these micro improvements consistently over time to make sure that our customers are surprised and they receive the best experience every time, everywhere, leveraging the use of technology. So all in all, in closing, it's been a great year so far. We are very happy with our performance, but we're not satisfied because we know that we're facing challenges. We know that we still have opportunities, and we're very focused on making sure that we learn and that we deliver. Now if we raise the, let's say, the view a little bit more towards the medium term, I want to, let's say, give you, similar to Jaime, what I would call a very optimistic view of the future. Because when you look at each of the different components or each of the different segments of the cement demand in Mexico, they look very attractive, very solid. And I will start with the self-construction. Self-construction turned out to be quite resilient during the last contraction and actually improved quite rapidly. But when you look, let's say, on the main drivers of performance of the self-construction segment, they still look very solid towards the midterm. First of all, remittances. Remittances, I mean, for 7 straight years are setting records. 7 straight years. Even President Lopez Obrador tells -- says a lot about remittances, but just this week, the last data point for August came up to $4.7 billion for the month of August, which is a 32% year-over-year growth. And again, 2021 is going to be another record year for remittances. But on top of that, on top of the remittances, the current administration is putting in place a lot of social programs that actually favor self-construction. When you look at the 2022 budget for the federal government, it includes already a double-digit increase in federal spending on programs that are related to self-construction. So again, this segment has performed quite well, and it looks very favorable towards the future. Next segment is the Industrial & Commercial segment, which is a segment that is already benefiting from near-shoring investments in Mexico. This is a reality. It is not a phenomenon that we think is going to happen eventually. It is happening already. When you look at what is happening in the country, there's a lot of distribution centers, logistic hubs and many industrial activity going on. There's factories being built in Mexico or expanded and not only in the automotive industry, which is quite visible, but in other industries such as electronics, manufacturing; and not only big companies but also medium-sized companies, which is super positive. But in addition to that, another important driver of growth for the sector is the tourism sector. Finally, after certain travel restrictions are -- let's say, are eased now, we're seeing a lot of -- more capital being deployed again to build hotels and condominiums in most major destinations. So again, industrial and commercial segment, also with very strong signals for the medium term. Now formal housing. Formal housing is also showing signs of improvement. Actually, as of July, permits have increased 35% because mainly commercial banking conditions are at very healthy levels compared to the past, and that is triggering the untapped or unserved demand for formal housing. Because let's remember that half of the population in Mexico is younger than 29 years old. Household formation in Mexico is more than 0.5 million per year. So that is a tremendous demand that is still there, and we believe that in the future, it will remain still very solid. So as labor conditions and employment improves, real wages also improve. This should serve as a main driver for growth for formal housing. And last but not least, infrastructure. I hope that infrastructure could have the same weight that it has in the U.S. industry. In Mexico, it has the lowest weight, but we believe it is very important for the competitiveness of the country. You are very well informed every Monday with the mañaneras on the development of the Mexico City Airport and the Dos Bocas refinery, which are entering the final phases of ready-mix and cement consumption, but we are also very aware of the Mayan Train in the inter-oceanic corridor, how they're going to start increasing their consumptions in the coming months. So the federal government has been delivering and performing quite well on those flagship projects that are, let's say, very visible. But more than discussing the flagship projects, I want to talk about the privately funded infrastructure projects, which are also very important. There's a lot of activity regarding highway concessions and airport expansions. Just as a data point, there's approximately 10 airport expansions happening nowadays. So that says a lot about the activity that has probably less coverage on the media. So all in all, when you look at each of the different components of the cement demand, they look very attractive. We don't expect to see again double-digit demand growth like the one we are experiencing this year. But again, we're very optimistic going forward on how healthy, how resilient and how it looks forward the demand for the coming years. Now -- oops, can you go -- let me go back. Okay. Similar to our colleagues, profitable EBITDA is also a key priority for us. And we have different sources that will fuel growth going forward. On one hand, and very important, is the strong fundamentals of our business not only because of the demand dynamics that I already mentioned but also on top of that, we have proven our strategic priority to make sure our prices and our profitability remains at very healthy levels. But on top of that, we are investing and developing the business going forward. And let me give you some examples on how we are deploying that type of capital. First of all, we're expanding cement production capacity in a timely manner and in the places that are -- where capacity is actually needed. We're increasing capacity for local production. You are aware about our Tepeaca expansion and Huichapan expansion that will help us serve the Central and Southeast region, which are actually the 2 regions that are growing the fastest nowadays, and they are very, let's say, tight in terms of cement utilization. But on top of that, we are investing to serve our colleagues in the North. Jaime is keeping us super busy. And actually, this year, we will have record-breaking exports, record-breaking that we have not experienced since 2006. And we're looking forward for the export program for 2022. Super excited about our export program. And you can see that the liaisons between Mexico and the U.S. are becoming tighter not only because of the remittances because also the supply chain dynamics that happened between the 2 countries. So we're investing in expanding the production capacity again in a profitable way, in the right timing and in the right locations. Now on top of that, we are also scaling up the Urbanization Solutions business here in Mexico. We're super happy that the performance this year of Urbanization Solutions is actually growing triple digits, triple digits this year. Super excited about the performance, but I want to give you a highlight of the type of portfolio that we are investing. I think that in the past, you have heard about Construrama supply. You have heard about admixtures, but let me elaborate a little bit on a vertical that is quite interesting, which is waste management under the Urbanization Solutions umbrella. We have a business in Mexico, which is called ProAmbiente. It's not a new business. Actually, it's a company that was created back in 1993, but we're taking ProAmbiente to different levels of performance. ProAmbiente will become the leader in waste management solutions in Mexico. And actually, just to give you some interesting data points. This year alone, via ProAmbiente, we will co-process 1.3 million tons of municipal and industrial waste. For some of you might say 1.3 million tons, how much is that? Is that a lot or not? So I can tell you there is a lot of waste. We are going to be the leaders on co-processing municipal waste. And let me give you some examples. Mexico City. Today, in Mexico City, we are able to co-process 13% of all the waste that is produced in Mexico City, -- So instead of going to landfills, nowadays, 13% of that waste is being co-processed in our manufacturing facilities. But we have a target and we have a plan to get to 25% to co-process 1 of every ton -- 1 of every 4 tons of municipal waste that is produced in Mexico City. That is our plan, and we're going to deliver. So we're super excited about the development of this vertical, which is aligned with the last point that I want to elaborate, which is our ambitious plan to reduce carbon footprint. You are aware about our Future in Action program which has on one hand, at least in Mexico, the most ambitious reduction target ever declared by any industry competitor. So we don't only have the most ambitious target. But I believe that we have an action plan that we are going to be able to deliver. And these projects or these initiatives are not only sustainable, are very profitable. And let me give you one example. Juan mentioned our Huichapan cement plant. Huichapan cement plant, which is located right in the middle between Queretaro and Mexico City, is the best example on how we are deploying capital targeted to our CO2 road map. And those investments have been super profitable. Huichapan cement plant now uses a little bit more than 40% alternative fuels. Actually, I call it friendly fuels, not alternative fuels. Those are friendly fuels, not fossil fuels. So 40% alternative fuels, less than 65% clinker factor. And Huichapan nowadays has a CO2 footprint similar to the one that we want to achieve in 2030 for the overall cement production facilities in Mexico. So we have a concrete example within our hands on how we can actually deliver on that road map by deploying capital in a profitable way. And by the way, Huichapan has one of the lowest production cost that we have in the system. So this is the type of investments that we're deploying, and we're super excited about our plan. So also, we're confident that we are going to deliver. Now in closing, I want to say that we are very optimistic about the future performance of our business because on one hand, we have strong industry fundamentals. But on top of that, we have a growth strategy that should continue delivering value for our shareholders. But on a final note, I want to emphasize something that our performance has been and will continue to be purpose-driven. We take our purpose very seriously, building a better future. And it all starts with all the colleagues, all the employees that work in the company. We do our best to make sure that they are building a better future for themselves and for their families, so they can help us build a better future for our customers, for our shareholders and for the communities where we operate. So this is what motivates and drives our purpose-driven performance. Thank you very much.

Okay. I think Ricardo was just that energy infusion we needed for this point in the morning, so maybe with that, we could open it up to questions in the audience. Rodolfo, why don't we start with you?

Thank you, Lucy. My question is on the energy side. What are you expecting -- or if you can give us a little bit of color on the pressures that you're seeing on energy broadly, pet coke and also on the electricity front, because I think this also ties well with all of your goals on CO2 reduction on your ESG calls. But particularly, as to how this bill that was introduced recently in Mexico could affect your operations. And any color there would be great.

Okay. First of all, regarding pet coke. Of course, we are also exposed because of the high volatility of pet coke prices. Nowadays, about 70% of our coke needs are served via the international spot prices and the rest are via the contracts that we have with Pemex. So whatever is happening with our pet coke volatility, we're trying to transfer into the prices because that is the formula that we must apply. That is very simple. Now regarding the new law that you mentioned, of course, right now, we are analyzing the potential implications of what is written or included in the language of that law. That law needs to go through a rigorous approval process. As you know, it requires constitutional changes, which is a qualified majority not only in the Congress but also, it requires the approval in 17 state legislations. I would say it's too early to say what is going to be the final outcome of that law. But what I can tell you is that we're working with chambers and associations to try to inform or give alternative views on what are the potential implications of that law, especially regarding our climate action agenda. As you know, we have scope 1 and scope 2 target reductions. The scope 2 are the indirect emissions. We want to favor more and more the use of renewables as part of our energy needs, now that close to 25% of our energy needs are coming from renewables, especially wind and some solar. And we want to almost double that amount. Of course, we will have to understand the implications of that law, what sort of conditions would create to accomplish that scope 2 reductions. But I think it's too early to tell at this point.

Thank you. And now I think I will take a call -- I mean, take a question from the virtual audience, Carlos Peyrelongue from Bank of America.

First one is related to electricity as well. If you could us an idea of the total cost, how much of that is electricity? And on your electricity consumption, how much is coming from private companies and how much from the CFE? And the second is related to prices. I believe you mentioned that there's a possibility for another price increase before the year is over. Is that correct? And would that be for cement for both bagged and bulk?

Thank you, Carlos. I will be very direct. About 30% of our energy right now that we consume comes from CFE. The rest is sourced via our contracts that we have with the tech or with the renewables, as I mentioned. So again, about 30% comes from CFE. Regarding prices, typically, how we have been managing prices, we have a different approach between bulk and bagged for cement. Typically, in bulk, we execute 2 price increases a year, one, which is typically the most successful one is at the beginning of the year, and then the other is in the summer. And in bagged prices, we typically have different windows of opportunities. And actually, in October last year, we implemented a price increase in bagged cement. And we are, right now, more or less understanding what sort of windows of opportunities will be presented to increase prices. I believe that we will increase prices before the end of the year on bagged cement. We still need to, let's say, finalize the timing and the amount. But what you should expect is, towards the beginning of 2022, the next window of opportunity to raise the, let's say, prices for both bulk and bagged. Thank you, Carlos.

In terms of the -- your utilization of the [ country ], can you give us the number of what your current utilization?

Utilization rates?

Capital capacity.

Capacity utilization. This is a very good question, Carlos, because when you look at our production for this year, actually, we're going to reach a record production since 2005 -- no, since -- yes, since 2008, to be more precise because of our export program and because we're not only, let's say, producing the typical gray cement, we're also producing mortars, white cement, Multiplast and other special cement products. So product has been very solid. Right now, it's in the [ 90-plus ]for the full year. But when you look at the seasonality, there has been a couple of months, sometimes weeks, where we have been operating at full capacity. This is very exciting for us. But let me tell you a little bit of our guidance that we gave you of about 10% volume growth for the full year because implicit on that guidance, you are seeing that growth rates for the second half of the year will moderate. Because right now, as of June, you have seen our performance of about 20% volume growth. And we gave you -- I don't know, it was in June or -- on June, the guidance of 10%. So we're expecting growth rates to moderate. And that is also providing us a little bit of oxygen for the capacity utilization as we were expecting, Carlos. Okay?

And just to be clear, those are growth rates on a year-over-year basis with harder comps, obviously, in the back half. Okay? And any other questions from this audience? Yes, Gordon Lee from BTG.

Gordon Lee from BTG. Really, it's a question on the competitive environment. And in the past, your competitors have not always been especially rational sometimes in terms of pricing. Is that something -- is that a concern that you're -- as you push through price increases, do you feel that the competitive -- that the competitors will follow typically given their own utilizations? And related to that, could you mention of any projects that you've identified or that you're aware of from the competition for expansions for cement expansions in Mexico?

Regarding prices for the competitive environment, we operate under a very challenging competitive landscape in Mexico. But it is true that supply-demand balance has been tight for everyone. And it is also a fact that inflation is affecting everyone. I cannot speak how they're going to react. I can speak on how we are going to react and how we have been, let's say, implementing a successful price increase. As of today, we have implemented a 7% price increase, which is successful. And when you look at the price levels that we have in Mexico, they're also healthy and sustainable. Again, we're looking at inflationary pressures, and we're going to try to mitigate them as much as possible. But we will do our best, and we'll see what happens. We hope that the best will be the outcome. Now regarding expansion capacities for the competitors. You saw that Holcim increased or put a grinding capacity in the [ U.K ]. company, [ indiscernible ] as well Fortaleza. So those are 2 types of investments that we have not seen in the past. Let's say, isolated or nonintegrated cement capacities. And on top of that, Cruz Azul investing in a new line in their Oaxaca plant that they're putting on stream, let's say, recently. But we believe or we heard that they have also obsolete capacity that they might shut down. So that's more or less the competitive landscape as we understand it today. Now when you look at the industry as a whole, when you have an industry that is about, I don't know, 40 million ton plus industry, and with the growth rates, organic growth rates that are expected, capacity expansions should be normal in this market. So I don't expect to see any major disruption on that front. Thank you, Gordon.

We've gone a little beyond. I'm going to take one last...

Sorry, Louisa.

No, no. No, not at all. No. But I'd like to take one last question from Adrian Huerta from JPMorgan.

A quick question on the urbanization solutions that you mentioned are growing triple digits. And it seems like the growth started since the second quarter of last year. How much are they representing out of total revenues now? And what is the growth outlook for next year from this?

That's -- probably I'll get back to you because the consolidated -- well, I can tell you, more or less, the overall EBITDA for the -- expected EBITDA for the year, which is close to $50 million in EBITDA, revenues, I will probably need to get back to you. But for example, consumer supply, which is the largest in terms of revenues within the organization solutions, I remember that we have revenues close to $450 million, $450 million in consumer supply. But probably we need to get back to Adrian on the consolidated figures for organization solutions.

No problem there. Ricardo, thank you very much for that great present.

Thank you. Thank you.

Okay. And now I'm very pleased to have a Q&A with our CEO, Fernando Gonzalez. So who would like to kick off?

If you have any questions about the Dominican Republic associated here...

Great. Maybe I will start, Alex, with you with the first question, please.

I'm sorry, if questions are to direct to a region or to the subjects, I might ask the support of my colleagues given that they are much more knowledgeable than I am.

This is an easy one, Fernando. It seems that you're moving from a delevering phase to a growing phase and an investment phase, but how should we expect -- or when should we expect perhaps a dividend policy, CEMEX moving more towards giving cash back to shareholders? You've been very active in the last few years on buybacks but how about dividends?

Well, we did some, but I think we need a much more stable trajectory, let's say, under the 3x leverage that we are in, in order to define sort of a policy or a dividend that we can sort of guarantee through time, meaning we don't want to do a onetime thing like -- with it. Now that needs to be approved by our Board. So we might try to start in next year. And let's see how it goes. Again, we need to be sure that we can deliver systematically a dividend.

Okay. And on the second -- the next question also we'll take from the room from Alan Alanis.

Could you walk us through the change that you're thinking in terms of the change in strategy from many years, decades where CEMEX has global aspirations to now basically be more focused in North America and Europe? And I think you went as specific as going into certain regions and certain metropolitan areas. What are the opportunities and risks that made your shift in strategy?

Yes. Well, let me start by reminding the latest adjustments we did that you are describing them. We want to grow and to invest mainly in the U.S. and Europe, to some extent, in Mexico. And we want to shorten our position in emerging markets. That's the main adjustment that we are doing. Now I think in a couple of decades, we were perceived as the emerging market company, the global, but the emerging one because of our origins, Mexican companies merging, so we are merging. But you know what, the last $25 billion in we invested in U.S. and Europe. So we are clarifying this adjustment, but it's not that different to what we were doing. What is different that we are clearly stating that we are not inclined anymore to add additional [ flags ]to our collection. There was a time, and a long time, 30, 40, 50 years of global is growing globally. And now that is changing because the way portfolios are perceived are different to the way they were perceived decades ago. So what kind of play are we or what kind of play is other competitors in the sector? So our preference now is to focus and simplify and concentrate in the markets and countries that we have commented. Now on growing, we need to take into account cycles in situations. So has it been easy to divest in emerging markets in the last 1.5 years? You know the answer. What about investments in the U.S. and Europe? Well, we are focusing on [ bolt-on ] greenfield small acquisitions type of investments. Are we willing to pay high multiples at something that might be close to the top of the cycle? Not necessarily. Is that changing our strategy? No. Strategy is the same, but we need to take and to develop opportunities at the right price in both sides, investments and divestments. So this strategy or the idea of divesting and investing nowadays has nothing to do with deleveraging. That's behind us. I mean we still have to -- a way to go, but meaning it's not the driver of -- the driver is really managing our portfolio towards this type of strategy that I already described.

And now we will take a question from our virtual audience. Alberto Valerio from UBS again, please?

My question is about the guidance. You said in the beginning of the presentation that nothing changed since the last report and the guidance that the guide provides. My question is how confident are you about the guidance in 2021 and the 10% increase for [ EBITDA ] in 2022? And if that $100 million that you mentioned that [indiscernible] by the inflation would be removed for the $3.1 billion EBITDA guidance for this year?

Sure. We're -- from what I think I said before is that because of high inflation, because of supply chain issues, because -- inflation, particularly in fuels, electricity, whatever, our own inflation, we believe on a preliminary basis, we still don't have the full third quarter analyzing. We need a little bit more time and we will comment that during our call 3 weeks from now. But on a preliminary basis, what we're saying -- what we already saw happening in the last 2, 3 months is that growth is slowing down marginally. I mean it's -- U.S., I think, it has been adjusted by 0.5 percentage point, okay? It's not moving from growing [ 6 ] to not growing or growing [ 3]. It's a marginal adjustment so far. But inflation is the one that is going up more than what we thought, as I think Jaime said. In the case of the U.S. and for good reasons, we're importing more some volumes are growing, capacity is utilized at 100%. So we need more volumes. But we need more volumes than the ones we thought we were going to need, meaning we are paying spot prices in shipping costs, more shipping costs, which have been very high. So because of that and because of some impact in FX, if you remember that our guidance was communicated, FX prevailing at the end of June, there is also some impact mainly because of the Mexican peso. We believe, again, preliminary basis that our expectation is now $100 million less on EBITDA, it's $100 million less. We're going to continue looking at our numbers, particularly to the latest ones, the September numbers. And during our third quarter call, we might come back with more precise estimates or conclusions on how this inflation, supply chain issues can impact us. I also mentioned just -- I think it's an interesting piece of info is that for the first 8 months, not the first 9, because -- not because the ninth month is not the case is because we have not done it, we have not finished. But the first 8 months, our contribution margins are holding or increasing compared to last year, meaning the first 8 months, we are okay and in track to our expectations. We see this gray clouds coming. So we need to we are kind of estimating making preliminary estimations, and that's what we wanted to communicate today.

Okay. And maybe if we can kind of keep it to the medium term, which really is the purpose of CEMEX Day, that would be great. Vanessa, do you want to go ahead with the question?

It's just a very quick follow-up on that. Fernando, there is [ $100 million ]. Are you referring to 2021 or 2022?

'21, '21, '21. Now by reviewing '21, I mean, if we adjust our expectations by $100 million, I think we will need some additional time. When we provided guidance, we thought uncertainty was not necessarily high. Now what we are saying, yes, we're going to provide definite numbers on our expectations for the year. I'm not sure what is it that we're going to do with 2022? It's 10%, Yes. 10%. But let's see how it goes. I mean, 2, 3 months, what happens with this adjustment on general GDP growth? What happens in our markets? So we need to evaluate that.

Maybe we could pass it to Gordon Lee from BTG. Thank you.

If I could focus on the third quarter, a couple of questions on the client side of things. The first, you mentioned in your initial remarks that maybe the difference between the results you've seen in Europe and what you've seen elsewhere has to do with sort of the circular economy taking hold. And I was wondering how much of the gap in the other markets towards that attainment of that same level of circular economy has to do with regulation and how much it has to do more with customers and just sort of nonregulatory sides of the business? And then the second question on the bridge that Juan showed in terms of the reduction from 2032 to net zero by 2050. Is it only the carbon capture portion that requires a technological breakthrough or are there other [indiscernible].

Carbon capture. Carbon capture. Well, there might be others, but it is the -- the elephant in the room is carbon capture and use for our industry and other industrial sectors. On the first question, Gordon, I think it's a combination. What I see is that I don't know exactly how to express it, but climate change has changed. We're speaking about climate change after 30 years of speaking about climate change, so what is new? Why is it that we wanted to talk about climate change? What is new is that nowadays, there is a momentum which, by the way, I think it's a very positive momentum in which more stakeholders have joined the idea of acting against climate change. And those stakeholders are creating a huge critical mass, motivating businesses and governments to move forward and to some extent, on top of motivating, is kind of letting ask what can happen if we don't do the job, kind of like, okay? So that's what is different. So why is it that we decided to make the adjustments? Well, we look at what is -- what is it that we need to do after realizing this new momentum to continue being leaders in our industry? Why is it that we want to continue to be leaders in the industry because we believe that from now on, we don't know when, but from now on, investors are going to get selective in their investments. So I have to assume that investors are going to say which company, the cement or the ready mix business is the leader or which companies are the leader and as good as the leader because those are the companies that will see inflows. The rest will see outflows. So that's why it's really important. I think it's variable nowadays that will define our future. So here, we are talking about climate change after 30 years, but the meaning of climate change nowadays is completely different. That's why we adopted the scenarios that are the most ambitious ones nowadays. We started, of course, declaring our net zero for 2050. I already commented that, yes. But it's still years to go. So we adopted the well below 2 degrees, which is the scenario that has -- it's very specific, meaning if we want to be aligned to the Paris Agreement, we have to subscribe to this well below 2 degrees scenario, which is the numbers you saw for our new 2030 targets are the ones aligned to that scenario. And now it is not only us saying we are aligned, it's SBTI saying, these guys are aligned. They analyze all the time, make their numbers and everything and they say, check this -- they are in their way to contribute to the well below 2 degrees scenario. And on top of that, we subscribe to the [ 1.5 ]. So it's like different elements or pieces in the equation that we started developing. And the 1.5 scenario, is, right now, the way of understanding this is more an aspiration or an intent. At least in the cement industry, we still don't have specific criteria that we have to comply with. That is being developed as we speak. And I think I mentioned, we are very pleased because members of our company were invited to participate in the committees developing the definition of the 1.5 scenario, which will be important more, let's say, beyond 2030. So that's what we understand on this new meaning of climate change. Now why is Europe different to the rest? One possibility is that we've been paying more attention to Europe, but I don't think so. Definitely, there are impacts because of different regulations. In my opinion, the European Union or several countries in the European Union, even before the European Union existed, they've been working on environmental issues and CO2 issues. And nowadays, the European Union and the U.K., which continues to have the same philosophy, is the economy that is closer to the circular economy version. Green economy has to be green and has to be economy. I mean, the idea of everybody failing because we need to spend more or invest more for the future economy that doesn't work, it's nonsense. So the green economy that is profitable, the green economy that would work has to be circular. And in that economy, what we have to do is even more profitable than what we do nowadays. So yes, there are several rules in the U.K., very aligned to a circular economy that are not existent in other countries develop or emerging. No difference. So that's one thing about rules. Example, alternative fuels. The original [ waste directives ] in Germany, the Netherlands and that part of Central Europe were adopted by your European Union. Nowadays, you have to pay more than GBP 100 to landfill a ton of waste in the U.K. But you cannot landfill more than, I don't remember, 4%, 5% in Germany and the Netherlands. So what happens that after decades, a new business sector was developed. The sector -- the [indiscernible] of the world is that sector. So to us, nowadays, instead of having our high [ scores ] getting higher, as Sergio mentioned, now it's an income stream, thanks to that portion of the circular economy in that region. Now -- so region -- I mean rules do impact and do have a role. So that means that we need to change the rules in the U.S. or in Mexico or in the Philippines? Not necessarily. We can achieve what we have achieved in Europe with the current rules. What we're saying, we can do it faster, and we can better serve society and we can be even more profitable if we manage to speed up the process of current rules prevalent in different states in the U.S. or in Mexico or whatever, to something similar to it. I think Ricardo mentioned, we are co-processing 25%, 30% of alternative fuels in Mexico without any major changes in the rules, so that's the cost of rules. Now let me refer back to the momentum. And during the break, I was hearing some anecdotes because this momentum is covering 360. Investors in the U.S. are nowadays that is really on top of climate change and [indiscernible]. That's my appreciation. Customers we were saying we need to improve to enlarge our value offer of low-carbon products to our customers. Our customers want to build with lower carbon products. So I was saying an anecdote that I was told to me. Our regional president in Alabama was a meeting we were having with Jaime and his team. He shared with us, you know what, I just received a call from one of our most important customers asking if Vertua is already available in Alabama? Like saying, meaning it's not going to be only a push type of effort, but customers are already asking. And by the way he said, and if it is happening in Alabama, it's happening everywhere. So this is -- so it's both. It's rules. And I did mention, we need to find a way to better inform, try to influence, promote collaborate in these rules moving in towards a circular economy. And we also need to work with stakeholders in general. But this example of customers is Mexico, the response of Vertua in Mexico has been huge. We were not expecting that it's an emerging market, but it is happening.

I think we have time for one more question.

A couple.

A couple? Okay. So we have time for a couple. The next one we're going to -- we're going to take a question from Carlos Peyrelongue from the virtual audience. Please go ahead, Carlos.

Considering your focus on bolt-on acquisitions and expanding capacity, some of the countries with new facilities, expansion topics, the possibility of a sustainable dividend. Is there a steady state target leverage that you are considering going forward and you're assuming that you do not want to go so fast?

No, we don't have any specific target yet because we don't have a specific proposal or actions to be taken in dividends. But for sure, it has to continue to being below 3x. Hopefully, even well below. Like the scenario, well below 3x.

Great. Ben Theurer from -- sorry, I'm losing it here, from inside the room. Please go ahead, Ben.

Okay. So it's more of a follow-up question. I know it's been asked in the past, but you have made some changes on management compensation and alignment to these ESG goals. As you move forward in the different regions, do you think there is a need to further adjust those? Or are you comfortable where you stand right now?

Thanks for asking, Benjamin, because we have not addressed that one at all during this morning. By the way, there are so many issues we wanted to address, but there is so much you can do in the time that we have with you. We started in July a trial or an experiment on modifying our variable compensation system of the first, whatever 4, 5 levels of the company, adding the impact of CO2. Meaning, as any other objective is adding the -- for instance, we have this year, an objective of CO2 reduction. And we will have next year, and -- so it's an annual plan. It's not just '25 and '30 and 2050. So we are making this trial. People is informed. I think, after looking at some numbers a couple of months, I think we need to make some adjustments because we started saying simple executives in Europe will use CO2 price in Europe and they have their plans or if they comply or they are below, by the way, I told them no way to be below the target. But anyhow, if they are below or they -- so it make the numbers with the cost of -- or the price of CO2 in Europe. What I saw is that there is a sizable impact. For the rest of the world, we use as a proxy, the price of CO2 in California, which is slightly below $20. And the impact is minimum, is neligible (sic) [ negligible ]. So I think we're going to be changing that to use for the whole company, the value of the ETS in Europe. At the same time, let me take the advantage of your question to address something else. We are doing exactly the same thing on evaluating investments. There are no requirements in name in Colombia, the Philippines, but we are considering CO2 prices in our investments. because we believe that we are going to be moving from the current status. Currently, about 60% of our cement capacity is in some sort of regulation on CO2. And that is not moving backwards. That is moving forward. So we better consider the implications, for instance, we were saying expanding cement capacity, well, we better consider that factor in how a new cement plant should be built, and what are the expected economics when including the price for CO2. Very simple stuff. Type 1 cement is produced with 95% clinker, 5% gypsum due to [indiscernible] cement plant. A blended cement plant is 67% clinker, you need a much bigger branded mill. So in the point of the future, we will need to use 90% alternative fuels. We need all the installation and we need to put the plants wherever alternative fuel is available. And so there are so many changes that little by little will be adopted in the industry. But referring to CO2 is compensation, we will start the trial last until December 31. So January 1st, next year, it's already part of our compensation system and in investments where kind of also in soft trials because again, $18, yes, it does make a difference, but we wonder if that is the price that we should use for investment that are going to last 20 years.

As a follow-up, within the different regions, have you difficulty actually measuring the CO2 [indiscernible] or is it across the board the same?

No, we've been engaged in how to measure CO2 as well as some relevant emissions like NOx, SOx in real time. So right now, I cannot tell you it's 100%, but it might be 94%, 95% of our capacity that is in which we have already this type of emissions real time.

Maybe I'd just add to that point, Ben, that the cement industry, one of the points that we went through was actually the first industry to come up with rules in place on how to calculate CO2 emissions. There are still industries, believe it or not, I believe oil and gas is one of those, that do not have rules or standardization of disclosure around CO2 emissions. And do you have a little more time? Okay. One more time. Okay. Paco Suarez from Scotiabank, virtually, please.

Quite exciting conversation. Precisely on the same subject, we have seen some of your peers doing transformational and major acquisitions like the Bridgestone acquisition made, like Holcim. And on the other hand, we are seeing this wonderful initiatives of waste management in Mexico. So on capital allocation, do you plan to go to push forward further to conduct more and more investments in this sort of new avenues of growth or perhaps it is not something that you have on your radar screen at the moment?

No. Thanks, Francisco. I think it's kind of simple. Let me start. You already know what's our fighting power, meaning resources away or on top of what we need to continue our [ dividend ] ratio. So we need to develop some of our free cash flow to do that. So that means that we don't have a reach free cash flow for us to invest. So we need to balance the equation. The reason why we decided since last year on bolt-on acquisitions was not by chance. That's what we can do. And at the same time, we thought that it was the right thing to do because of the hundreds of opportunities we knew were around our businesses that with a marginal effort and with a marginal investment, could help us to -- on top of our organic growth to support EBITDA growth, which is what we were missing. So we've been already investing this year, we will be investing next year. Maybe with this bolt-on strategy, we will invest in like about 3 years. But you know what, there's so far you can get with this type of very small investments. So through time, I think the number of these opportunities will start declining and our balance sheet will be much better. So we will be moving from this bolt-on acquisition strategy towards a much larger transformation of our portfolio. Now again, you know the numbers of the company. And if we wanted to invest heavily already in the very short term, we need to divest. And as I mentioned, in M&A in emerging markets, in our industry, it doesn't seem that there has been plenty of opportunities. I'm not saying there has not been transactions. What I'm saying is the transactions that we have tried because we have tried many, we thought that we could create more value keeping those assets than selling at the prices that -- on the offers that we have received. Again, this is consistent with our strategy, but our strategy is not a concept only. We need to take into account cycles, I already say it. So if we have to wait, we will wait. But we're not waiting, meaning doing nothing. We are moving. Our bolt-on strategy will increase our EBITDA. $330 million of EBITDA by '23, '24, I think it's a sizable opportunity. So we will be cautious. Something that I can add to that is that we have learned lots of lessons. We still don't forget the lessons we learned in 2008 or '09. We are not afraid of anything, we just want to manage risk in a different manner. So we know our position. We're very happy. We have after 14 years, our [ level of ] ratio is below [ 3x ]. But we don't want to rush into something similar. Little by little, bolt-on, low-risk, give us some time. And we -- from there, we will start increasing our or speeding up our -- the execution of our strategy.

Thank you very much for Fernando. And thank you, everyone, in the audience for attending. I in particular would like to thank the presenters who were told they had 3 slides to present, regions and topics like climate action and technology, which is not an easy task at all. And they did a great job and complied with it. So thank you all very much. And for those of you virtually, we hope that we will see you on the quarterly call. And for everyone else, we do have the opportunity to meet outside for a few minutes. Thank you.