Cemex has communicated clear goals to the market and is committed to targeting an investment-grade profile. It wants to use $1bn of free cash flow a year, in conjunction with asset sales, to reduce debt by $3.5bn and achieve a net leverage ratio of less than 3x by 2020.
The most attractive basic materials companies are those that have exercised capital discipline in the years since the last commodity-price crash.
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Some of these exist in the cement sector, and have successfully reallocated capital, deleveraging and prioritising balance sheet strength over expansion.
Fraser Lundie is head of credit at Hermes Investment Management
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