Mexico's top cement maker Cemex is outsourcing jobs worldwide to IBM in a deal that will help it save $1-billion (U.S.) over 10 years, the latest bid by the company to trim costs and boost its financial health.
Cemex SAB de CV, which was swamped by the 2008 U.S. housing meltdown shortly after paying out some $16-billion to buy Australian peer Rinker Materials, has been working its way out of a deep debt hole for the past three years.
Cemex chief financial officer Fernando Gonzalez told Reuters the deal with International Business Machines Corp. would likely affect "between 1,500 and 2,000" staff, adding that the figure was a preliminary estimate.
Some jobs may be absorbed by IBM, Mr. Gonzalez added. Cemex will start passing jobs to IBM from September and the entire transition should be complete by December of next year.
"Starting 2014 is when we will have a full year of savings … that we hope should be of more than $100-million per year," Mr. Gonzalez said, adding that final numbers for the outsourcing plan will not be public until later this year.
By cutting costs and its debt burden, Cemex is getting back on its feet. Two weeks ago, the company posted its highest quarterly operating core profit in nearly three years on a pickup in its U.S. business.
Monterrey-based Cemex employs about 42,000 people worldwide and has operations in over 50 countries.
IBM will provide Cemex with business process and information technology services. It will also include finance and accounting, and human resources back-office services. IBM was not immediately available for comment.
"While $1-billion sounds pretty attractive and it is definitely good news for the company, we won't see the real benefits until they get reflected in their profits," said Norma Lopez, an analyst with brokerage Multivalores.
Cemex is extending the maturity on a big chunk of its debt – which would help it dodge a maturity tsunami of $7.25-billion in early 2014 – as it struggles with a stagnant construction market.
Cemex has proposed a debt exchange to lenders – selling assets, a prepayment and revised financial covenants to gain breathing space. The proposal, announced in late June, has been negotiated with half of the creditors.
The exchange offer is due on Aug. 20. So far, Cemex reports strong participation by lenders.
Mr. Gonzalez said Cemex is reviewing operations worldwide to spot the ones that could be sold entirely, but is open to unloading minority stakes, too. The executive declined to comment on which operations were being analyzed.