CEMEX Cement. Quarterly Report July 27, CX: Proving the success of its Value-before-Volume strategy.

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1 Quarterly Report CEMEX Market Outperformer 12M FWD Price Target US$10.8 Price M Price Range 3.8/8.6 Shares Outstanding (Mill)* 1,542 Market Cap USD (Mill) 10,976 Float 78.6% Net Debt USD (Mill)** 14,233 EV USD (Mill) 26,217 Dividend Yield 4.0% *Including Convertibles **Net debt includes Perpetual Notes 2015 TTM 2016e 2017e Revenues 14,127 13,917 14,179 15,066 EBITDA 2,636 2,691 2,766 3,109 Net Profit FCF 628 1, ,039 EPS P/E EV/EBITDA P/BV Figures in US$ millions Lilian Ochoa G. +52(81) ext Alejandro Azar +52(81) ext CX: Proving the success of its Value-before-Volume strategy. We are reiterating our Market Outperformer recommendation and introducing our 12M FWD price target of US$10.8 per ADS, as our conviction on the name remains strong. Our investment thesis is based on a favorable long-term outlook which, in line with company expectations, is supported by the following: Encouraging volume performance in the Americas, Favorable pricing trends in local currency in all regions, and Potential FCF generation, in order to enhance financial position and strengthen balance sheet. 2Q16 Highlights: Consolidated revenues still damaged by the stronger USD. Total sales posted a slight 0.7% YOY decrease as the higher prices in local currency terms across all regions except Europe, coupled with the stronger demand in Mexico, the US, and the European region, were more than offset by the effect of the USD appreciation in a YOY comparison. Meanwhile, on a like-to-like basis, adjusting for the ongoing operations and for F/X fluctuations, revenues would have increased around 6.0% YOY. Cost reduction efforts and Value-before-Volume initiative continue to boost profitability levels. Operating profit and EBITDA margins increased 160 and 140 bps, respectively, mainly driven by the company s cost-reduction efforts, lower energy costs, operating leverage, and its Value-before-Volume initiative. Thus, operating profit and EBITDA increased 11.3 and 6.3% YOY, respectively. On a like-to-like basis, operating profit and EBITDA would have expanded around 24.0 and 16.0% YOY, respectively. Bottom line (+80.6% YOY) was boosted by its sound operating performance and higher F/X gains. A lower effective tax rate during the quarter, and a 110.9% YOY expansion in discontinued operations also contributed to the performance. FCF generation grabbed the spotlight in the quarter. FCF generation stood at US$422.0 million vs. US$63.0 million in 2Q15, mainly benefited by a lower net financial expense, taxes, and a strong reversal in working capital needs. Thereby, net debt plus perpetual notes decreased 3.3% QOQ, leading to a consolidated funded debt to EBITDA ratio improvement from 5.17x in 1Q16 to 4.93x. 12M FWD EV/EBITDA PRICE PERFORMANCE VS. IPC P/E 07/15 08/15 09/15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 07/16 20% 10% 0% -10% -20% -30% -40% -50% 07/15 08/15 09/15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 07/16 CEMEX GBM Grupo Bursatil Mexicano, S.A. de C.V., Casa de Bolsa ( GBM ), and its affiliates, may carryout and seek to do business with companies covered in its research reports. Investors should not consider this report as a single factor in making their investment decisions. These materials do not constitute an offer to buy or sell any security or participate in any trading strategy. IPC /15 08/15 09/15 10/15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16

2 Investment thesis Strong fundamentals and the proven success of its Value-before-Volume strategy support our optimism on the name. Thus, our investment thesis on CEMEX remains unchanged, based on a favorable long-term outlook in the Americas which, in line with company expectations, is supported by: Encouraging volume performance in the Americas, where the US should continue to increase its contribution to CEMEX s consolidated results, and the Mexican operations should regain the market share lost during last year. Favorable pricing trends in local currency in all regions. Since 2011, CEMEX made a commitment to start recovering its return on capital, given the chronic underpricing of the industry s products, mainly in the US. As a result, the company embarked on a Value-before-Volume initiative, with tactics like debundling of its product prices (products, services, and surcharges), and a more transparent approach to its clients, in order to increase prices. Since then, we have seen CEMEX carry out its strategy successfully. Potential FCF generation, in order to enhance financial position and strengthen balance sheet. Strong EBITDA generation expected for the coming years, combined with FCF initiatives, including reductions in interest expenses and taxes, continuous improvements in working capital, and controlled CAPEX, should lead to a conversion rate of 40.0% by Indeed, for 2016, CEMEX expects to save around US$150.0 million in annualized cash interest expenses while, going forward, additional savings in financial expanses should come from the refinancing of around US$1.0 billion in notes with a coupon of over 9.0% in its debt. Regarding working capital, we should mention that the company increased its working capital initiatives from US$50.0-US$100.0 million to US$150.0 million by the end of the year with a target between 0 and 10 average working capital days. Hence, in our view, further efficiencies should be propelled by the company s focus on speeding up account receivables and inventory efficiencies in the US and Mexico. A management committed to creating value and deleveraging. In order to bolster its deleveraging process and in turn its return to its investment grade, CEMEX has also implemented an asset sale strategy, including non-core and fixed assets. Thus, in addition to the ~US$506.8 million proceeds from the successful Cemex Holding Philippines IPO, the company is still expecting to conclude the sale of certain assets in the US to GCC for US$400.0 million (pending agreement) by yearend, as well as the sale of Croatian operations for million (pending antitrust approval). Moreover, the company should benefit from the potential sale of US$300.0 million in fixed assets, among other expected divestments. The latter led CEMEX to increase its asset sale target to a range of US$1.5-US$2.0 billion for 2016 and Hence, considering the sound FCF generation going forward, and the mentioned asset sales, we expect CEMEX to reduce its leverage ratio from 4.9x in 2Q16 to 3.2x by All in all, after the adjustment of our economic assumptions, as well as our FCF generation estimates, we are reiterating our Market Outperformer recommendation and introducing our 12M FWD price target of US$10.8 per ADS. Estimates Variation We are keeping our revenue and EBITDA expectations for 2016 and onwards unchanged; however, considering the success of CEMEX s FCF initiatives, mainly in terms of interest expenses and working capital, we are increasing our FCF conversion rate for the full year from 27.4 to 33.1%, with continuous improvements for the following years. Meanwhile, in order to maintain our valuation on a conservative side, we have decided not to incorporate the additional asset sales planned by the company until they are announced. Figures in US$ million Previous 2016 New Previous Previous USD USD USD USD USD USD EBITDA 2, % 2, % 3, % 3, % 3, % 3, % EBITDA Margin 19.5% 19.5% 20.6% 20.6% 21.4% 21.4% FCF , ,196.6 Source: GBM estimates 2017 New 2018 New

3 Estimates vs. Official Results GBM's Estimates* Official Results** Sales 0.5% -0.7% Operating Profit 9.3% 11.3% EBITDA 6.4% 6.3% Net Profit 22.3% 80.6% Operating Margin 14.2% 14.6% EBITDA Margin 20.7% 20.9% Net Margin 3.7% 5.6% Source: *GBM; **CEMEX 2Q16 Press Release Moving on to 2Q16 results Consolidated revenues still damaged by the stronger USD. Total sales posted a slight 0.7% YOY decrease to US$3.7 billion as the higher prices in local currency terms across all regions except Europe, coupled with the stronger demand in Mexico, the US, and the European region, were more than offset by the effect of the USD appreciation in a YOY comparison. Indeed, consolidated cement and aggregates volumes increased 3.7 and 3.0% YOY, respectively, while ready-mix volumes remained practically flat YOY. We should note that, according to the company, consolidated revenues increased around 6.0% YOY on a like-tolike basis for the ongoing operations and for F/X fluctuations compared to 2Q15. Cost reduction efforts and Value-before-Volume initiative continue to boost profitability levels. Operating profit and EBITDA margins increased 160 and 140 bps to 14.6 and 20.9%, mainly driven by the company s cost-reduction efforts, lower energy costs, operating leverage, and its Value-before-Volume initiative, which continues to yield results in Mexico and Colombia. Thereby, operating profit and EBITDA increased 11.3 and 6.3% YOY, respectively. Considering the ongoing operations and excluding F/X fluctuations, consolidated operating profit and EBITDA expanded around 24.0 and 16.0% YOY, respectively. According to the company, CEMEX s sensitivity to the P $1.0 depreciation against the USD s current levels should translate into a headwind of around US$50-US$60.0 million. Thus, the F/X impact on EBITDA during the quarter was around US$69.0 million. Profitability breakdown ( Chg.) EBITDA Op. Profit Growth Growth EBITDA Mg. EBITDA YOY Difference Mexico 23.9% 17.8% 37.9% bps US 32.9% 10.3% 16.6% bps SCA&C -4.3% -4.5% 32.9% bps Europe 5.9% 3.7% 13.4% 69.9 bps AMEA -1.6% -1.8% 22.9% 55.8 bps Total 11.3% 6.3% 20.9% bps Bottom line was boosted by its sound operating performance and higher F/X gains. The company reported a net income of US$205.4 million (+80.6% YOY), mainly as a result of the following: CEMEX s higher operating profit (+11.3% YOY), An F/X gain of US$108.5 million compared to a US$37.9 million gain in 2Q15, The lower effective tax rate during the quarter, and A 110.9% YOY expansion in discontinued operations, including the operations in Bangladesh and Thailand until their disposal on May 26, As a result, earnings per share moved from -US$0.2 in 2Q15 to US$0.2.

4 FCF generation grabbed the spotlight in the quarter. CEMEX s FCF generation stood at US$422.0 million vs. US$63.0 million in 2Q15, translating into a conversion rate of 54.7%, mainly thanks to: a lower net financial expense (US$259.0 million vs. US$287.0 million last year), the lower cash taxes, (US$154 million vs. US$251 million last year), and CEMEX s efforts to improve its average working capital days, which led to a reversal of US$232 million vs. US$11.0 million last year. Thereby, net debt plus perpetual notes decreased 3.3% QOQ, leading to a consolidated funded debt to EBITDA ratio improvement from 5.17x in 1Q16 to 4.93x, also aided by the sound EBITDA generation. CEMEX s Quarterly Free Cash Flow Performance Figures in US$ million 2Q15 3Q15 4Q15 1Q16 2Q16 QOQ % YOY % EBITDA % 6.3% Interests Expenses % -10.1% Working Capital NA NA Taxes % -38.6% Other cash items NA NA Operating CF % 167.7% CAPEX % 1.3% FCF NA 578.3% Sales Breakdown (YOY %) Prices in Local Currency Mexico 6.8% 18.0% 12.0% 9.0% -7.0% 6.0% 3.0% US 2.8% 4.0% 5.0% 1.0% 6.0% 1.0% 4.0% SCA&C -10.0% 2.0% 2.0% 2.0% -12.0% 8.0% -11.0% Europe -1.7% 0.0% 4.0% -1.0% 3.0% 1.0% 5.0% AMEA -4.1% 1.0% 0.0% 2.0% -3.0% 2.0% -1.0% Mexico USA SCA&C Europe Total sales Cement prices Cement volume Ready Mix prices Ready Mix volume Aggregates prices Region s Dynamics Aggregates volumes Excluding F/X fluctuations, Mexico s revenues increased 24.0%, mainly benefited by a 12.0% YOY expansion in cement volumes, reflecting increased demand due to better market dynamics and an improvement in the market position, combined with a generalized price increase in local currency terms. Regarding profitability, Mexican operations are proof of the success of its Valuebefore-Volume strategy, with an operating and EBITDA margin expansion of 460 and 360 bps to 33.7 and 37.9%, respectively. On a like-to-like basis, operating profit and EBITDA should increase 44.0 and 37.0% YOY. The US maintained its encouraging results, both in terms of revenues and profitability, mainly driven by its operating leverage and higher prices on a yearly basis. The infrastructure sector reflected a pick-up in highway-and-bridges construction spending during 1H16, while the residential sector maintained its strength due to solid fundamentals, such as low inventories and high job creation. Revenues for the region declined 9.9% YOY, as the 2.0% YOY increase in cement volumes due to the market share improvement in Colombia and the contribution of the Dominican Republic, Nicaragua, and Guatemala, combined with better pricing dynamics, was offset by the negative effect of the F/X fluctuations and a tough comparison base in Panama related to the Panama Canal expansion. However, on the profitability front, margins expanded for the second time YOY since 2013, boosted by a better product mix in Panama and the Rest of CLH s operations and efficiencies. The region s revenues declined 1.7% YOY, as the higher volumes in cement, ready-mix, and aggregates were more than offset by the GBP depreciation YOY. On a like-to-like basis, sales increased 1.0% YOY. Meanwhile, a better product mix and efficiencies led to profitability improvements during the quarter.

5 AMEA Revenues in the AMEA region remained practically flat, as higher volumes in Egypt, as a reflection of government projects related to the Suez Canal tunnels and low income housing, in addition to higher local currency prices across all markets, were offset by the stronger USD, as well as flat cement volumes in the Philippines due to a temporary slowdown in construction associated to the June elections. Meanwhile, profitability levels continue to benefit from a better product mix, and the lower energy costs in Egypt, which reflect the ramp-up of the pet coke plant. CEMEX s DCF Valuation Figures in US$ thousand 3Q-4Q16e 2017e 2018e 2019e 2020e Perpetuity CF EBITDA 1,412,694 3,108,515 3,361,921 3,615,890 3,800,466 3,800,466 Taxes -136, , , , , ,000 CAPEX -394, , , , , ,000 Change in working capital 124,690 75,329 47,231 32,721 3,379 FCF to the firm 1,006,580 1,957,226 2,064,767 2,238,379 2,319,530 2,850,466 DCF 1,051,409 1,873,775 1,811,759 1,800,181 1,709,761 23,075,048 NPV 31,321,933 WACC 9.1% Net debt* 12,761,800 Perpetual notes 442,000 Minority 1,331,788 Theoretical mkt cap 16,786,345 # Shares 1,541,534 ADR P target $10.9 Current price $7.1 Discount (Premium) 52.9% WACC Equity Weight 44.5% Debt Weight 55.5% Risk Free Rate 6.2% Market Risk Rate 11.2% Beta 1.7 Cost of Equity 14.7% Weighted Cost of Equity 6.5% Interest rate** 6.6% Cost of Debt 4.6% Weighted Cost of Debt 2.6% WACC 9.1% SOP PRICE $10.8 THEORETICAL AVG PRICE $10.8 Upside 52.2% *Includes the sale of assets of Croatian operations, certain assets in the US to GCC and the proceeds from the Cemex Holding Philippines IPO.. ** Interest rate = Estimated cost of debt next 12M.

6 CEMEX s SOP Valuation Figures in US$ million Divisions EBITDA 12M FWD EV/EBITDA TTM EV Net Debt 12M FWD Equity Value Ownership Value to Cemex CEMEX excl. CLH** 2, x 26,421 11,369 15, % 13,938 CLH* 800 3, % 2,688 Sum of the Parts Value 2,437 16,626 Theorical Price per Share 10.8 Current Price per Share 7.1 Premium/(Discount) to Sum of the Parts -34.0% *Considering our 2016e price target for CLH. For more information, please refer to our GBM 2Q16 Comments: CLH. Source: GBM estimates GBM Estimates Figures in US$ thousand Financials (US$ Mill) 2015 TTM 2016e 2017e 2018e Volume Growth YOY 2015 TTM 2016e 2017e 2018e P&L Cement 0.3% 3.7% 4.2% 3.7% 3.2% Revenue 14,127 13,917 14,179 15,066 15,744 Ready-Mix -4.0% -0.3% -0.3% 3.3% 2.7% Var (%) -7.6% -5.8% 1.9% 6.3% 4.5% Aggregates -7.3% 3.0% 1.2% 3.3% 2.8% Gross Profit 4,717 4,757 4,813 5,167 5,499 Gross Mg. 33.4% 34.2% 33.9% 34.3% 34.9% Valuation 2015 TTM 2016e 2017e 2018e Operating Profit 1,674 1,746 1,835 2,125 2,351 EPS Operating Mg. 11.8% 12.5% 12.9% 14.1% 14.9% P/E 146.0x 32.2x 21.3x 18.0x 13.6x EBITDA 2,636 2,691 2,766 3,109 3,362 EV/EBITDA 10.0x 9.7x 9.2x 7.8x 6.9x Var (%) -2.2% -1.4% 2.8% 12.4% 8.2% P/B 1.3x 1.3x 1.3x 1.2x 1.1x EBITDA Mg. 18.7% 19.3% 19.5% 20.6% 21.4% P/Sales 0.8x 0.8x 0.8x 0.7x 0.7x Interest (1,238) (1,201) (1,155) (1,097) (1,019) Taxes (142) (178) (227) (365) (435) Return 2015 TTM 2016e 2017e 2018e Net Profit ROA 0.2% 1.1% 1.7% 2.1% 2.8% Var (%) NA NA NA 18.5% 32.8% ROE 0.9% 4.1% 6.1% 6.7% 8.2% Net Mg. 0.5% 2.4% 3.6% 4.0% 5.1% ROIC 0.3% 1.5% 2.3% 2.8% 3.8% Balance Sheet FCF Yield 5.7% 10.7% 8.3% 9.5% 10.9% Cash Dividend Yield 4.0% 4.0% 4.0% 4.0% 4.0% Accounts Receivajle 1,612 1,736 1,659 1,761 1,744 Buyback Yield 0.0% 0.0% 0.0% 0.0% 0.0% Inventory 1, ,025 1,044 1,063 Fixed Assets 12,428 11,838 11,937 12,135 12,354 Leverage 2015 TTM 2016e 2017e 2018e Total Assets 31,472 30,784 30,014 29,714 29,417 Debt/Equity 1.6x 1.5x 1.4x 1.2x 1.0x Accounts Payajle 1,797 1,821 1,876 1,932 1,990 Net Debt/EBITDA 5.6x 5.4x 5.0x 4.1x 3.5x Debt 14,887 14,406 13,875 12,835 11,639 Interest Coverage 1.5x 1.6x 1.8x 2.3x 2.7x Total Liajilities 21,967 21,351 20,307 19,397 18,290 Equity 9,505 9,433 9,707 10,317 11,127 Turnover (Days of) 2015 TTM 2016e 2017e 2018e FCF Accounts Receivajle Operating Profit 1,674 1,746 1,835 2,125 2,351 Inventory Depreciation ,011 Payajles Interests (1,151) (1,079) (1,003) (918) (868) Cash Conversion Cash tax (486) (298) (347) (432) (471) -Working Capital Liquidity 2015 TTM 2016e 2017e 2018e -CAPEX (762) (706) (649) (794) (874) Current Ratio 1.0x 1.1x 1.0x 1.0x 1.0x Free Cash Flow* 628 1, ,039 1,197 Quick Ratio 0.6x 0.6x 0.5x 0.6x 0.6x *Includes Other Cash Items

7 Investment Risks In addition to the risks related to macroeconomic aspects, we believe the most relevant risk in the Mexican market is: during the last couple of years, there has been a significant flow of global funds into the Mexican market in search of new investment opportunities. There is no guarantee that, going forward, these flows will remain at current levels. The company s particular risks include: 1) Lower than anticipated recovery in any of its markets (US, Mexico, Spain, Latin America, Europe and Asia); 2) Higher financial burden given debt refinancing; 3) Tight credit markets coupled with the construction slowdown; and 4) Increased competition could cause downward pressure on margins, hence on profits. CEMEX 15.0 Stock Price Performance vs Analyst Estimates /08/ M arket Outperformer 09/12/ M arket Outperformer 04/02/ M arket Outperformer 27/07/ M arket Outperformer Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Price Price Target Important Disclosures: The analyst or analysts involved in the creation of this document hereby certify that the views expressed in this document accurately reflect their personal opinions and that they have not and will not receive direct or indirect compensation for expressing specific recommendations or views in this report. This report has been prepared by GBM and is subject to change without notice. GBM and employees shall have no obligation to update or amend any information contained herein. This report is for informational purposes only, based upon publicly available information, which we believed is reliable, but its accuracy and completeness cannot be guaranteed. GBM makes no express or implied representations or warranties that such information is accurate or complete and, therefore, GBM and employees shall not in any way be liable for related claims. This report does not constitute an offer to buy or sell any security or participate in any trading strategy. The information and analyses contained herein are not intended as tax, legal, or investment advice and may not be suitable for your specific circumstances. Each investor shall make their own determination of the suitability of an investment of any securities referred to herein and should consult their own tax, legal, investment, or other advisors, to determine such suitability. This report may discuss numerous securities, some of which may not be qualified for sale in certain countries or states therein and may therefore not be offered to investors in such countries or states. This report or any portion hereof may not be reproduced, reprinted, sold or distributed without the written consent of GBM.