July 27, 2016 / 6:57 PM / 2 years ago

UPDATE 3-Mexico's Cemex to slash debt faster as profit beats expectations

(Adds shares, quote, revenue results in earlier Reuters poll, information about construction sector in the U.S.)

July 27 (Reuters) - Mexico’s Cemex, one of the world’s largest cement producers, on Wednesday said it aims to cut debt over the next two years more than it previously planned as it reported that its quarterly profit unexpectedly surged by 81 percent.

Shares in Cemex rose more than 4.14 percent to 13.57 pesos by 1:25 p.m. local time.

The company said second-quarter net profit rose to $205 million, almost double analysts’ estimate of $107 million in a Reuters poll, boosted by its Mexico business and exchange rate gains.

Cemex also said it now aims to cut total debt by $3 billion to $3.5 billion in the next two years, up from a previous target of up to $2 billion. It aims to sell assets worth up to $2 billion, up from a previous goal of $1 billion to $1.5 billion.

Chief Executive Fernando Gonzalez told journalists that the company hoped it could cut debt to a level that would let it regain its investment grade credit-rating status in 2018.

Consolidated net sales for the second quarter rose 6 percent to $3.7 billion on a like-to-like basis for ongoing operations and adjusting for currency movements, roughly in line with a Reuters poll.

Mexico net sales grew 7 percent to $796 million, while in the United States they rose 3 percent to $1.04 billion.

Shares in Cemex are up more than 40 percent this year, boosted by hopes of stronger growth in the United States, its biggest market by sales. U.S. cement growth volume was spurred by residential and infrastructure activity.

Mexico’s peso lost almost 6 percent of its value against the dollar during the quarter, amid worries over Britain’s vote to exit the European Union. That affects Cemex, which is burdened with a heavy dollar-denominated debt load.

But it said proceeds from listing its Philippines business in June helped reduce total debt plus perpetual notes by $1.15 billion during the quarter. (Reporting by Richa Naidu, Gabriela Lopez, Christine Murray and Natalie Schachar; Editing by W Simon and Leslie Adler)

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