Lorenzo Zambrano, Chairman and CEO of Cementos Mexicanos (Cemex), once observed that “we had to become an international company to survive.” From its home country, Mexico, Cemex created an international business by extensive acquisition of other cement companies, construction of capacity, and international sourcing from independents. Extending its operations from emerging markets to developed economies, Cemex was rated as one of the most admired companies in the world. The company sought to reduce volatility of earnings by pooling risk across a wide range of geographic markets, in the Americas, Europe, Asia, Africa, and the Middle East. To Zambrano: “It is standard portfolio theory.” For the long term, Zambrano's objective was to ensure that no one market would account for more than one-third of its business, to find new markets with significant and rapidly growing demand. As a result of its many acquisitions and geographic diversification, the company faced high debt, significant currency risk, many sources of market demand risk, and various types of supply-side risk. The company's strategy of delivering value as a global producer and market maker would be tested to the full.

Cemex and the Mexican market for cement

Cemex was created in 1931 through the merger of Cementos Hidalgo, founded in 1906, and Cementos Monterrey, founded in 1920. Growth through acquisition and plant construction was significant in the postwar period and by the mid-1970s the company had achieved a national presence and become the country's leading cement producer.