Analysis: Odessa arrives as cost before it arrives as volume

The clearest line in the release is the gap between the 15% revenue increase and the 1% net income increase. Two mechanisms account for it. The first sits in the cost of sales: EBITDA margin fell 70 basis points to 31.8% from 32.5%, because the ramp-up is being supplied partly by shipping clinker and cement from Mexico into Texas, which turns up as export freight and transfer cost rather than as plant efficiency. The second sits in the financial line. Interest capitalisation tied to the Odessa project, alongside lower rates on the cash pile and peso translation, cut net financial income from US$8.5 million to US$0.3 million, removing roughly the amount by which operating income improved.

The geographic split of profit moved with it. US operations produced 78% of second quarter EBITDA and Mexico 22%, against 85% and 15% in the same quarter of 2025. Mexico is contributing a larger share of profit at a moment when its volumes are close to flat, which is a currency and price effect more than an operating one.

The disclosure has limits worth naming. GCC does not publish kiln utilisation, clinker output or the cost per tonne at Odessa, so the size and duration of the ramp-up drag cannot be measured from outside. The company’s own documents are also not consistent on capacity: the quarterly report states annual cement production capacity of 7.1 million metric tons, and the investor fact sheet for the first half describes 6 million metric tons in its company profile while listing 7.1 million metric tons, split 4.6 million in the United States and 2.5 million in Mexico, on the same page.

Guidance was left implying a slower second half. GCC still expects mid single digit consolidated EBITDA growth for 2026, free cash flow conversion above 60% and total capital expenditure of US$270 million, of which US$200 million is growth and US$70 million maintenance. First half EBITDA is already up 14.7%, so holding the full year target means the second half is expected to grow far less, or not at all.

The external backdrop is not obviously helping the US volume story. The Census Bureau put total US construction spending in July 2026 at a seasonally adjusted annual rate of US$2,157.6 billion, 3.8% below July 2025, with highway construction at US$150.3 billion, 0.2% below the revised June figure. GCC’s infrastructure led quarter therefore ran ahead of the national series, which points to regional demand in its landlocked markets rather than a broad national upturn. A careful reader would watch three things next: whether US cement prices, down 3.2% in the quarter, keep falling while concrete prices rise; whether first half free cash flow, down 23.5% to US$46.5 million on a US$74.5 million working capital build, converts back in the second half; and whether the margin gap closes once Odessa supplies its own market.

What the documents say

GCC, S.A.B. de C.V. (BMV: GCC) reported consolidated net sales of US$418.4 million for the second quarter of 2026, a 15% increase on the US$363.9 million booked a year earlier, and EBITDA of US$132.9 million, up 12.3%. The Chihuahua based producer of cement, aggregates and concrete published the figures on July 28, 2026. The same quarter brought the start-up of the new kiln at the company’s Odessa plant in Texas, the largest single item in a capital programme that has been running through the cash flow statement for two years.

United States volumes carried the quarter

Sales in the United States rose 14.1% to US$310.5 million and accounted for 74% of consolidated revenue. Concrete volumes increased 28.7% and cement volumes 10.8%. Concrete prices in local currency rose 5.7%, while cement prices fell 3.2%. GCC identified infrastructure as the most dynamic market segment of the quarter.

That mix is a reversal of the pattern a year earlier. In the second quarter of 2025 US sales grew 7.7% to US$272.3 million on a 20.7% rise in concrete volumes and a 4.2% rise in cement volumes, with concrete prices up 9.5% and cement prices up 0.6%. The most dynamic segment then was renewable energy. The 2026 quarter was built on volume across both product lines and on a shrinking cement price, where the 2025 quarter leaned on price.

Mexico sales grew, helped by the peso

Mexican sales increased 17.7% to US$107.9 million, or 26% of the consolidated total. Cement volumes rose 6.2%, concrete prices rose 5.2% and cement prices rose 0.2%, while concrete volumes slipped 0.5%. Currency did much of the work. GCC said the appreciation of the Mexican peso against the US dollar lifted reported Mexican sales by US$11.1 million; stripped of that effect the increase was 5.6%. The company translates pesos at the average monthly rates published by Banco de Mexico, which averaged 17.3987 pesos per dollar in the quarter against 19.5281 a year earlier.

Demand in Mexico came from self-construction and infrastructure. The comparison base was weak: in the second quarter of 2025 Mexican sales fell 14.8% to US$91.7 million as concrete volumes dropped 13.1% and cement volumes 6.2%.

Costs, cash and the balance sheet

Cost of sales was US$281.1 million, or 67.2% of sales, a 50 basis point increase that GCC attributed to higher production costs, larger exports from Mexico to the United States, higher transfer freight and the cost base of the business acquired in the first quarter. Selling, general and administrative expenses rose 14.8% to US$34.5 million from US$30 million. Operating income before other expenses increased 12.9% to US$102.8 million.

Below the operating line the picture changed. Net financial income fell to US$0.3 million from US$8.5 million, which the company put down to the stronger peso, lower interest rates on its cash and higher financial expenses from interest capitalisation on the Odessa expansion. Income tax rose 15.4% to US$28.5 million. Net income was US$74.3 million, 1% above the US$73.5 million of a year earlier, and earnings per share were US$0.2275 against US$0.2242.

Free cash flow rose 17% to US$56.9 million, a conversion rate of 42.8% against 41.1% a year earlier, even as maintenance capital expenditure rose 81.7% to US$23.8 million from US$13.1 million. Cash and equivalents ended June 2026 at US$812.5 million. Total interest bearing debt was US$626.7 million, all of it long term and all denominated in US dollars, and net leverage stayed negative, meaning cash exceeded debt at both the end of June and the end of March. Asset purchases of US$36.3 million in the quarter covered aggregates and concrete operations in the Amarillo and Midland-Odessa regions. GCC paid a dividend of Ps. 2.0325 per share on May 12, 2026, declared by the shareholders’ meeting of April 23, 2026, and repurchased shares for a net US$4.8 million.