Welcome to the CEMEX Fourth Quarter 2021 Conference Call and webcast. My name is Chuck, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If at any time you require operator assistance, please press star followed by zero, and we will be happy to assist you. Now, I would like to turn the conference over to Ms. Lucy Rodriguez, Chief Communications Officer. Please proceed.
Good morning. Thank you for joining us today on our Q4 2021 Conference Call and Webcast. I hope this call finds you and your families in good health. I am joined today by Fernando Gonzalez, our CEO, and Maher Al-Haffar, our CFO. As always, we will spend a few minutes reviewing the business, and then we will be happy to take your questions. I will now hand it over to Fernando. Fernando?
Thanks, Lucy, and good day to everyone. I'm quite proud of 2021 results and want to offer my congratulations and thanks to the men and women at CEMEX who make this happen every day. First, and most importantly, amidst another year of COVID, we were able to keep our employees safe and our operations running. This in and on itself is a huge success. We also achieved exceptional financial and strategic performance. During the year, we delivered 18% growth in EBITDA, the highest in a decade. Inflation, of course, reared its ugly head in June. We responded quickly within the constraints of the industry pricing paradigm to pass through cost inflation in all regions. While we achieved high-level cement pricing results with the best annual growth since 2015, it still was not sufficient to compensate for rising energy and transportation costs.
Traditionally, the most significant price action in our industry takes place in January and April in most markets around the world. While we expect that this year's annual increases will be important in our goal to recover margins, we will continue throughout the year to adjust our pricing strategy to reflect cost pressures. Adjusting for asset sales, we reached an 8% return of capital for the year, the highest level since 2007. Adjusting for goodwill, the return on capital would exceed 14%. Full-year EBITDA margins improved 0.8 percentage points. This achievement comes despite inflation and margin headwinds from product mix as well as rising inputs. Full-year margins were just shy of our Operation Resilience goal of 20%.
In terms of free cash flow, we generated more than $1.1 billion, a 15% increase from 2020, money that we used to delever as well as fund our growth strategy. The 11% increase in sales was driven by strong growth in volumes and prices. Consolidated volumes for cement, ready-mix, and aggregates grew mid-single digits, with all regions contributing to growth. The 6% growth in cement volumes is the highest since 2006. The volume increase was complemented by strong pricing, with consolidated cement prices rising 5%, while point-to-point pricing from December to December rose 10%. This suggests a strong runway for pricing momentum in 2022. Importantly, all regions participated in the pricing gains. Full-year EBITDA increased 18%, the largest increase in more than a decade, driven by pricing and volumes.
Urbanization Solutions also contributed, with EBITDA rising 22%. We expect this growth in Urbanization Solutions to continue in 2022 as our growth investment portfolio ramps up. While the contribution of pricing is quite significant in the full-year waterfall, it does not fully offset the rising variable costs, largely in energy, freight, and inputs. Of course, the annual results do not show the rapid increase in costs we experienced in the second half . The cost pressures were felt primarily in our cement operations, while ready-mix and aggregates margins were stable to improving. Our pricing strategy for 2021 got off to a strong start with our annual price increases in the first half, calibrated to our expectations for input cost inflation in the year. Margins expanded 2.5 percentage points in the first half.
In cement, the majority of pricing actions occurred in the period from January to April, prior to the start of the construction season. Around mid-year, we began to experience a significant runoff in costs, primarily energy and inputs, that were not contemplated in our pricing strategy. While we moved quickly to adjust mid-year with additional summer/fall price increases, it was not sufficient to keep pace with costs. Consolidated margins declined 0.8 percentage points in the second half. While ready-mix and aggregate margins held up well, cement margins were impacted. While we were quite successful in the year with cement prices, it was not sufficient. As you can see on this slide, cement prices rose 5% in 2021, the best pricing we have seen since 2016. Our prices are up 10% point to point from December to December.
Today, we are better prepared to manage the inflationary challenge. We have reflected the cost pressures in our customized 2022 price announcements scheduled for January and April. We are also assuming that inflation is not transitory, and we are prepared to respond quickly to changes in the environment. Our goal, of course, is to recover margins in line with our Operation Resilience target. 2021 was a year of great progress in our strategic priorities. In 2021, we continued to strengthen our capital structure with perhaps the most visible metric being leverage dropping below three times for the first time in years. You should expect that deleveraging will continue with the goal of an investment-grade rating in sight. We advanced materially in our Operation Resilience goal to optimize and rebalance our portfolio for growth.
We invested heavily in our growth portfolio in 2021, spending $380 million, the most in the last decade, and continue to reposition our business towards developed markets. This was in spite of supply chain issues that delayed many growth projects. For 2022, we plan to accelerate the pace with an expected $600 million investment in strategic assets. This includes execution on our pipeline of close to $900 million in approved bolt-on margin enhancement projects, primarily in developed markets, as well as legacy cement capacity additions of 4.3 million metric tons. Importantly, our growth strategy is paying off, resulting in $100 million of incremental EBITDA in 2021 and an estimated $100 million for 2022. Our growth strategy also entails repositioning the existing portfolio towards developed markets.
To that end, we announced in fourth quarter the pending sale of our operations in Costa Rica and El Salvador for $335 million. We expect this transaction to close in the first half , and proceeds will support our growth investments in developed markets as well as deleveraging. We will continue exploring divestment opportunities in our emerging market assets and remain committed to our goal of increasing the weight of developed markets within our portfolio. 2021 achievements were not just financial. We accelerated our climate action ambition by committing to the most aggressive 2030 goals in our industry and developed a detailed plant-by-plant road map to get us there. These targets were validated by SBTi under the Well Below 2°C Scenario, currently the most ambitious pathway for the industry.
We signed the Business Ambition for 1.5°C commitment, pledging that we will align our targets once there is a pathway available for our industry. Most importantly, we made significant progress against our climate goals in the first year. Carbon emissions declined 4.4 percentage points, the largest annual decline we have achieved. The goal of our Future in Action strategy is, of course, to provide greener products and services to our customers so that the built world of the future is more sustainable and circular. As of March 2021, we have successfully rolled out net zero low carbon concrete and low carbon cement under the Vertua label in our markets. Our Vertua net zero low carbon concrete, the first in the industry, allows our clients to customize their carbon footprint to their particular needs.
These Vertua products complement our existing family of sustainable products and solutions designed to meet the needs of a green and circular economy, reducing energy consumption, improving insulation, enhancing the capacity of structures to withstand climate disasters, and of course, reducing carbon emissions. We have seen very favorable customer receptivity to those products, with Vertua cement volumes growing almost 50% since its launch in March. Partnering with Danish modular 3D printing company COBOD, we successfully launched D.fab, a ready-mix solution for 3D printing that costs 1/5 of the cost of the specialized mortars traditionally used in 3D printing. This construction modality optimizes the use of concrete, minimizes transportation costs and waste, and makes use of readily available local resources.
This product has been successfully used in two residential projects, including the world's largest 3D-printed building. With our enhanced decarbonization roadmap in place, we reduced our carbon emissions by 4.4% to a historic low for CEMEX. An almost two percentage point decline in clinker factor, coupled with a four percentage point increase in alternative fuel usage, drove the carbon reduction. Our clinker factor performance is attributable to the introduction of limestone cement and other cementitious materials into our processes. In the U.S., we have introduced limestone cement in five of our eight plants, and we are retrofitting our plants to support additional limestone cement utilization in the future. Our decarbonization experience in 2021 supports our strong belief that climate action is a tremendous opportunity and that the cement industry can shine in a circular economy.
As I have said before, we have the knowledge and tools in place today to achieve our 2030 goal. The technological challenge lies on the period beyond 2030 to reach net zero. There are many possible decarbonization options out there. We view this decade as the period to test and scale developing technologies, partner with world-class experts, identify the most promising, and put in place the infrastructure necessary for deployment. Carbon capture in its many forms offers the most encouraging prospects to get to net zero. I'm excited about what I see in terms of our innovation pipeline. We are engaged in seven carbon capture industrial pilots, which test various methodologies. Three of the projects currently have co-financing in place from the E.U. and the U.S. Department of Energy.
With our ongoing scientific partnership, we announced last week that for the first time, we have produced clinker using solar energy. Historically, solar has not been able to reach a high enough temperature to substitute fossil fuels in the kiln. We will continue to test this breakthrough at scale. For the first time ever, we are introducing electric vehicles into our ready-mix fleet in three countries. This work is closely aligned to our founding membership in the First Movers Coalition, where we have committed to support breakthrough technology in the development of electric heavy-duty trucks. As the largest ready-mix in the western world, our ability to transition our fleet to electric would be a high-profile event. We continue to lead the industry in hydrogen technology using hydrogen injection to augment alternative fuel usage in our kiln. We are currently using hydrogen injection throughout Europe and are rolling it out globally.
Our recent announced partnership with HiiROC on a new hydrogen injection technology will further accelerate this strategy, allowing us to increase hydrogen usage fivefold. We are also working with ACCIONA and Enagás on a green hydrogen project in Mallorca, Spain. We believe the experience and knowledge we gain in this project will be instrumental in eventually fueling our cement plant with hydrogen. These are just a few of the many technologies we are looking at to meet our net zero goal. The world is rapidly outgrowing the planet's natural resource reserves. To stem this tide, the world must embrace a truly circular economy, and the cement industry plays an important role in this. Our industry can provide a valuable service to communities for one of society's most intractable challenges, waste. Through our use of alternative fuels and raw materials, CEMEX absorbs 50 times the waste that we generate.
The ability of cement plants to use solid waste as alternative fuels reduce fossil fuel consumption, as well as the amount of waste deposited in landfills, where it produces methane, a greenhouse gas that is 80 times more harmful to the environment than CO2. In 2021, alternative fuels constituted 29% of our fuel mix, a record substitution rate. Europe, of course, leads the way with approximately 60% of our fuel mix being alternatives. Outside of Europe, we are moving quickly to boost its usage. Our Mexican operation is spearheading this effort with a 9 percentage point increase in alternative fuels in 2021. This success is possible due to our growing sustainable waste management business in Mexico, Pro Ambiente. During 2021, our Mexican operation consumed approximately 13% of the total waste generated in Mexico City.
We continue to expand this business and in fourth quarter, announced the acquisition of a sustainable waste management facility in Querétaro. I would like to emphasize that a transition to a low carbon economy is not only good for the world, but is also profitable for CEMEX. While there are a number of other levers, I would like to focus on our alternative fuel strategy. In 2021, alternative fuels accounted for 39% of our fuel mix and produced savings of $200 million versus fossil fuel. These savings were achieved through the significant price differential between fossil fuels and alternatives. Digital innovation is central to all that we do at CEMEX, including our commercial outreach, our operations, as well as our administrative management. On the commercial side, CEMEX Go is the first and only global digital platform in the industry that covers the full customer journey.
61% of our sales are now processed through CEMEX Go. We are continuously innovating with new versions, responding to customer feedback. While it wasn't built for a pandemic, it's been an important competitive advantage for us over the last two years. We use advanced analytics to predict behavior and improve decision-making across our supply chain. CEMEX Go reliability and service is a key factor in our securing the highest Net Promoter Score ever for two consecutive years. On the operations side, machine learning is helping us run our cement plants more effectively as we look to optimize energy efficiency, fuel mix, carbon production, and scheduled maintenance in our plants. Our operational experience, coupled with our open innovation platforms, have allowed us to solve for pain points in the industry.
To deal with the complexities of the ready-mix business, we have developed a proprietary cloud-based ready-mix management system that is now being commercialized externally under the Arkik name. This solution gives independent ready mixers the capacity to integrate end-to-end commercial and order fulfillment processes. In our administrative functions, we leverage world-class digital partners and expertise to optimize our processes. Maher will speak in more detail on this. Through our open innovation platform, CEMEX Ventures and NEORIS, we are exploring disruptive digital tech`nologies in the construction space. To date, CEMEX Ventures has invested in 16 startups, including PartRunner, which provides last minute and last mile delivery of building materials, and Voyce Control, a job site delivery coordination platform. Now back to you, Lucy.
Thank you, Fernando. Our U.S. operations experienced strong demand dynamics throughout the year across all products, with most of our markets sold out. Sales grew 9%, driven by volumes and pricing. Cement, ready-mix, and aggregates volumes were up 6%, 8%, and 1% respectively, with the residential sector as the main engine of growth. Despite difficult prior year comps, cement volumes in fourth quarter were flat, with double-digit growth in Florida and Arizona offset by winter weather in California. With the rapid rise in input cost in May, we moved aggressively to address cost pressures. For the first time in 15 years, we introduced a successful second national pricing increase. As a result, fourth quarter sequential cement prices rose 1%, while year-over-year prices increased 6%. Our efforts to align price with cost inflation continue in 2022, with double-digit cement pricing announcements scheduled for the first half.
January price increases took effect in Florida, Southern California, and Colorado, regions which represent approximately 40% of our cement volumes. Given the continued cost pressure, we have advised customers that they should expect a second pricing increase in the year. Energy costs, primarily fuels, rose more than 20% in the second half, while imports increased almost 30% year-over-year. As a result, EBITDA margins declined 1.2 percentage points in 2021. To offset some of the rising import cost pressure in 2022, we will take full advantage of imports from our Mexican operations, a key competitive strength. As we look forward, we remain optimistic. We expect a low single-digit growth in volumes for cement, ready-mix, and aggregates driven by the residential sector and a recovery in industrial and commercial.
Despite rising interest rates, we are confident we will continue to see residential growth driven by a backlog in housing demand. Finally, for infrastructure, we expect the new Bipartisan Infrastructure Law to yield incremental demand for our products towards the end of 2022. 2021 was a great year in Mexico, with sales rising 17% to record annual sales in peso terms. The industry is operating at a high capacity utilization rate with no new capacity additions apart from our own. Top line growth was driven by high single-digit volume growth and mid to high pricing growth for all of our products. In 2021, we saw double-digit bagged cement growth during the first half, supported by government social programs and record level remittances, slowing in the second half as the comps became more difficult and we moved out beyond the midterm elections.
As the formal economy picked up steam, bulk cement and ready-mix volumes benefited from higher formal housing and industrial activity. Industrial activity was supported by growth in manufacturing and warehouses, onshoring, as well as the build-out of logistic networks. In fourth quarter, cement volumes declined largely due to a difficult comparison base with fourth quarter 2020 volumes, the highest since 2014, driven by pandemic housing improvements and government social programs. While cement prices grew 9% point to point in Mexico in 2021, this increase was not sufficient to compensate for rapidly escalating cost inflation in the second half, driven largely by energy. While full- year margins expanded 0.5 percentage points, we saw a deterioration in margins in the second half, with fourth quarter margin declining 3.2 percentage points.
To compensate for input cost inflation, we announced mid-teens percentage price increases for our products effective January 1. In addition, our climate action strategy is also helping us to respond to cost pressures in Mexico. In fourth quarter 2021, our alternative fuel consumption in Mexico reached 28%. Regarding 2022, we expect our cement volumes to be flat or decline low single-digit, while ready-mix and aggregates increase between 2% and 5%. Our cement volume guidance is driven by a difficult comparison base in bagged cement in 2021 due to pre-electoral spending and stay-at-home renovations. We expect bagged cement growth in Mexico to adjust to a more normalized trend as formal sector demand accelerates. We will take advantage of expected lower cement volume growth to support the needs of our U.S. business.
With high capacity utilization and the entire industry facing similar cost challenges, we are confident that we should be able to recover input cost inflation. In EMEA, top line annual growth of 6% was driven by higher prices and volumes in most markets. European volumes were up mid-single digits across our core products, led by increasing infrastructure and residential activity in the U.K., Poland, France, and Spain. We achieved record cement volumes in Europe, led by double-digit growth in the U.K., with most markets above pre-COVID levels. A second round of price increases was implemented in the second half of the year to respond to the sudden run-up in input cost inflation. As a result, our European cement prices in local currency terms rose 1% sequentially and were up 4% for the year.
We've already announced price increases for January and April in Europe, which we expect will offset inflationary pressures from energy and raw materials. With our favorable carbon credit position, we have not been affected by the rapid run-up in carbon cost in 2021. Finally, in Europe, our Urbanization Solutions business was an important driver of EBITDA growth. EBITDA for the EMEA region rose 4% in 2021, with a slight decline in EBITDA margin. In the Philippines, cement volumes were up 7%, with all sectors growing. Volumes were heavily impacted in fourth quarter by Typhoon Odette, which caused significant disruptions in the central part of the country. However, we do expect reconstruction activity to begin in 2022. Pricing has been improving in the Philippines with three consecutive quarters of growth. For more information, please see our CHP quarterly earnings, which will be available this evening.
In Israel, construction activity was strong in 2021, with average daily sales volumes for ready-mix growing double digits and with low single-digit growth for aggregates. Finally, in Egypt, since the government announced an industry rationalization plan, we have seen an important improvement in pricing. For 2022, we are expecting volume growth across our EMEA region, supported by fiscal stimulus and the renovation wave in Europe, as well as strong fundamentals in most markets. 2021 was a very strong year for our South Central America and the Caribbean operations. Net sales rose 18% on a like-to-like basis, the highest annual growth since 2012. While the region did benefit from an easy comp due to COVID lockdowns in 2020, 2021 cement volumes grew 13% and surpassed pre-pandemic levels.
This double-digit growth occurred in spite of sporadic pandemic lockdowns in some markets, as well as social protests in Colombia in the second quarter. With volume growth and high capacity utilization, the region experienced strong pricing momentum, with cement prices up 8% in the fourth quarter. As a result of tight cost management control, EBITDA grew 25%, while EBITDA margin expanded approximately 2 percentage points. Volumes in fourth quarter declined slightly, primarily due to Colombia as a result of our pricing strategy. With continuous cost pressures, we announced price increases in cement for the beginning of the year of approximately mid-single digits for the region. In Colombia, our full-year cement volumes grew 8%, supported by housing, self-construction, and infrastructure. The outlook for the country in 2022 remains positive with a healthy self-construction sector, 4G highway projects, as well as the rollout of new infrastructure programs.
In the Dominican Republic, we saw strong demand growth in 2021, with cement volumes up 22%. Due to unexpected maintenance in fourth quarter, our volumes declined 5%. Demand is supported by the self-construction sector and the reactivation of tourism projects. Going forward, we expect the self-construction sector to continue to benefit from a high level of remittances, while the formal sector maintains its recovery trajectory. We believe that with higher global shipping costs, our strong logistics network, coupled with our planned cement capacity additions into a sold-out region, will be an important competitive advantage. I invite you to review CLH's quarterly results, which were also published today. Now I will pass the call to Maher to review our financial developments.
Thank you, Lucy, and good day to everyone. As you heard from Fernando, our 2021 results were quite strong, with sales and EBITDA growing the most in a decade and generating around $1 billion in free cash flow for the second year in a row. On the debt management and capital structure side, our results last year were also quite strong and transformational for us. A year of many records and firsts. We issued the lowest cost U.S. dollar bond in our history. We refinanced our syndicated bank facility at a cost never achieved before, slightly above 1%, and with investment grade style structure. A first in over a decade. We also introduced a Sustainability-Linked Financing Framework, which is unrivaled in our industry and includes three key performance indicators and a second-party opinion from the leading provider.
We paid or refinanced over $7.5 billion in debt and applied free cash flow and asset sales proceeds to reduce debt. During the year, our consolidated net debt, as measured under our credit agreement, declined by $2.3 billion, and we reduced interest expense by $141 million, representing savings of 20% versus the prior year. We also reduced our leverage ratio by the most ever, reaching 2.73x , a reduction of 1.4x , and significantly lengthened our average life of debt to 6.2 years, the highest in more than a decade. All these achievements were noted by our rating agencies. During the year, Fitch upgraded our credit rating by one notch to BB, and both Fitch and S&P raised their outlook to positive.
In December, we became a founding member of the recently created United Nations Global Compact CFO Taskf orce for the Sustainable Development Goals, which aims, among other things, to attract more capital towards sustainable development. In line with the Task force's goal, we aim to have at least 50% of our debt stack sustainability linked by 2025. We approach 2022 with a very strong financial position. We do not have any refinancing needs for the next three years. We have minimal exposure to interest rates with 90% of our debt at a fixed rate, a very favorable position in an environment of rising rates. Our liquidity position today is stronger than ever. We have a strong cash position with a record $1.75 billion committed revolving credit facility that allows us to comfortably navigate through our business cycle.
On our risk management side, we are adequately positioned to mitigate risks associated with currency fluctuations in most of our non-U.S. dollar markets. We have raised debt in various currencies when pricing is attractive, such as the euro, Mexican peso, Philippine peso, and the Colombian peso, among others, which translated into a positive $140 million translation effect on our debt this year. In addition, we have an ongoing Mexican peso hedging strategy that effectively lowers the volatility of the exchange rate at which we convert pesos to dollars for tenors of up to 18 months. This year, our operations generated $1.1 billion in free cash flow, an increase of $143 million versus the year before. This growth in free cash flow was driven primarily by higher EBITDA and savings on financial expenses.
Investment in working capital was driven primarily by the 14% increase in sales this year. However, average working capital days reached -15 days, one day better than last year. We aim to continue improving our discipline in working capital management. For example, on the collections front, we are working on reducing the risk profile of our receivables by partnering with third parties that are using artificial intelligence and cognitive analytics to improve the sales to collection process. As a result, the credit quality and the turnover efficiency of our receivables are at record levels. Finally, for strategic CapEx, we invested $380 million in highly accretive growth projects. We are currently undertaking the biggest and most comprehensive adoption of digital technologies ever to transform the way business services are provided at CEMEX. We're calling it Working Smarter.
Working Smarter will fundamentally change the current shared services model into a fully digital, virtual, and agile way of delivering business management services across our company that will create a unique competitive advantage. With advanced platforms, analytics, and automation services, we will deliver digital workplace solutions and collaboration frameworks to enhance the employee and workforce experience. Working Smarter will leverage remote work and virtual centers of excellence to allow business services to be provided seamlessly with the best talent anywhere in the world. To accelerate innovation, we have signed separate multi-year contracts that in the aggregate are totaling $500 million with six leading service providers in the fields of finance and accounting, information technology, and human resources, replacing current expenditures with new supplier services at an optimized cost, effectively continuing to reduce our operating expenses.
In addition, having access to our partners' collective research and development capabilities ensures that Working Smarter will remain at the forefront of technology and innovation for years to come. Beyond all of these benefits I just discussed, we expect to capture accumulated savings up to $100 million per year once Working Smarter is fully implemented and achieve a return on investment of about 4x with short payback periods. Of course, as we go through the implementation of these various initiatives, we will fine-tune the timing, scope, and magnitude of these savings. For more details about this initiative, I invite you to take a look at the press release we issued earlier this week. Now back to you, Fernando.
In 2022, we expect EBITDA growth of mid-single digits. This growth will be driven primarily by pricing with flat to low single-digit volume increases. Cost headwinds will continue to be with us in the first half of the year due to more difficult comps as we only began to experience inflationary pressures in the third quarter of 2021. We expect these pressures to ease on a year-over-year basis in the back half. We expect energy to remain the largest cost headwind, and we estimate that energy for the production of cement will increase by 19% on a per ton of cement consumed basis. We expect CapEx of $1.3 billion, with $600 million going to strategic efforts. With rising sales, we anticipate an investment in working capital of $150 million.
Cash taxes are expected to be $250 million. Based on our current debt portfolio, we expect cost of debt to decline by $10 million. As always, we will continue to look for market windows for refinancing opportunities. Overall, in 2022, we anticipate a favorable environment with more moderate volume growth in most markets and strong pricing dynamics that reflect high capacity utilization and input cost inflation. Finally, we aim to recover margins in line with our Operation Resilience goal with our pricing strategy. Back to you, Lucy.
Before we go into our Q&A session, I would like to remind you that any forward-looking statements we make today are based on our current knowledge of the markets in which we operate and could change in the future due to a variety of factors beyond our control. In addition, unless the context indicates otherwise, all references to pricing initiatives, price increases, or decreases refers to prices for our products. Now we will be happy to take your questions. In the interest of time and to give other people an opportunity to participate, we kindly ask that you limit yourself to one question. If you wish to ask a question, please press star followed by one on your touchtone telephone. If your question has been answered or you wish to withdraw the question, press star followed by two. Press star one to begin.
The first question comes from Vanessa Quiroga from Credit Suisse. Vanessa, please go ahead.
Hi. Thank you, Lucy. Hi, Fernando. Hi, Maher.
Hi, Vanessa.
Thanks for taking my question. Hi. It's the following. Considering your indications of double-digit pricing growth in key markets and the investments contributing to $100 million EBITDA, really the guidance of mid-single digit EBITDA growth seems low in my view, even against the energy cost increase that you're indicating of 19%. I'm wondering if there's another factor affecting margins. I mean, is something happening with the CEMEX export volumes or are you expecting to have to import clinker at much higher cost? Because the EBITDA guidance seems low, given the pricing indication. Thank you.
Fernando, would you like me to take a stab at that?
Please go ahead.
Thank you. Vanessa, I think that you know, you put your finger on the pulse there. I think that you know, certainly we're coming into 2022 assuming and expecting a lot of volatility, you know, particularly on the cost side. Of course, we are planning for the inflation that we've seen to be you know, fairly structural for the foreseeable future. I'm sure you saw the CPI numbers this morning that really threw a curveball to the market. We are being cautious. I mean, we are expecting you know, things to be volatile.
It's just a reminder for everybody, you know, if we take the energy price increases that we saw in the fourth quarter and hold them flat to the whole year, you know, that would give us about a 15% increase. We're guiding 19%. We could be. I don't know, who knows? We could be better, we could be worse. Of course, we're accelerating our efforts to switch to alternative fuels and less costly and more effective fuels. That's one big challenge. You mentioned the possibility of, you know, a more imported cement and clinker, and the answer is yes. I mean, we are expecting growth in some markets that are sold out, and we do expect, you know, some growth in that.
Of course, the costs are higher because of transportation and so forth and so on. Now, it's very important that going into this year, we're expecting a bigger percentage of the amount of cement that we trade to be coming out of our own facilities, in particular in Mexico, which on a consolidated basis should be more beneficial, right? I think that bottom line, you know, you heard our guidance on the volume side. We're expecting flattish volumes in cement, mid single-digit in aggregates and low single-digit in ready-mix. Now, very importantly is pricing. This is a year that is about pricing. That is very important.
We are aiming to reach our Operation Resilience margins of 20% and also, you know, recovering the cost gap from 2021. You know, coming into the year, of course, we have a little bit of a tailwind. If we take a look at the end-to-end, December-to-December, you know, 2020 to 2021 point-to-point, pricing increase for the year was 10%. And versus the, you know, the year-over-year pricing increase of 5%. We think that we're coming in with a good tailwind. As you said, we've definitely made announcements, you know, in pricing of double- digits in, you know, I would say most of our markets, for January and April, and we're getting good traction on that.
Now, additionally, you know, we are quite hopeful on the results from the growth portfolio. As Fernando said, you know, we are expecting about $100 million from that. Now, the other thing that is also important that we remarked on peripherally, I mean, I talked about it a little bit, is Working Smarter. I mean, that has actually started paying off in 2021, and we're expecting it to continue to deliver in terms of cost reduction. Bottom line, I would say that we're being cautious, commensurate with the expected volatility and high inflation going into 2022. Fernando, I don't know if you wanna add anything to that.
No, I think it is a very complete explanation, Maher.
Thank you.
I might just add one point, Vanessa, I think that you're well aware of this, but you know, we saw inflation begin to spike in June. You know, what that means is that in the first half, because we had very low cost inflation in the first half of last year, the first half will be a very difficult comp, and then things should normalize towards the back of the year. The next question comes from the web, and it's Paul Roger from Exane BNP. On the 4% reduction on CO2 on a per ton of cement produced basis, at this rate, given what you accomplished in 2021, you would easily achieve the 2030 target. How conservative is the 475 kilo goal, and could you consider revising it?
Okay. Well, let me start by saying that last year was, for us, kind of a special year regarding our transition towards a low carbon economy. I wonder if this 4.4% percentage points of adoption will be repeated every year. Anyhow, I think what we are showing with last year results, and I will briefly explain what is it that happened last year. I think we are showing that our industry is capable of its effective and fast transition towards a low carbon economy while increasing profitability of the industry. Now, what happened last year? As you know, we started adjusting our ambition, our aim, aligned to the most aggressive scenarios, and we adjusted our objective. We brought our former 2030 objectives to 2025, and we include new ones.
What we did at the same time, starting in 2020, is we developed a very comprehensive roadmap, a CO2 reduction roadmap per cement plant. For the first time, it was executed last year all over the 12 months. That tool or that process did allow us to assure that the intent, the ambition, it could be executed in almost in an impeccable manner. We continue with the same idea, meaning on the execution on this reduction. We are very positive that we will continue making the reductions needed to complete our objective. You know, 2030 it is still not too close, but yes, seems like we might be able to achieve those targets before that date. Now, we continue monitoring and observing how this movement or process towards a low carbon economy evolves.
My expectations is that through time, there will be more stringent demands from society, from different stakeholders, investors, customers, employees, everybody. We will continue adjusting our targets. Based on the 2021 result, very positive that we will continue with reductions. That again, I cannot promise 1.4% every year, but we now I think we have really whatever is under control, it's under control to assure that our objectives will be met. It's just a simple clarification because, you know, so many negative interpretations regarding our industry, regarding our possibility or capability of transitioning to a low carbon economy and you know, the potential reduction in margin, the potential increases of CapEx without returns.
I think that through time, we will be demonstrating that that's the old wisdom, and there is a new wisdom which calls for a cement industry in a circular green economy, serving better society and being as profitable or even more profitable than it has been.
Thank you, Fernando. The next question comes from Carlos Peyrelongue from Bank of America. Carlos, please go ahead.
Thank you, Lucy. Good morning, Fernando, Maher, and Lucy.
Morning.
My question is.
Carlos.
Good morning. My question is related to pricing. If you could comment a little bit on the traction you've gotten so far. You've announced important price increases in most of your geographies. It would be interesting to see what type of traction you're getting. I understand at least in Mexico the traction is very solid. It would be great to hear your comments on this issue of traction. Thank you.
Let me make a general comment, and then I will ask Maher and Lucy to complement on some more specific data. I think it is clear that what happened last year is that we defined and started and executed our pricing strategy considering a much lower inflation. Meaning, normally the last quarter of the year, we plan for our pricing strategy for the first four months of the next year, and that's what we did. Inflation started really going up materially in June, July, more or less. Most of our pricing strategy by then, it was already executed. What we did is started checking, monitoring, realizing, and reacting with additional price increases in the second half when possible.
As we have commented in the case of ready-mix and aggregates, we managed to maintain margins. In the case of cement, it was not the case. It's the product that has been most affected. When we saw that happening on top of you know trying to increase traffic from the second half during the year, we developed our pricing strategy for 2022, considering current high levels of inflation. With a clarification that Lucy already made. We didn't buy or we didn't take the idea of inflation being lower at some point in time of the year. We thought that was not a convenient base for our pricing strategy.
We started executing our pricing, our 2022 pricing strategy already with the idea of recovering margins lost, so not to lose more margins during 2022, and to achieve our Operation Resilience margin of 20%. Now, what is it that we've seen lately, and I would like for either Maher or Lucy to comment, but we are very pleased and positive on what we have seen in January. January is just a month, but again, what we see is very positive. If Lucy or Maher want to comment.
Yeah. Thank you, Fernando. I'll jump in. I mean, Carlos, at first, I mean, as Fernando said, I mean, we see some very good response for the January pricing increases. I mean, they're going well. I think you saw in Mexico, in particular, I think yesterday, INEGI came out announcing prices sequentially going up by a little bit over 8%. This is, you know, from December. You know, we're obviously an important part of the market, so without kind of saying what we did, I think you can pretty much extrapolate from that.
In the case of U.S. and Europe, the pricing increases are more seasonally affected, you know, for those markets where we announced pricing increases for January and for those customers, you know, the prices sequentially were up in the mid-single digit to low double-digit area. So we've gotten some very good traction in those markets and to those customers that have been affected. Now, obviously, as you know, the U.S., because of seasonality, most of the pricing happens in the spring, in April. That is going to be impacting the biggest part of our sales there.
In the U.S., the January pricing increase is affecting about 40% of our sales versus the April one will be more 60%. Europe is along the same lines. In the SCAC region, we also got some very good traction versus the fourth quarter. We got around a mid-single digit increase. Now, to summarize, I mean, we're going into January with somewhere between 50%-60% of our markets with pricing increases starting as of January, and we're expecting the balance to come in in April, in the spring.
Now, something very important that we need to mention here is that, you know, we have communicated with our customers in many of our markets, particularly markets that are sold out, that they should expect a second round of pricing increases in the summer and fall. This is based on our expectations of the structural nature of inflation, which, you know, we expect to continue. Now, you know, at the same time, as I said earlier, I mean, you know, on the cost side, we're not sitting on our hands. You know, we're taking actions to make sure that we're disciplined on the cost side.
We're making sure that we're, you know, investing more and executing more to switch to alternative fuels, which are 60% less expensive on a gigacalories per ton basis than fossil fuels. I think that we're pushing on all, you know, on all fronts, frankly, on the pricing side and on the cost side. On the pricing side, it's looking good. You know. Lucy, I don't know if you wanna add anything to that.
No, I think you did a great job covering it. That's it for me. Let's move on to the next question. Benjamin Theurer from Barclays. Ben, please go ahead.
Perfect. Thank you very much, Lucy. Good morning as well, Maher, Fernando. Just to understand a little bit the dynamic in Mexico, what happened in the quarter, I suspect the margin under 30% is not precisely what you're looking for. Was it maybe shift driven, lower cement, more aggregates and ready-mix? How do you think about the level of profitability, looking into 2022, also given the guidance for likely declining cement volumes but growing ready-mix and aggregates? That would be my question. Thank you.
Well, if I make comments, then I think there is, as you are suggesting, a mixed effect. You know, ready-mix volumes and aggregate volumes are, you know, stable or growing when compared to cement that declines. So there is, to some extent, a mix effect. On margins, I think in Mexico, we had the highest impact of energy costs when compared to other geographies. For 2022, in Mexico our team in Mexico is following exactly the same criteria that we define for the whole company.
You know, we got prepared in the last months of last year to announce and to execute price increases at the level of what we are estimating as the most probable inflation, outward inflation for the year. You know, they have already started executing. As Maher mentioned and using the data from INEGI, the sequential increase of cement price in Mexico is 8%. That is not covering 100% of our costs. You know, I think it will improve.
I think Maher mentioned also our aim with our pricing strategy this year is to recover margin, achieve our 20% margin, which we were close to it, and a 30% margin, established in our Operation Resilience, our plan or initiative. What we are already executing, we will continue monitoring how inflation develops, and we will be increasing prices again on an as-needed basis to comply with this objective.
Fernando, can I maybe also add to Ben just a couple of things? I mean, this is just to complement what Fernando was saying. I mean, I think it's very important also to take a look at the comparison, right? I mean, the fourth quarter of 2020, cement volumes grew by like 17%. Within that, bag cement grew like almost 22%. We had like the highest, I think, amount of growth since 2014, probably. The comparison is very tough. You had really kind of, you know, in the quarter coming into people probably becoming more back to normalized life and focusing less on renovation and all of that kind of accelerated quite a bit.
That's what was kind of driving the specific quarter, I would say, more than anything else.
Thank you, Maher. Thank you, Fernando. The next question comes from Gordon Lee from BTG Pactual. Gordon, please go ahead.
Hi, good morning. Thank you for the call. Just a quick question. You know, at some point last year, and admittedly this was before the inflation spike, but at some point last year, you were contemplating the possibility of maybe introducing a dividend in 2022, which you decided not to do. I was wondering what the thinking was behind that and what you would need to see to either implement an ordinary dividend policy or a more systematic share buyback, given where the stock price is trading. Given how much your balance sheet has improved and how, even in the face of the cost inflation, you're still generating significant amounts. When could we expect something more, let's say, a more sort of forceful decision on starting to return capital to shareholders? Thank you.
Yes. Well, what I can say is that perhaps more than when is under which conditions we are willing to proceed with a systematic dividend. We wanna do that. I think it's the right thing to do. We were planning for that. When we saw the way things started evolving in the second half of last year, we decided to postpone that possibility. We want to be sure that we consolidate our current positive balance sheet structure because we wouldn't wanna go back to the idea of giving a dividend one year and then suspending again. You can expect that in the future, in the near future, but again, depending on conditions rather than timing, that is going to be happening.
Thank you, Fernando. The next question comes from Anne Milne from Bank of America. Anne, please go ahead.
Hi, good morning. Thank you very much for the call. The question is on your refinancing. Maher, I think you said you have a target of 50% under your, I guess, your green targets by 2025. Is that correct?
Yes, Anne. Yeah, exactly. Yeah. I mean, by 2025, yes.
Okay. Just because you don't have a lot of bonds that have calls in the short term, I think one in euros and maybe one in dollars next year, is there any other plan on the liability management side re that? Since I assume it'll be the same targets you'll put in your bonds as you have in your financial agreement.
That is correct. Yeah. I mean, we're obviously there are. I mean, there is the seven and three-eighths that you know, something could happen in 2023. I believe in 2024, there is another bond that is callable. There is the EUR 400 million bond that is callable already. So I think there are sufficient refinancing opportunities. Plus as we deleverage, I mean, you know, what's gonna happen is that the amounts that will be refinanced that will be sustainability-linked will become more important as a percentage of the total debt stack. But you know, we're seeing a lot of demand, frankly, for sustainability-linked bonds.
As you know, our debt is, you know, the bank debt is all sustainability-linked, including, you know, recently we secured a peso-denominated loan that is close to about $250 million, that is in addition to the bank facility, the credit agreement that we have. That's also sustainability linked. I think we're slowly putting in slices that we feel reasonably comfortable that by 2025 should get us to a level of 50% or more.
Okay. You think. Well, I guess you don't know yet if the penalties or premiums would be similar.
I mean, you know, for SLBs, we're gonna be using the Sustainability-Linked Framework. Of course, the greeniums, as they call them, are subject of negotiation at the time that we structure a bond, as you know. You know, we will make sure that we're very market-driven and, you know, making sure that the greeniums are meaningful to the market, that they're not just, you know, unlike some of the other issuers that have come to the market that have been criticized, frankly. I mean, we're very tuned in to that, and we wanna make sure whatever we do is viewed favorably by the market that is looking at that type of financing.
Okay, thank you very much, and thank you for reading my mind on that last point.
Thank you very much. Yeah.
Okay. The next question comes from Paco Suarez from Scotiabank.
Thank you. Thank you for the last comments. I can agree more with that. The question that I have is precisely on your overall targets for this year and EBITDA projections, your guidance related to on the cost side. Basically, what are you assuming on fuel substitution rates this year? Can we see actually an upside risk on the cost side from the initiatives of rolling out your capabilities to inject hydrogen and the like to your cement plants across all regions? Thank you.
I'm not sure we are sharing that info, that specific info, but let me start by commenting that we continue our strategy on increasing the use of alternative fuels with high content of biomass. That's our specific preference and objective. As an example of what can happen this year, you know, there are two projects that will increase even more, even further, the use of alternative fuels of two of our largest plants in Europe. That's Rugby and Rüdersdorf. We are finishing as we speak this month or last month and one of the plants and in March, the other one. Starting in April/May, we will increase the use of alternative fuels in these two plants to 90% plus.
We continue developing these alternative fuels projects everywhere. What you can expect is that we will, from 29%, you know, we will continue increasing that proportion. You know, a while ago, I made a comment about how profitable could be the transition towards a low carbon economy. I think this element specifically on alternative fuels is a proof that our investments in order to reduce CO2 are profitable. Very profitable in the case of Europe in particular. This is what you can expect. I'm not sure we are disclosing more specific info on our proportion. Lucy and Maher, do you have that info?
No, I think you're correct. At the moment, we aren't disclosing year by year targets.
Yeah.
Okay.
Got you.
Thank you, Paco. I think we have time for two more questions. The next question comes from Adrián Huerta from JP Morgan. Adrián, please go ahead. Adrián, are you there? Adrián, we can't hear you, so I think I will move to the last question then. Please let me know if you are available. The next question comes from Yassine Touahri from On Field Investment Research. Yassine, please go ahead.
Yes. Good morning, ladies and gentlemen. I would have just one question. Could you tell us how much of your fuel bill and electricity bill for 2022 is hedged and how much is not hedged?
I mean, on the electricity, I don't think you know, we have some fixing on the electricity side. I'm trying to see here what's the percentage. What I can tell you is that in terms of the transportation bill, for instance, diesel, a big chunk of our diesel is hedged for 2022, 75%, close to 75%. In terms of the fossil fuels, I mean, I don't want to call them hedges, but I would say that probably more than half of our fuels are fixed cost-based fuels, whether they're fossil fuels or alternative fuels. On the power side, Lucy, can you help me out on the power side?
Yeah, I can help you out here. I think roughly about 60% of power is under some type of fixed contract. Now, of course, some of these are regulated. There can be provisions that under extraordinary situation they can petition for a hike. But roughly 60% is under contract, I believe, for this year.
That's what I hear. Thank you very much.
Thank you, Yassine.
Okay. I'm forgetting my job here. Well, I think that kind of wraps it up. We appreciate you joining us today for our fourth quarter webcast and conference call. If you do have any additional questions, please feel free to contact investor relations, and we look forward to seeing you next quarter. Thank you very much.
Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a good day.