Holcim sees better prospects in H2

Leading cement-maker Holcim Philippines sees better business prospects in the second semester, given indications that the government would step up spending that could likely benefit construction and boost demand for cement.

The second semester is also seen turning better for the cement manufacturer given a lower base of comparative net profit recorded in the second half of 2010, Holcim Philippines chief operating officer Roland van Wijnen said in a briefing.

After the sluggish first semester, van Wijnen said the company would be happy to end this year with flat sales growth relative to last year. Holcim was previously targeting a 3-5 percent growth in volume but Van Wijnen said this might no longer be attainable.

Holcim posted a big drop in its first-semester profit compared to year-ago level, cement demand weakened in the absence of election-related government spending that had supported sales in early 2010.

Six-month net profit this year reached P1.44 billion, down by 48.6 percent from a year ago. For the second quarter alone, net profit was down by 55 percent to P622.3 million.

If the government would indeed escalate spending for the rest of the year, the Holcim official said this would bode well for the cement industry. The government traditionally accounted for roughly half of total cement demand which was why the lower infrastructure spending had such an impact on the industry, he said. In the first six months, cement demand declined by 9 percent.

Construction activities in the private sector remained robust in the first half, however, as property developers sustained the rollout of commercial and residential projects.

Holcim Philippines’ sales volume mirrored the industry performance, although the company noted this was still above the levels during a regular or non-election year like in 2009.

Earlier this month, the finance department reported that public spending only reached P698.87 billion in the first half compared with the P838.55 billion programmed for the period. The government’s first-half spending was also lower than the P788.83 billion spent in the same period last year.

Van Wijnen said the company and business, in general, appreciated the government’s efforts to ensure transparency and credibility in construction projects and activities.—Doris C. Dumlao