Slower infra activity gnaws on Cemex earnings

Slower public infrastructure activity, adverse weather conditions and intensified market competition gnawed on the earnings of cement-maker Cemex Holdings Philippines Inc. (CHP) in the fourth quarter of 2016.

CHP’s pro-forma net sales declined by 13 percent year-on-year to P5.56 billion in the fourth quarter of last year. As operating expenses rose, CHP booked a pro-forma net loss of P7.18 million for the three-month period.

Full-year net profit stood at P1.87 billion, supported by a modest 2-percent growth in net sales to P25.37 billion. This was on the back of an increase in volume and price.

The cement-maker’s share price fell below its initial public offering (IPO) of P10.75 per share after releasing its fourth quarter results. Share price on Friday slipped by 8 percent as of 2:12 pm.

CHP said its results were affected by the decline in infrastructure spending during the second half of 2016, attributed to transition in government.

“We observed more projects being completed, rather than new projects being started,” the company said in a regulatory filing. For instance, it noted that the airport public-private partnership (PPP) project bundle, initially scheduled to be awarded in the fourth quarter of 2016, had been put up for re-bid.

CHP’s consolidated pro-forma cash flow grew by 11 percent last year to P6.7 billion.

“We are proud of our operating results. Despite challenging market conditions during the second half of 2016 marked by a slowdown in construction activity, coupled with La Niña-like weather conditions, we managed to increase both our bottom line and profitability through cost management efforts. We will continue to focus on these aspects of the business,” Pedro Jose Palomino, CHP president and chief executive officer, said in a press statement.

CHP said it remained confident on the multiplier effect of government investment in infrastructure and government’s ability to support it from the current fiscal program. It anticipates renewed public construction activity in the second half of 2017.