Cement firm expanding via acquisition, diversification
Eagle Cement Corp., one of the country’s leading cement-makers, is preparing for potential opportunities to grow through acquisitions and diversification to new business lines involving other building materials.
In its prospectus submitted to corporate regulators, Eagle Cement said it would “continuously evaluate business prospects, potential capacity expansion and acquisitions, subject to the prevailing competitive landscape and cement supply demand
balance.”
“In line with this, Eagle Cement may also venture into other related products and/or market segments such as ready-mix concrete, masonry or mortar cement and others,” the prospectus added.
With a cash flow based on earnings before interest, taxes, depreciation and amortization (Ebitda) of P6 billion versus P11 billion in net long-term debt, Eagle Cement can opt to repay its debt in two years. Yet the cement firm is raising as much as P9.2 billion from an initial public offering targeted in May in order to map out plans for expansion particularly in the Visayas and Mindanao
region.
The company also expects that some cement plants may be up for sale in the future. As such, Eagle Cement intends to use the funding flexibility to bid for those plants, potentially speeding up its expansion.
In the past, Eagle Cement had attempted to bid for some local cement assets but had yet to bag any takeover deal. All its existing cement production capacity had been built from scratch using newer equipment and technology, allowing the company to operate more efficiently and squeeze better margins from its cement products.
To date, Eagle Cement operates the country’s largest cement factory in a 200-hectare complex in Barangay Akle, San Ildefonso, Bulacan. The cement complex is able to house and handle all stages of cement production from limestone quarrying, clinker production, additives mixing and market distribution. Its is currently composed of two production lines that produce 5.1 million metric tons (MT) of cement every year or around 130 million bags per annum.
The company is building a third production line in Bulacan which will add two million MT or 50 million bags of cement to its capacity. Capital outlay for this Bulacan expansion is estimated at P7 billion.
The Bulacan complex also includes a quarrying site with 300 million MT of reserves which in turn would be good to feed all three fully operating production lines in this site for the next 50 years. —DORIS DUMLAO-ABADILLA
