The country’s leading cement-maker Holcim Philippines is investing $54 million in the next two years to expand capacity and brace for cutthroat competition that has affected profitability.
In the first six months, Holcim’s net profit fell by 42.6 percent year-on-year to P2.1 billion on the back of a 16.7-percent decline in net sales to P17.4 billion.
For the second quarter alone, net profit slumped by 46.2 percent year-on-year to P1.16 billion.
The decline in income was attributed by the company to lower sales alongside higher production input costs.
Nonetheless, Holcim said it would continue to invest to raise its cement production capacity from its current 10 million metric tons to 12 million metric tons to support demand as the government rolls out its flagship infrastructure projects.
In a statement yesterday, Holcim Philippines president and chief executive Sapna Sood said the investments indicated the company’s continued commitment to the development of the country and to serve its customers better.
“Our investments assure that Holcim Philippines will continue to provide a reliable supply of an essential building material as cement demand increases in the country as these projects come on stream,” she said.
“The company will invest $54 million in the next two years to add two million metric tons to its current cement capacity by the first half of 2019, particularly in La Union and Davao,” she said.
Holcim likewise operates cement manufacturing facilities in Bulacan and Misamis Oriental along with mobile concrete ready-mix facilities and an aggregates business backed by a nationwide network of dealers.
“This investment continues the company’s successful de-bottlenecking of all sites in 2016 that already raised cement capacity to 10 million metric tons from 8.5 million,” Sood added.
Aside from raising its cement production capacity, Holcim said it was introducing more innovative building solutions and services to help the country build faster, cost-effectively and sustainably.
Holcim is now offering 24-hour delivery to key customers in Luzon, a scheme that will be replicated in the rest of the country within the year. This is meant to ensure immediate product availability for new homes, farm-to-market roads, new highways and essential infrastructure.
Meanwhile, Holcim reported a softer second quarter performance compared to last year when volumes were significantly higher due to pre-election infrastructure spending. Second quarter revenues reached P8.6 billion, lower than the P10.8 billion reported in the same period last year.
Revenues were weighed down by a combination of lower volumes and a dynamic price environment.
Cash flow as measured by earnings before interest, taxes, depreciation and amortization (Ebitda) slipped to P1.9 billion in the second quarter compared to P3.3 billion year-on-year. For the first semester, cash flow also fell to P3.7 billion from P5.1 billion in the same period last year.
Holcim Philippines is a member of the LafargeHolcim Group, a global leader in the building materials industry which operates in 80 countries and employs 80,000 people.