Cement battle cuts Cemex profit by 46%

The country’s third largest cement maker Cemex Holdings Philippines Inc. saw a 46-percent year-on-year drop in first semester net profit to P486 million as stiff competition curbed prices and volumes.

In a disclosure to the Philippine Stock Exchange Thursday, Cemex reported that for the second quarter alone, net profit slid by 69 percent year-on-year to P137 million.

Cement sales volume declined by 5 percent year-on-year to 2.5 million metric tons in the first semester. In the second quarter alone, this declined by 2 percent year-on-year to 1.3 million metric tons although on a sequential basis, cement volumes in the second quarter increased by 6 percent compared to the previous quarter.

Demand from the private sector improved, particularly for residential, commercial and industrial construction. But the public sector was another story.

“Bureaucratic obstacles continued to weigh down on the government’s infrastructure project implementation in the first half… Implementation and funding policy reversals by the administration are seen to further delay outlay as the government’s low absorptive capacity may curb its ability to facilitate the projects,” Cemex said.

Cemex also said the government’s tax reform program, a means to supporting its infrastructure goal, had “progressed slowly.” The new taxes are now being discussed in the Senate.

Cemex also reported selling prices declined in response to heightened competition, including imports. Average cement selling prices declined by an average of 8 percent year-on-year in peso terms in the first six months and by 9 percent in the second quarter.

A longer-than-expected shutdown of its APO Cement Plant in Cebu during the second quarter also temporarily affected cement output.

Net sales for the second quarter stood at P5.63 billion, down by 12 percent year-on-year. Six-month net sales also fell by 14 percent year-on-year to P10.99 billion.