Cemex income dropped 71% in Q1
Cement-maker Cemex Holdings Philippines Inc. saw a 71-percent year-on-year drop in first quarter net profit to P100 million due to foreign exchange losses and sluggish cement prices coupled with higher coal and power prices.
Cement volumes grew by 16 percent to a quarterly high, resulting in a 10-percent increase in net sales to P5.9 billion.
However, cost of sales increased at a faster pace at 24 percent, driven by higher coal and power costs compared to the same period last year.
Excluding financial expenses and unrealized foreign exchange losses, Cemex’ recurring first quarter net profit fell by 20 percent to P348 million.
As a percentage of sales, cost of sales increased by 6 percentage points year-on-year during the first quarter.
Fuel costs accounted for 26 percent of cost of sales, up from 19 percent during the same period last year, attributed to the timing differences in the use of the company’s coal inventory, alongside higher excise taxes on coal and liquid fuels.
For the rest of the year, Cemex expects the impact of fuel costs to decline as coal costs— having been fully contracted for 2018—start tracking 2017 levels.
Power costs accounted for 22 percent of cost of sales versus 21 percent in the previous year.
This was attributed to higher grid rates for its manufacturing plants.
Meanwhile, cement prices were lower by 8 percent year-on-year in the first quarter in US dollar terms and 5 percent in peso terms, reflecting stiff competition.
Compared to end-December 2017, however, selling prices improved by 2 percent as of end-March in peso terms.
“We are very focused on supplying the needs of the market, given the growing Philippine economy and what we believe will be a robust construction sector for many years to come. Our results showed our ability as a company to deliver on the country’s needs,” said Ignacio Mijares, Cemex president and chief executive officer.
“Strong local demand presents both opportunities and challenges for the industry. The execution of our expansion project, and the attainment of greater operational efficiencies will be important for us to continue growing,” Mijares added.
Cemex, which trades on the Philippine Stock Exchange under the ticker CHP, is an indirect subsidiary of Mexico- and New York-listed CEMEX, S.A.B. de C.V., one of the largest cement companies in the world based on annual installed cement production capacity.
