Cement maker Cemex Holdings Philippines Inc. incurred a 2018 net loss of P930 million, a reversal of the previous year’s net profit of P658.8 million, due to lower operating cash flow, higher income tax expenses and larger foreign exchange losses.
For the fourth quarter alone, Cemex incurred a larger net loss attributable to equity holders amounting to P325 million, compared to a net loss of P21.9 million in the same period last year.
For the full year, cement sales volume increased by 7 percent, driven by robust demand from both the private and public sectors. The company posted record volumes in the third quarter and first half of the year, bringing full-year sales revenue to P23.4 billion, 7 percent up from the previous year.
In the fourth quarter, the company’s financial performance was adversely affected by the landslide that happened in Naga City in Cebu on Sept. 20, 2018.
Cemex was forced to obtain raw materials from farther sources, jacking up its cost of sales to 66 percent in the last quarter from 58 percent a year ago. This suggested that Cemex had to spend 66 centavos to sell every P1 of its products.
As a result, the company’s operating earnings before interest, taxes, depreciation and amortization (Ebitda) margin went down in the fourth quarter to 7 percent from 12 percent. For the full year 2018, Ebitda margin eased to 12 percent from 15 percent in the prior year.
Ebitda margin is an indicator of a company’s financial health without pricing in financial decisions, accounting decisions or various tax environments.
The company’s lower operating Ebitda and higher financing and tax expenses resulted in the net losses in the fourth quarter and the full year.
“The past quarter was a very challenging one following the landslide in Naga City. It tested the strength and resolve of all who were affected. The perseverance of the community was very inspiring even as we worked on restoring our operations to normality,” Cemex president and chief executive officer Ignacio Mijares said.
In October, one of the company’s main subsidiaries, Solid Cement, signed a procurement, construction and installation agreement with CBMI Construction Co. Ltd. of China for the new cement production line scheduled to start operations in the fourth quarter of 2020. The company continues to evaluate different options to fund this expansion project.
“We are excited about the prospects for the company in 2019 and see continued strong cement demand in the country. For this reason, we remain focused on improving our operations and completing our expansion in a timely manner,“ Mijares said.
A unit of Mexico-based Cemex SAB, Cemex produces and markets cement and cement products in the Philippines, such as ready-mix concrete and clinker, in the Philippines through direct sales using its extensive marine and land distribution network. Its brands include “APO,” “Island” and “Rizal.” —DORIS DUMLAO-ABADILLA