Cement makers build profits despite PH’s unstable infra targets
Two of the country’s largest cement-makers posted improved earnings at end-September as belt-tightening measures and higher cement prices made up for the slack in product volumes on slower construction activities and delays in infrastructure projects.
Holcim Philippines, the largest cement manufacturer in the country, reported a 158.6-percent year-on-year jump in third quarter net profit to P457.45 million. This brought nine-month profit to P1.88 billion, up by 7.9 percent from the previous year.
Cemex Holdings Philippines Inc. chalked up P72.38 million net profit in the third quarter, a turnaround from the P78.7 million net loss in the same period last year. Nine-month net profit amounted to P874.7 million, a reversal of the P663.41-million net loss a year ago.
Holcim reported cement demand started to pick up in the third quarter as government resumed its infrastructure spending. However, sales volumes were still lower than the third quarter of 2018 despite improved pricing, resulting in lower net sales of P8.3 billion from P8.5 billion in the same period last year.
“Our intensified focus on cost and operational efficiency across all our operations has allowed us to sustain high performance levels amidst a still muted market environment. We have seen better pricing and a favorable product mix. With our new and improved cement production and dispatch facilities commissioned this year, we are ready to capture opportunities as the market grows and deliver innovative products and solutions to our customers,” Holcim president and chief executive John Stull said in a disclosure to the Philippine Stock Exchange.
For Cemex, sales increased by 2 percent to P18.2 billion for the period in review. For the third quarter alone, net sales decreased by 3 percent year-on-year due to lower volumes.
Domestic cement volumes for the third quarter declined by 6 percent year-on-year due to lower construction activity, mainly related to public infrastructure. In addition, Cemex cited delays in infrastructure projects that gnawed on private investment.
The company expects its cement volumes to be flat for 2019.
Cost of sales, as a percentage of sales, remained flat at 59 percent at the end of the nine-month period. Operating expenses, as a percentage of sales, were lower by 3 percentage points year-on-year.
Cemex president Ignacio Mijares said: “We continued to face lower construction activity during the third quarter. Nevertheless, we are pleased with what we have achieved through the first nine months of the year, particularly with our own efforts to optimize costs, maintain efficiencies, and improve our customers’ experience. We continue to believe in the long-term growth prospects of the Philippines, as infrastructure remains a vital engine for growth in the country.”
Cemex’s domestic cement prices were 3 percent higher year-on-year during the third quarter as a result of price adjustments implemented in 2018. —DORIS DUMLAO-ABADILLA
