CEMEX Holdings Philippines, Inc. (CHP) swung to a net loss in the second quarter of 2018, as higher income tax expenses dragged its bottomline despite rising cement volumes.
In a disclosure to the stock exchange on Friday, the listed cement manufacturer said it recorded a net loss of P635 million in the three months ending June, against a profit of P136 million in the same period a year ago.
The company attributed the negative performance to higher income tax expenses amounting to P710 million during the period.
“This was due mainly to the utilization of the company’s deferred tax assets, which is a non-cash expense,” the company said.
The company generated P5.99 billion in net sales during the quarter, 6% higher year-on-year. Cement prices however slowed by 5% from the same period a year ago, dampening the higher volume.
On a six-month basis, CHP’s net loss amounted to P535 million, versus a net income of P486 million during the first six months of 2017. Revenues meanwhile went up by 8% to P11.88 billion.
Construction activities in the residential were among the factors that pushed CHP’s sales for the quarter, driven by sustained inflows from overseas, demand from the growing middle class and foreign residents, as well as more low-income and socialized housing projects.
The company also saw accelerated growth from infrastructure projects for the period. Citing government data, CHP said disbursements for infrastructure and capital outlay grew by 96% last April and 26% last May.
“Our results show our ability as a company to grow together with the market and serve the increasing infrastructure demand of the country, both public and private. The upgrades we have implemented in our operations and distribution processes have allowed us to continue supporting the country’s development,” CHP President and Chief Executive Officer Ignacio Mijares said in a statement.
Amid recording a loss for the first semester of the year, CHP noted that cash flow remained positive at P1.25 billion. Mr. Mijares said this will allow them to continue pursuing their expansion.
“We will continue to look for opportunities to improve our profitability understanding the need to increase our efficiencies to compensate rising input costs. We are encouraged by the progress in our cash position that will help fund the expansion of our operations in the coming years,” Mr. Mijares said.
CHP is currently undertaking a solid plant capacity expansion, investing $225 million into this. The company looks to complete the expansion by the first quarter of 2020.
The funding for capacity expansion forms part of the company’s P3.74-billion capital expenditures for the year, which also includes allocation for maintenance and other strategic investments.
Shares in CHP dropped 9.48% or 33 centavos to close at P3.15 each at the stock exchange on Friday. — Arra B. Francia