Corporate News

Ang’s Eagle sees Philippine cement boost on Duterte infrastructure plan

Posted on April 26, 2017

PHILIPPINE TYCOON Ramon S. Ang’s cement company is betting that a $169-billion spending spree by President Rodrigo Duterte on infrastructure will spur sales to a record this year.

Sales will probably rise to 4 million metric tons in 2017 from 3 million metric tons last year at Eagle Cement Corp., outpacing the industry’s growth, company President Paul Ang said in an interview in Makati City. The company, poised this week to price the nation’s largest initial public offering in 2017, is expanding its production capacity to meet demand.

“Demand in the past several years has really been driven by private consumption,” Mr. Ang, the eldest of San Miguel Corp. President Ramon Ang’s eight children, said April 20. “Imagine how much more this industry can grow if government spends what it plans to on infrastructure.”

Demand for cement is rising as the Philippines plans to invest P8.4 trillion ($169 billion) to build airports, railways, roads, bridges and subways during Duterte’s six-year term. The increased demand helped boost Eagle’s first-quarter profit by about 25% to P1 billion from a year earlier, the 37-year-old Mr. Ang said.

Eagle and the Ang family, through Far East Cement Corp., plan to sell as many as 575 million shares at up to P16 each in its initial share sale next month. Eagle may get proceeds of up to P8 billion from the total of as much as P9.2 billion.

The younger Ang said he took a loan from his father in 2002 to revive a distressed cement plant in the Malaysian state of Sarawak, turned the company around, and sold it to set up Eagle.

The cement maker’s plant in Bulacan province, north of capital Manila, has capacity of 5.1 million metric tons, and a new production line there will add 2 million tons by 2018. It’s also building a plant in the central province of Cebu to boost capacity by another 2 million tons.

The excess capacity will help Eagle tap markets outside the Philippines’ main island of Luzon, which accounts for two-thirds of the nation’s total demand, according to Mr. Ang.

“I am building now even before demand kicks in,” Mr. Ang said. “By 2020, I would be sold out in Luzon if I don’t start building again.” -- Bloomberg