Corporate News

Holcim net income flat

Posted on May 03, 2016

HOLCIM PHILIPPINES, Inc. delivered flat earnings in the first quarter of the year, with the cement maker expecting strong private construction activity and the implementation of the projects under the government’s public-private partnership (PPP) program to take up the slack for the anticipated slowdown in state spending later this year.

Holcim Philippines’ plant in Lugait, Misamis Oriental. -- BW FILE PHOTO
In a briefing in Makati City yesterday, Holcim President and Country Chief Executive Officer Eduardo A. Sahagun said the company’s bottomline was unchanged at P1.5 billion in the January to March period, dragged by the scheduled maintenance shutdown of its plants in Luzon and additional costs for the importation of clinker to support demand.

“The scheduled maintenance happened in this (first) quarter when in 2015 there is none... You can say if there were no shutdowns, it (profit) should be P1.7 billion,” Mr. Sahagun said.

Asked on its full-year earnings outlook, the Holcim CEO said: “Normally, there is an improvement.”

The cement manufacturer rode on strong demand to push revenues by 17.2% year-on-year to P10.1 billion in the three-month period from P8.6 billion, driven by the sustained rollout of private projects and higher state spending for infrastructure. The government allocated this year P760 billion for infrastructure spending, equivalent to 5% of gross domestic product.

Holcim sold 54-million bags of cement in the first quarter, 14.9% higher from the 47-million bags sold a year ago. Of the total bags sold, seven million bags were sourced overseas.

The company is spending P2 billion -- higher than the regular capital expenditure budget of P600 million -- to jack up its cement capacity by nine-million metric tons (MT) by the end of the year, Mr. Sahagun said.

This is in line with a three-year plan to boost capacity by an additional 10-million MT by 2017 through the de-bottlenecking of existing facilities, from 8.2-million MT in 2015, to support increased demand for cement.

The cement maker remains “cautiously optimistic” as the country elects a new president, with Mr. Sahagun anticipating a temporary weakness in government spending later this year.

“I anticipated a slowdown in my plan, but that will be in the fourth quarter [this year] and first quarter of next year until they put together a new Cabinet,” Mr. Sahagun, noting that public spending accounts for 40% of sales.

The decline in state spending may be offset by demand from the private sector and PPP projects which are now in the implementation stage.

“Whoever gets elected has to spend on infrastructure,” Mr. Sahagun said.

Shares in Holcim added 16 centavos or 1.14% to close at P14.20 each on Monday. -- Krista Angela M. Montealegre