EARNINGS of Holcim Philippines, Inc. went down by five percent in 2018, as its improved performance in the fourth quarter failed to offset the higher interest expenses from loans for its expansion program.
In a statement issued Thursday, the listed cement manufacturer said net profit stood at P2.55 billion in 2018, lower than the P2.69 billion it posted in 2017. This came amid a three percent increase in net sales to P35.62 billion.
Operating EBITDA, or earnings before interest, taxation, depreciation, and amortization, slipped by 10% to P4.89 billion.
The company attributed the profit decline to “higher interest expenses from short-term loans to fund its expansion projects.”
In the fourth quarter, Holcim Philippines more than doubled its net profit to P804.56 million, 107% higher than the P389.31 million it generated in the last quarter of 2017. Net sales were also higher by three percent to P8.36 billion. Operating EBITDA also jumped 48% to P1.49 billion for the October to December period.
“In 2018, we faced higher production and financing expenses, but we successfully contained their impact on our financial performance through initiatives that emphasized operational excellence and cost prudence,” Holcim Philippines President and Chief Executive Officer John Stull said in a statement.
Mr. Stull noted that amid the challenging business environment last year, they were able to strengthen the ground work for their company.
“Our commercial initiatives were key to growing our business and allowed us to take full benefit from the robust construction sector which was one of the economy’s drivers last year and over the medium term,” he said.
Holcim Philippines completed the expansion of its La Union plant in January, hiking production in the facility by 80% to 1.8 million metric tons (MT). This forms part of a $54-million investment in its plants in La Union and Davao to increase the company’s capacity to 12 million MT.
The company will also invest $300 million for the upgrade of its cement operations in Misamis Oriental and Bulacan, which will bring its total capacity to 13 million MT by the end of 2020.
The expansion aims to take advantage of the higher demand for construction materials due to the government’s massive infrastructure program, as well as reduce expensive imports.
Holcim Philippines is part of the global building solutions firm LafargeHolcim Group, which has operations in about 80 countries.
Shares in Holcim Philippines went down by 1.27% or 12 centavos to close at P9.32 each at the stock exchange on February. — Arra B. Francia
