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Cement makers in the Philippines feel the pinch

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World Cement,


Falling domestic consumption of cement saw tight competition in the Filipino cement market in 2Q17. Cement volumes were down 3% on the previous year, when pre-election government spending boosted demand, while imports also added to the pressure on local cement producers.

CEMEX Holdings Philippines reported a 46% decline in net income in 2Q17 from PHP896 million to PHP486 million, which the company blamed on lower prices and volumes, and higher operating expenses.

“Prices declined in response to heightened competitive conditions and continuing presence of imports in the markets,” the company said in a press release.

CEMEX was also hit by a longer-than-expected shutdown at its APO cement plant in Cebu, which hit cement output.

Operating EBITDA was also down at LafargeHolcim’s Filipino operations compared the previous year. Holcim Philippines reported quarterly EBITDA of PHP1.9 billion, a significant fall from the PHP3.3 billion achieved in the same period last year.

Bucking the trend, Eagle Cement reported EBITDA of PHP3.4 billion in 1H17, a rise of 11% on the previous year, as sales of both bagged and bulk cement rose “in the midst of tight competition and an industry decline in prices.”

The company – which is the fourth largest cement producer in the Philippines in terms of installed capacity, behind Holcim Philippines, CEMEX, and the unlisted Republic Cement, a subsidiary of CRH and Aboitiz – benefitted from the operation of a second production line at its plant in Bulacan.

Despite the falling volumes, Filipino cement makers remained positive on the future potential of the market on the back of planned government investment in infrastructure.

Holcim said it would invest US$54 million over the next two years to raise its production capacity from 10 million tpy to 12 million tpy. Investment would be focused on increasing the capacity at its La Union and Davao plants, said President and CEO, Sapna Sood. That investment follows the successful debottlenecking at the company’s sites in 2016, which raised cement capacity from 8.5 million tpy to 10 million tpy.

“Our investments assure that Holcim Philippines will continue to provide a reliable supply of an essential building material, as cement demand increases in the country, as these projects come on stream,” said Sood.

Meanwhile, Eagle Cement has plans to add a third production line at Bulacan by 1Q18, boosting its capacity by 2 million tpy to 7.1 million tpy. The company is also planning a second cement plant in Cebu. Groundbreaking is scheduled fro October of this year, with completion due by 2020.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/09082017/cement-makers-in-the-philippines-feel-the-pinch/


 

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