LISTED cement manufacturer Cemex Holdings Philippines Inc. (CHP) reported a pro-forma consolidated net income of P1.87 billion in 2016 on higher sales on improved prices, volumes and cost efficiencies.
The firm, which was only incorporated in September 2015 for the purpose of listing in July last year, had no comparative figures for profits as the group reorganized and consolidated its subsidiaries effective January 2016.
In multiple disclosures to the Philippine Stock Exchange on Friday, CHP said the net income was driven by net sales, which went up by 2.2 percent to P25.36 billion in 2016 from P24.93 billion in 2015 because of higher domestic cement volume and price. The net sales were composed of cement revenues (94 percent), insurance revenues (4 percent) and other sources of revenues (2 percent).
For the fourth quarter, the company reported a pro-forma net loss of P7.81 million because of lower net sales, down by 13 percent to P5.55 billion from P6.38 billion.
It said the weaker fourth quarter 2016 performance was because of the lower infrastructure activity and cement demand amid “La Niña-like” adverse weather conditions and intensified market competition.
The company sees its performance improving this year, driven by “renewed public construction activity in the second half of 2017” and “greater confidence that should enable robust private corporate spending.”
“We remain confident in the multiplier effect of government investment in infrastructure and government’s ability to support it from the current fiscal program,” CHP said.
The company said it will continue to ramp up domestic cement production to reduce imported materials, take price positions on energy needs, substantially reduce foreign exchange exposure and interest expense through peso-denominated debt financing, and seek ways to optimize logistics operations and overhead structure.
For 2017, CHP has a capital spending program of P2 billion, which will be used for maintenance and corporate purposes (P868 million), solid plant expansion (P889 million), and other strategic expenditures to reduce costs (P277 million).
The $225-million solid plant expansion is expected to be completed by the fourth quarter of 2019. The company is obtaining regulatory approvals from the Department of Environment and Natural Resources (DENR) for the plant expansion.
Earlier this month, CHP borrowed $280 million in senior unsecured peso-denominated loans (about P13.9
billion) to refinance a majority of its outstanding long-term loan with New Sunward Holding B.V., a related company.
Cemex is one of the leading cement manufacturers in the Philippines, producing cement and cement products such as ready-mix concrete and clinker through its brands Cemex, APO, Island, and Rizal. It is an indirect subsidiary of global cement giant Cemex S.A.B. de C.V., which is listed on the Mexican Stock Exchange and the New York Stock Exchange.