Holcim to reach 10M MT output target by end-2016

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Despite 6-month profit fall to P3B from P3.3B

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LISTED cement maker Holcim Philippines Inc. is confident that its output target for 2017 of 10 million metric tons (MT) is achievable by late 2016, with its capacity boosted by the recent acquisition of the assets of Lafarge Republic Inc.

Holcim President and Chief Executive Officer Eduardo Sahagun told reporters on Monday that the consolidation of assets will lead to an output higher than the current 8 million MT, giving the company the added leverage to achieve its target ahead of schedule.

“We are now a part of the LafargeHolcim group… We have acquired last week the Lafarge assets… What we’re after is to supply customers. If we supply more customers and eventually increase market share, then it’s better for us,” Sahagun noted.

Last week, the company sealed the acquisition of some Lafarge assets for P3.095 billion in line with the global merger of the two largest cement manufacturers in the world with 115,000 employees in 90 countries.

The assets include 100 percent of Lafarge Republic Aggregates Inc. (LRAI) and Quimson Limestones Inc. and the 40-percent interests in Sigma Cee Mining Corp. and APC Properties Inc., as well as the Star Terminal based in Harbour Centre Manila and \other parcels of land located in Pinagtulayan, Bulacan. The acquisition was funded by five- to 10-year bank loans.

Holcim wanted to acquire more assets, particularly the Lafarge Iligan Inc. and Lafarge Mindanao Inc., but was beaten by the “higher bid” of Aboitiz-CRH Group, Sahagun said.

The additional capacity of 2 million MT will be coming from the Calaca plant in Batangas (1.2 million MT), the Mabini plant also in Batangas (300,000 MT) and the Star Terminal in Manila (500,000 MT).

Despite being a part of Lafarge-Holcim merger, Sahagun said Holcim “is deferring” plans to build a $550-million factory in Bulacan until the next administration comes in next year.

Sahagun earlier said the Bulacan plant will be constructed right after the global merger. The large scale facility would have raised Holcim’s cement yearly capacity to 2.5 million MT.

Meanwhile, the company reported a lower net income in the first semester of the year P3 billion from P3.3 billion a year earlier due to a scheduled maintenance shutdown and the impact to the cost and expenses of expensive imported clinker despite higher sales.

Sales in January to June reached P18 billion, a 6.7-percent growth from P16.9 billion a year earlier.

In the second quarter, the company posted a lower net income of P1.52 billion from P1.65 billion in the same comparable period.

“There were timing opportunities as well as larger imported clinker. There are also one-off costs,” Holcim Chief Financial Officer Domenic Rosina said in the same briefing.

The one-off costs totaled P200 million which involved expenses incurred by an arbitration case in Singapore, Rosina noted, saying it was a bribery case involving a client. She did not elaborate.

Earmarked as capital expenditures for the year was P2 billion, consisting of a P700-million expansion budget and P1.3 billion for operations.

KRISTYN NIKA M. LAZO

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