Holcim Q2 profit down 17% on lower cement sales
HOLCIM Philippines, Inc. reported a 17% drop in its attributable profit for the second quarter of 2019, weighed down by lower cement sales amid flat infrastructure spending for the period.
In a regulatory filing, the listed cement manufacturer said net income attributable to equity holders of the parent stood at P716.15 million, lower than the P863.65 million it posted in the same period a year ago. Net sales plunged 28% to P7.28 billion.
This brought the company’s attributable profit nine percent lower to P1.42 billion in the first half, amid an 18% decline in net sales to P15.38 billion.
“Net sales generated for the first half of 2019 was P15.4 billion…mainly due to easement of demand from muted pubic infrastructure projects following the delayed passage of the national budget,” the company said.
Holcim Philippines noted that price management in both cement and aggregates offerings partly compensated for the lower volumes.
Meanwhile, operating EBITDA (earnings before interest, taxation, depreciation, and amortization) improved by 9.5% to P3 billion for the first half, which the company attributed to its initiatives on product mix, pricing, logistics efficiency, and cost-optimization. EBITDA margins accordingly went up by five percent.
“We continued to deliver value to our customers and shareholders by sustaining actions to manage our costs and improve operational efficiency despite a slowdown in public construction activity which affected sales volumes,” Holcim Philippines President and Chief Executive Officer John Stull said in a statement.
Mr. Stull added that they expect demand to accelerate in the second half.
“Holcim Philippines is ready to capture the market’s growth having put in place significant initiatives to drive performance and adequately respond to the country’s growing need for high quality building materials,” he said.
In June, the company completed the expansion of its Davao plant that raised its cement production capacity to 2.4 million metric tons. The expansion started in October 2017 and was valued at P1.5 billion. It also launched Solido, its newest blended cement brand, for infrastructure applications last March.
Holcim Philippines is currently being acquired by diversified conglomerate San Miguel Corp. (SMC) worth $2.15 billion, as part of its parent Lafarge Holcim Group’s exit from the Southeast Asian region.
The transaction is currently being reviewed by the Philippine Competition Commission.
Shares in Holcim Philippines went up 0.43% or six centavos to close at P14.10 each at the stock exchange on Wednesday.