(Philipines) — Holcim Philipines Inc. said profit for the first quarter of the year ended flat at P809 million compared with last year’s P818.56 million on the back of high production costs.
But Holcim is optimistic that cement demand will continue to surge on higher spending as it prepares to reopen a grinding facility in Batangas.
Holcim’s cement sales reached P6.61 billion, up from the previous year’s P5.65 billion.
Roland Van Wijnen, company chief operating officer, said despite the volume growth, Holcim’s profitability continued to be “eroded” by high production costs, “especially as it has not achieved the price levels needed to recover from these costs.”
“Prices are still below what they were in 2010, which puts us in a difficult situation as we are faced with increased cost of inputs, particularly electricity and coal,” van Wijnen said.
The suggested retail price of cement is P200 per bag.
“The biggest challenge is to raise prices. This is an expensive country to make cement. We need to import clinker, coal and labor is expensive against other countries in the region,” van Wijnen said.
Holcim is also concerned about the power problem in Mindanao where it has two plants.
The company’s Mabini grinding facility in Batangas will increase Holcim’s capacity by up to 22.5 million cement bags annually.
Holcim’s Mabini plant will become its second facility in Batangas. Early last year, the company reactivated its terminal in Calaca to better serve its customers in Southern Luzon and facilitate cement transfers from Holcim’s facilities in Mindanao to Metro Luzon, where demand is highest.
Holcim Philippines plans to spend around P400 million to rehabilitate the facility. The cement manufacturer acquired the Mabini plant in 2003 but deferred operations due to low demand in subsequent years.