Holcim Philippines forecasts slower growth, may increase prices

Holcim Philippines forecasts slower growth, may increase prices
Published: 25 April 2011

Holcim Philippines expects cement sales volumes to grow at a slower pace of 3-5% this year amid projections of lower public sector spending, Holcim Philippines Chief Operating Officer Roland van Wijnen said in a briefing. This is slower than the volume growth of 10% for the company last year, which exceeded the average 7% increase enjoyed by the local industry.

Mr van Wijnen argued that there will be no more election spending this year and less public rehabilitation work. Furthermore, the effects of the government’s public-private partnership (PPP) program for infrastructure projects won’t be felt by the cement industry until 2012.

To offset lower demand, and to recover the increases in fuel and freight costs, Holcim may increase prices.

Coal prices have steadily risen this year due to weather-related supply disruptions experienced by major producers such as Australia, which suffered from floods in January. Oil prices have also surged this year due to unrest in the Middle East.

The company is also looking at increasing market share to make up for the expected moderation in cement demand for 2011. "We are now one-third of the market, around 33%. Our target is 33%- 35%," Mr van Wijnen said.

The company has a total installed clinker production capacity of 6.94Mta and cement production capacity of 9.8Mta. To date, the company is selling around 5.5Mta.

The firm has also allocated PHP1bn for capital expenditure this year, from around PHP800m in 2010, in an effort to meet its operational and market share objectives.

Holcim Philippines owns four production facilities, one cement grinding mill, three ports, and four storage and distribution terminals. It also operates 23 sales offices and works with more than 950 "channel partners" in the country.