Holcim posts slower profit hike after blackouts cut output

Holcim posts slower profit hike after blackouts cut output
Published: 15 April 2011

Holcim Philippines, Inc. grew profits by a slower pace in 2010 after plant operations in Mindanao were hit by a power shortage, the company said in a financial report released yesterday.

The local arm of the Swiss-based cement giant posted a 23% increase in net income attributable to equity holders to PHP3.835bn last year versus the 142% surge it enjoyed in 2009.

"In 2010, deficiency in power generation in the [Mindanao] grid was brought about by the drought in the country," Holcim Philippines said, referring to the power shortage seen early last year as the lack of rain slashed the output of key hydro-electric power plants there.

The cement maker had to shutter one of its two lines in Misamis Oriental and cut down production at its Davao plant due to power outages. It then resorted to importing pricier cement clinker, according to earlier reports.

As a result, the margin of the firm’s earnings before interest, taxes, depreciation and amortization "decreased by 1.2% as cost of sales and freight cost increased," Holcim Philippines said, pointing in particular to higher power prices.

"[But] despite input costs and the one-off impact of clinker imports at the height of severe power outages in Mindanao, we were able to maintain profitability, helped along by market growth and operational improvements," the company’s report read.

Revenues grew by 8.29% to PHP23.67bn, offsetting a 6% rise in cost of sales and freight to PHP16.53bn last year, the company said.

Interest and financing charges meanwhile fell by 41.5% to PHP234.53m.

Moving forward, the cement maker said it is working on "various options to support its short- and long-term power sourcing plan" to cope.

This, as Holcim Philippines said power shortages in Mindanao will be likely in the next three to five years.