Philippine growth may slow this year, Holcim

Philippine growth may slow this year, Holcim
Published: 10 February 2010

Philippine cement demand growth may slow this year because spending for public infrastructure is expected to ease after presidential elections in May, the nation’s biggest maker of the building material said.

Government projects may be put on hold with the transition to a new government, said Ed Sahagun, vice president at Holcim Philippines Inc., a unit of the world’s second-largest cement maker. Demand for the building material grew 11 percent in 2009 and will expand at least 1 percent this year, he said.

The transition may stall “disbursements for public infrastructure projects,” Sahagun said in a phone interview. “We are a bit cautious because we don’t know what will happen in the second half.”

Philippine President Gloria Arroyo, whose term ends in June, has increased the government’s budget, which includes outlays on airports, roads and state programs, to a record 1.54 trillion pesos ($33 billion) to bolster growth. About 40 percent of the cement demand comes from the government, Sahagun said.

Holcim Philippines had a “banner year” in sales and earnings in 2009 and is “looking at another good year” in 2010, Sahagun said.

Holcim Philippines posted a 2.82 billion peso profit in the first nine months last year on 16.93 billion pesos of sales, according to its statement two months ago.

“If they are saying that they had a banner year in 2009, then expect that the dividend payment this year will be very good,” said Rico Gomez, who helps manage $1 billion at Manila- based Rizal Commercial Banking Corp. “Even with the projected slowdown in growth, Holcim is an attractive stock because it has consistently rewarded investors with good dividend yields.”