Holcim Philippines halts expansion until 2014

Holcim Philippines halts expansion until 2014
Published: 03 August 2009

Local cement manufacturer Holcim Philipines, Inc. is putting on hold any expansion plans until 2014 as available capacity has not yet been maximised, a ranking official said late last week.

The listed firm, which claims to be the country’s largest cement producer, will instead monitor growth in demand to decide whether to revive three production lines that have been temporarily shut down.

"[There will be] no new plans to expand in the next five years. Our three spare lines are not running. And for the next five years, there [will be] sufficent domestic supply," Francis C. Felizardo, Holcim Philippines’ senior vice-president, told reporters at the sidelines of the Metro Manila Business Conference on Friday.

Capital expenditure in the short-term will be focused more on improving efficiency, Mr. Felizardo added.

The firm’s four kilns can produce up to 7.2 million tons of clinker, and 8.7 million tons of cement a year, the largest among cement firms, industry data show.

Three production lines at its Bulacan, Misamis Oriental and Davao City plants have been stalled. This comes as the growth in demand enjoyed by the entire industry slowed to 1.9% in 2008 versus 10.4% in 2007, Mr. Felizardo said in his presentation at the conference.

"The possibility exists in the next five years [to revive] the spare lines...as long as industry demand growth is 6% every year," Mr. Felizardo said.

"Residential demand is always there. The back log in housing will not be solved any time soon. And we believe government need to invest in infrastructure more," he added.

Holcim Philippines’ profits dropped by over two-fifths last year as expenses surged, documents from the Securities and Exchange Commission show.

The firm’s net income stood at P1.29 billion even as sales grew 11.89% to P18.17 billion. The firm pointed to increases in power costs, raw materials and higher expenses for repairs as the reasons behind lower earnings.

Holcim Philippines shares closed on Friday at P3.50 apiece, slightly up 0.05% from the previous day.