Holcim Philippines, Inc.’s profits dropped by over two-fifths last year as growth in sales was not able to offset the surge in operational expenses, documents from the Securities and Exchange Commission showed.
The listed firm’s 2008 net income dropped to P1.29 billion from the previous year’s P2.21 billion, despite sales growing by 11.89% to P18.17 billion from P16.24 billion with the cost of operations going up.
"As early as the first quarter and onwards for most of the year, increasing input costs weighed heavily on operations. Coal, which is the single biggest item in our variable operating cost, peaked at prices more than double of last year’s levels," the company said.
Holcim Philippines said the P2.3-billion increase in cost of sales and freight services was mainly due to the P1-billion hike in power and fuel costs, P450.8-million increase in the prices of raw, packaging and production materials, and the P403.3-million increase in the cost of repairs and maintenance.
Holcim Philippines said 2008 was a difficult year for the cement industry, but the company still managed to post modest growth as private sector spending for residential and commercial construction compensated for reduced infrastructure projects.
The cement manufacturer said despite the challenging environment last year, it did not defer plant improvements and maintenance programs.
"We continued to invest in our alternative fuel and raw materials program, allowing us to increasingly use coal substitutes while reducing carbon emission," the company said, adding that it has upgraded its kilns to allow for greater use of domestic coal.
Holcim Philippines said it has also expanded into the ready-mix concrete business.
"Even as we have been able to complete significant investments, we have maintained a strong balance sheet - keeping us confident and determined to improve our prospects moving forward," it said.