Cemex eyes flat sales on uncertanties

Cemex eyes flat sales on uncertanties
Published: 18 November 2008

Cemex Philippines, the country’s third-largest cement maker, expects sales this year to be flat in view of what the firm’s public relations director described as “uncertainties” in the market, including the impact of a tariff cut.

“We expect sales to be more or less the same as last year,” public affairs director Darwin DJ Mariano told reporters recently. He pointed to uncertainties stemming from the possible impact of the financial meltdown on the local construction industry.

Another source of uncertainty for the industry, he said, are persistent reports that President Arroyo signed, or was on the verge of signing, a draft executive order (EO) lifting tariffs on imported cement, supposedly to force local cement makers to bring down prices by unleashing cheap competition from abroad.

“It would be purely speculation” to forecast something based on that (unconfirmed reports of the EO), Mariano said. Still, Mariano said they are still “hoping for improved market conditions” in an industry where price spikes accompany an upward curve in construction activities.

In Cemex’s case, the company posted annual increases in net sales and net income since 2004 at P8.8m to P11.9m last year.

However, return on sales dropped from a double-digit figure of 12.46 to five per cent last year.

From subsequent net losses every year of P0.8m in 2001, Cemex posted its first net income in 2004 at P0.5 million. The company hit a high of P1.3m in 2005, before dipping to P0.6m in net income last year.

One effect of the uncertainty is the company’s move to weed out inefficiencies. This year Cemex shed out 19 positions. “But that’s the last,” Mariano added.

Meanwhile, Malacañang was asked to reconsider a plan to scrap the five per cent tariff on imported cement amid warnings that the move could backfire on the local cement industry.

Sen. Benigno “Noynoy” Aquino III warned that lifting cement tariffs would have serious repercussions on the local industry and its workers. He urged the economic managers to “study the matter carefully and not rush into any decision.”

Aquino aired the warning even as Press Secretary Jesus Dureza clarified the other day that contrary to reports, President Arroyo has not yet signed an executive order scrapping cement tariffs, as recommended by Trade Secretary Peter Favila.

The senator voiced concern that the conflicting reports “only add further anxiety to the cement industry and its workers.” He noted that their collective apprehension stems from the possible dumping of imported cement that threatens the viability of local cement companies and the job security of over 100,000 workers if and when the President allows the tariff lifting.

He also recalled earlier reports that Favila had favored the lifting of cement tariffs due to the alleged high prices of local cement.

But Aquino pointed out that trade groups were opposing the tariff lifting, arguing that it would only “favor some importers to the detriment of Philippine industries and local jobs.”