Holcim Philippines, Inc. will spend P2 billion this year as it upgrades its equipment in preparation for as much as 10% growth in the local cement industry.
"We’re allotting [50% more capital expenditure] to accelerate the refurbishment of plants in Bulacan, Davao and La Union," Holcim Chief Operating Officer Ian S. Thackwray said on the sidelines of the company’s stockholders’ meeting yesterday.
He expects the company to perform better this year. "We’re cautiously optimistic because the growth is largely influenced by how sustainable the government’s infrastructure spending is," he told reporters.
"There is also a seasonality in demand, with the company last year experiencing a decline in volume starting in the second half due to the rainy season," Mr. Thackwray added.
Tight competition in the industry also brought about slower demand for cement products, coupled by increasing coal prices, he added.
Holcim imports coal from Indonesia and uses it to fuel the production of cement, which has limestone as the primary raw material.
The company will likely to keep cement prices in the coming months after raising these in the first quarter, Mr. Thackwray said. Holcim cement products cost between P185 and P195 per bag.
"But that would be subject to future cost increases of coal, which is 40% of our cost. All the same, competition is also subject to high costs of electricity," he said.
Yesterday, the company said its first-quarter net income fell by 2.6% to P463.37 million. In a presentation to stockholders, Mr. Thackwray said net income in 2007 went up by 47% to P2.2 billion as a result of government spending on infrastructure and property purchases of Filipinos working abroad. Holcim has a market share of about a third and sells four cement products.