Cemento Melón cuts investments to US$15m due to 10% sales decline

Chile’s Cemento Melón has seen sales drop by 10 per cent in the first quarter of 2014. "Earlier this year we estimated that we would at least maintain 2013 sales, but in the first quarter the market fell about 10 per cent, and we saw sales drop by a similar number," Jorge Eugenin, the company’s CEO, said.

In addition, as the cement industry is nearly 100 per cent dollarised, the depreciation of the Chilean peso has also impacted profit margins as costs jumped.

In terms of investments made by Cemento Melón, he said that in recent years capex fluctuated between US$55-60m, but this year the figure would be limited to US$15m. The focus of investments is expected to be on maintenance and optimisation projects that have an immediate positive impact on profitability.

The Norte Grande earthquake is expected to lead to a growth in market demand, but not until next year. “First comes a phase of emergency care that does not require concrete. Only in the second or third year, a significant effect on demand can be seen,” Mr Eugenin said.

The company also reported that it would reduce its number of directors from 10 to nine following the death of Peruvian businessman Mario Brescia.