PHILIPPINES: Strong demand for cement boosts Lafarge Republic's net income

Lafarge Republic Inc (LRI) grew its earnings by nearly a third on robust demand for cement.

In a disclosure to the Philippine Stock Exchange, LRI said its consolidated profit hit P3.7 billion last year, a 30 percent improvement from the P2.8 billion reported in the prior year.

Sales rose by 16 percent, riding on the industry's expansion with nationwide demand reaching 19.4 million metric tons or 5.9 percent higher than in 2012.

“The infrastructure and other construction projects of the government, both at the national and local levels, coupled with the sustained demand from the private and commercial sectors contributed to this remarkable growth," said LRI president Renato C. Sunico.

The cement manufacturer noted that cost of sales increased mainly on account of costlier power and raw materials, including logistics expenses.

"We were able to moderate the increase by utilizing local coal in our kilns, which have lower prices, while at the same time increasing our use of alternative fuels. Continuing operational efficiencies also helped to partially offset the cost increase. Notwithstanding these initiatives, higher costs remain a key concern and challenge in the future," Sunico said.

Last year, LRI embarked on capacity expansion initiatives on expectations of continued increase in construction activity until next year.

The company is investing in a new cement mill in its Norzagaray manufacturing plant that will boost its annual capacity to 850,000 tons. It will start commercial operations by June 2015, or six months after the target commissioning date of a similar new mill in its Teresa manufacturing plant.Full year capacity in Luzon will increase by 1.7 million tons by 2015 because of these initiatives.

Likewise, LRI reopened its Danao plant to serve demand during peak periods and supply the Visayas and Mindanao regions. In addition, projects in its Iligan and Norzagaray plants provided an additional 500,000 tons per annum of cement production capacity.

"We continue to prepare for the forecasted continued growth in cement demand in 2014. LRI is committed in contributing to the economic growth thru innovative solutions in the construction industry, and most importantly to the building of sustainable and resilient cities for our people," Sunico said.