PHILIPPINES: Northern Cement starts $200-M expansion

Northern Cement Corp. (NCC), the cement manufacturing subsidiary of San Miguel Yamamura Packaging Corp., is set to double its capacity to more than two million tons as part of its expansion project.

The company recently held ground breaking ceremonies for its $200 million capacity expansion project in its cement plant in Sison, Pangasinan.

Northern Cement president Ramon Ang said the expansion supports the growing infrastructure industry in the country.

“The economy and the infrastructure sector are growing rapidly and by expanding Northern Cement, we are supporting the development efforts of the Philippine government and reducing dependence on imported cement,” Ang said.

Established in 1968, Northern Cement is one of the pioneers in the local cement industry.

With the entry of the San Miguel Group as an equity shareholder in 2012, Northern Cement has since completed a modernization program, acquiring the latest manufacturing technologies for its existing lines.

San Miguel is building five new cement plants with a total annual capacity of 10 million tons.

Affiliates Northern Cement and Eagle Cement will build the new plants in Pangasinan, Bulacan, Quezon, Davao and Cebu, with a capacity of two million metric tons each.

San Miguel owns a 35 percent stake in Northern Cement, a company owned by SMC chairman Eduardo Cojuangco, while Eagle Cement is privately owned by Ang.

The additional 10 million metric tons of cement capacity would bring the San Miguel Group’s cement capacity to roughly 16 million metric tons.

For all five plants, San Miguel is pouring in $1 billion, higher than the earlier announced budget of $800 million.

Ang said the industry has a current capacity of 33 million metric tons which would increase to roughly 43 million once the new cement plants of the San Miguel Group are in place.

SMC previously announced its intention to go full blast with its expansion into cement and power. The conglomerate has been bullish about the local cement industry as the Philippines has a per capita consumption of 170 kilos, far lower than the per capita consumption of 1,000 kilos in other countries.

PHILIPPINES: Mayor asks firm to suspend coal, cement imports

Saying he feared the impact of coal on community health, Mayor Jesse Concepcion urged a company operating in the coastal village of Lucanin here to suspend the importation of coal and cement.

Concepcion, in a letter to Maria Isabel Tapan, port operations manager of the Seafront Shipyard and Port Terminal Services Inc., said the company should first consume its stock before resuming importation.

Seafront supplies power plants in Bulacan, Pampanga and other parts of Luzon with coal and cement from Indonesia.

Concepcion made the appeal as two cargo ships loaded with imported coal and cement docked at Seafront’s port here recently.

But Carlo Virgilio Ignacio, Seafront vice president for operations, informed the mayor, through an emissary, that his company would adopt safety measures to protect the health of residents.

In May, Byron Lisanin, Mariveles sanitary inspector, ordered Seafront to contain its coal supply that are stored in an open facility.

Lisanin urged the company to install an ambient air quality monitoring system and to put up a windbreaker at the coal yard to contain dust and smoke.

Concepcion said Seafront should also build a sanitation lagoon where wastes could be treated first before these are discharged into the sea.

The Mariveles government’s action was prompted by complaints from neighboring communities whose residents claimed they suffered asthma and other respiratory diseases.

However, no health report had been presented by residents to validate these claims.

Danilo de Guzman, 62, a resident of Lucanin, said his neighbors complained of exposure to coal dust from trucks ferrying coal into the facility.

PHILIPPINES: San Miguel spending $800M to put up 2 cement plants

Conglomerate San Miguel Corp. is investing around $800 million to build two new cement manufacturing plants, preparing to meet an expected surge in demand from big-ticket infrastructure and private construction activities in the years ahead.

One of the plants will rise at cement affiliate Northern Cement Corp.’s existing facility in Pangasinan and the other in Quezon province, SMC president Ramon S. Ang said Thursday after the stockholders’ meeting of SMC’s parent firm Top Frontier Investment Holdings Inc.

Each of the plant will have an annual production capacity of 2 million tons and cost $400 million each, Ang said. The first plant will be completed by June 2017 and the other by end-2017.

About 50 percent of the project will be funded by equity and 50 percent by loan, Ang said. As such, around $400 million will be raised from borrowings for the cement plants, he said. Ang denied reports that SMC was raising $400 million through a seven-year loan facility for the construction of a new 300-megawatt coal-fired plant in Bataan. He said the project financing for this project had already been completed.

Coincidentally, he said SMC was planning to borrow $400 million not for power plant projects but for the cement business.

It was earlier reported that SMC had invested in Northern Cement, a company owned by its chair Eduardo “Danding” Cojuangco, in 2013.

The entry into the cement business is seen in line with the company’s large infrastructure projects. Ongoing projects include the Tarlac-Pangasinan-La Union Toll Expressway (TPLEx), the Boracay airport rehabilitation, Metro Railway Transit-7, Naia Expressway and the Skyway Stage 3 which will connect the South and Northern Luzon Expressways.

At present, the group is already operating South Luzon Expressway, Skyway 1 and 2 and Southern Tagalog Arterial Road (STAR) tollways.

PHILIPPINES: Aboitiz acquiring Lafarge's cement plants

Aboitiz Equity Ventures Inc said it plans to partner with Irish building supplies group CRH Plc to buy the Philippines cement business of France's Lafarge, seeking to diversify into infrastructure.

Aboitiz, a large Philippines' conglomerate with interests in power generation and banking, said the potential acquisition would involve four cement manufacturing plants on the main island of Luzon, a plant in central Cebu province and limestone quarries.

Financial terms were not disclosed.

"Venturing into infrastructure meets our growth criteria," Aboitiz Equity CEO Erramon Aboitiz said in a statement.

"We are very optimistic of the potential gains this new core business will bring to the group amid the huge demand for infrastructure in the Philippines."

Lafarge and Switzerland's Holcim Ltd are disposing of assets to win regulatory approval for their planned merger to create the world's biggest cement firm.

A deal would be subject to the completion of the merger and approval by the boards of both Aboitiz and CRH, the Philippine company said.

EU antitrust regulators last month cleared CRH's planned 6.5 billion euro ($7.4 billion) purchase of a number of mostly European assets from Lafarge and Holcim.

PHILIPPINES: Cement sales rise 9.6% in Q1

Cement sales grew by 9.6 percent in the first quarter from a year ago amid strong demand from both the public and private sectors, the Cement Manufacturers Association of the Philippines (CeMAP) said.

In a text message yesterday, CeMAP president Ernesto Ordoñez said the country’s total cement sales reached 5.7 million tons in the first quarter this year, up from the 5.2 million tons in the same period in 2014.

The growth was attributed to demand from projects being undertaken by the public and private sectors.

Ordoñez said public sector spending, particularly that of the Department of Public Works and Highways went up.

Private sector spending also improved because of growing confidence in the country which continues to show a strong economic performance and enjoying global recognition.

“In addition, Holy Week when growth is slow, did not happen the first quarter this year but in April in the second quarter. This increased growth compared to last year. Last year, it was March in the first quarter which slowed last year’s potential growth,” Ordoñez said.

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Earlier, he said the CeMAP expects increased the construction activity in the country to support higher cement sales this year.

The government has been increasing the budget for infrastructure to address gaps and support economic growth.

The private sector is also undertaking construction activities to meet demand for homes and offices.

The country’s total cement sales reached 21.305 million tons in 2014, up by 9.6 percent from the 19.445 million tons in 2013.

The CeMAP is composed of the following: Cemex Philippines Group of Companies, Holcim Philippines, Inc., Lafarge Associated Companies, Northern Cement Corp., Pacific Cement Philippines Inc. and Taiheiyo Cement Philippines Inc.

PHILIPPINES: Holcim profit rose 13% in ’14 to P5.1B

Holcim Philippines, the country’s leading cement manufacturer, considers 2014 a banner year as net profit rose by 12.9 percent to P5.1 billion on the back of robust construction activities.

The construction industry grew by double-digits last year to keep cement in high demand. With this, Holcim’s cement sales volume rose by 12.3 percent last year to help the company achieve revenues of P32.6 billion, 13 percent higher compared to the previous year.

Holcim thus managed to grow faster than the 9.5-percent expansion of the entire cement industry last year.

The overall industry nevertheless picked up pace from the sector’s 5.6-percent growth posted in 2013.

“The healthy economy continues to provide opportunities for our business to thrive. Last year, with the sustained construction boom, the challenge was ensuring that there is enough supply so these projects are completed on time and on budget. Our company is proud to have met this challenge and contributed to the country’s development,” said Holcim Philippines president and chief executive officer Eduardo Sahagun.

At the same time, Sahagun said effective cost management in manufacturing, distribution and support groups allowed the company to minimize the impact of expensive imported clinker on net profit.

Cash flow as measured by earnings before interest, taxes, depreciation and amortization (Ebitda) went up by 15.1 percent to P8.8 billion.

Given the double-digit growth in Holcim’s net profit last year, return on equity (ROE) likewise rose to 23.6 percent last year from 21.7 percent in the previous year.

For 2015, Sahagun said the company would focus on continuing to improve its ability to supply the market through efficiency initiatives in manufacturing and logistics.

He added that Holcim Philippines would sustain its commitment to deliver products and services that keep customers delighted.

Sahagun said higher government budget for infrastructure, sustained private sector expansion and faster implementation of public-private partnership projects would provide the cement industry with numerous opportunities.

Holcim Philippines, which is part of the global cement group Holcim, operates four cement plants in La Union, Bulacan, Misamis Oriental and Davao.

It has more than 1,700 employees in the Philippines and produces four cement products: Holcim Excel, Holcim WallRight, Holcim Premium Bulk and Holcim 4X. Its products are sold in bags, jumbo bags and in bulk.

PHILIPPINES: Cement makers to raise prices

Cement companies are set to raise prices by P10 per 40-kilogram bag of cement within the week, at the start of the peak period for construction activities.

Three cement companies issued separate advisories to their distributors about the impending price hike for cement products.

Cemex Corp., La Farge Cement Corp. and Eagle Cement are poised to increase cement prices at the earliest possible time this week, according to the advisories.

Cemex’s Rizal cement currently sells for P198 per bag while Lafarge’s Republic brand sells at P197. Eagle Cement sells its product at P193 per bag.

Concerned cement companies could not be reached for comment as of press time.

Holcim Cement, which has yet to issue an advisory, said “prices normally move up and down depending on the season and usually summer is the peak of construction season.”

The planned price hike ran contrary to the Trade Department’s plea to manufacturers to reduce prices based on 50-percent reduction in fuel prices.

Trade Undersecretary for consumer welfare and protection Victorio Mario Dimagiba said his office had not yet received any notice for cement price hike.

The Trade Department and manufacturers have a standing agreement that a manufacturer should inform the agency first before implementing any price adjustment.

Dimagiba said its latest price monitoring report showed that retail prices of cement actually declined. “As you know all cement brands reduced prices in November 2014 from a high of P230,” he said.

The National Price Coordinating Council will meet Tuesday to review existing supply and price situation.

The Cement Manufacturers Association of the Philippines said cement robust sales were observed in all four quarters of 2014, but the fourth-quarter figure posted the highest growth.

Cement sales climbed 9.6 percent in 2014 to 20.2 million metric tons from 19.44 million MT in 2013, on the back of healthy growth in construction.

Fourth-quarter cement sales jumped 15.7 percent to 5.21 million MT from 4.5 million MT recorded in the same period in 2013 while third-quarter sales increased 11.9 percent to 5.4 million MT from 4.8 million MT.

In the first two quarters of 2014, cement sales posted a 6-percent incremental output, reaching 10.7 million MT from 10.1 million MT in 2013.

CeMAP said the ongoing public-private partnership projects also contributed to the rise in cement demand and sales.

It said infrastructure disbursements were channeled mostly to ongoing reconstruction and rehabilitation efforts in communities devastated by typhoon Yolanda.

PHILIPPINES: Cement prices expected to dive

The cement industry will be forced to cut down prices to survive when the Philippines opened its market next year for products from other countries in southeast Asia, a mineral industry expert said on Wednesday.

Louie Sarmiento, president of the Philippine Mine Safety and Environment Conference (Amsec), said the country will be flooded with cheap but good quality cement as a result of free trade among the 10 member countries of the Association of Southeast Asian Nations (ASEAN).

“The cement industry will feel the impact of the ASEAN integration because cheaper and better quality cement from Taiwan and China are expected to flood the country during the start of the free trade,” Sarmiento said during the Mine Safety and Environment Conference in Baguio.

Cement production is a P3 billion industry providing employment to about 400,000 workers. Cement plants are scattered in various parts of the country such as La Union, Rizal, Surigao, Misamis Oriental, Cebu, Bulacan, and Zamboanga. 

The Asean integration will open free trade to member countries that include Brenie Darussalam, Cambodia, Indonesia, Lao, Malaysia, Myanmar, the Philippines, Singapore and Thailand.

Sarmiento said the industry, to remain competitive, must not only lower the price but also ensure stable supply of cement so customers will not look somewhere else to fill up their needs.

The cement plants must improve manufacturing methods, adopt latest technologies to comply with international standards and increase their production on monthly basis to be able to bring the price of their product, Sarmiento said.

“Our cement manufacturers are aware of the impact of integration on the industry. They are now shifting to better modes of production, looking for cheaper raw materials, embracing new technologies that would make their products competitive in the international market,” he said.

Sarmiento said he was confident the cement industry will catch up with stiffer competition through improved production techniques, better services and efficient system of operation by the time the Asean integration will be in effect.

PHILIPPINES: Cement sales up by 11.9% in Q3–Cemap

CEMENT sales grew by 11.9 percent in the third quarter as clement weather allowed for increased construction activity, according to the Cement Manufacturers’ Association of the Philippines (Cemap).

Cemap President Ernesto Ordoñez said the outlook for cement sales for the year remains buoyant from the industry’s perspective despite a slow second-quarter growth of only 3.2 percent.

Cement sales for the third quarter alone amounted to 5.374 million metric tons (MMT), an 11.9- percent increase over last year’s sales of 4.805 MMT.

This brought the year-to-date sales volume to 16.093 MMT, a 7.7-percent improvement over last year’s nine-month sales of only 14.941 MMT.

According to Ordoñez, the pickup in cement consumption was due to better weather, a factor that may have affected sales, which were stunted, in the second quarter.

However, an industry source, speaking on condition of anonymity, said the more telling factor that hindered more buoyant sales in the second quarter was the political turmoil, and its consequent impact on business, that came in the wake of the controversial Disbursement Acceleration Program (DAP).

The DAP was declared unconstitutional in the third quarter but the nature of the contentious program of the Department of Budget and Management have divided government since late 2013.

The DAP was said touted as an economic stimulus program meant to speed up the public disbursement process and help boost economic expansion.

The program diverted savings and approved funds from slow-moving government projects to new activities/projects. Increased spending on infrastructure projects was one of the activities funded by the

DAP mechanism.

An industry source also predicted a more pronounced demand for cement may be realized toward the end of the year as spending for public infrastructures accelerate.

Ordoñez said the acceleration from the second-quarter sales growth of only 3.2 percent to 11.9 percent bodes well for the industry.

PHILIPPINES: Cement firms see flat sales growth on slow PPP approvals

The cement industry expects a flat growth in sales this year, due to the slow approval of infrastructure projects under the public-private partnership scheme and a projected lower expansion of the construction industry.

“The general momentum is positive, but not sufficient or not moving fast enough. PPP projects, though taking a tad too long, would definitely help improve sales,” the Cement Manufacturers Association of the Philippines said over the weekend.

Cement sales grew 5.9 percent in 2013 to 19.445 million metric tons from 18.356 million MT in 2012. The cement sector posted a growth of 17.5-percent growth in 2012, the highest over the last 15 years.

Cement sales increased 3.2 percent in the second quarter to 5.519 million MT from 5.349 million MT a year ago and 5.7 percent in the first half to 10.718 million MT from 10.136 million MT in 2013.

CMAP said, however, PPP projects were not moving fast enough to start construction this year.

Cement companies are currently expanding capacity to support the expected increase in government spending for road construction, repair and rehabilitation to improve road networks and spur economic growth.

CMAP said demand for cement and construction materials would be led by the need to put up more infrastructure projects.

Three PPP projects were moving this year, including phase 1 of school infrastructure project with estimated cost of P16.28 billion, Daang Hari-South Luzon Expressway link road project and Naia expressway project.

PHILIPPINES: Iloilo construction slows down amid shortage in cement

Iloilo has been experiencing a shortage of cement amid massive ongoing public works and real estate projects.

The shortage has been felt by contractors and traders for several weeks now as demand peaked during the summer season. “There has been increased demand and apparently suppliers have not anticipated the volume needed,” according to a construction supply store owner in the city, who spoke to the Inquirer on condition of anonymity. “But this is in a way positive because the shortage is due to high demand related to various projects,”the store owner added.

‘Yolanda’ areas

The shortage has also been felt in northern Iloilo, one of the areas worst hit by Super Typhoon Yolandalast year. “I don’t have any stock left. We are still waiting for our supply to arrive next week,” a cement trader in northern Iloilo said.

Demand is especially high for the Portland type of cement which is commonly used for government projects and in major construction works. Prices have remained stable despite the low supply with a 40-kilo bag of Portland cement costing from P240 to P245, while regular cement costs about P230 per bag, according to the store owner.

But a contractor involved in constructing residential buildings said prices had risen from P238 to P250 per bag in the past two weeks. “Some stores limit the volume of cement one can purchase only up to 10 bags because a lot of buyers are also waiting for their orders,” the contractor, who also asked not to be identified, said.

Project delays

The contractor said the shortage of cement had led to delays in construction projects and also to higher expenses. Major government projects are being implemented in Iloilo including the construction of the P1-billion Iloilo Convention Center, widening of the Sen. Benigno Aquino Jr. Avenue into a 10-lane road including bicycle and pedestrian lanes, the 14-kilometer Iloilo circumferential road and the six-lane widening road from Jaro District to the entrance of the Iloilo International Airport in Cabatuan town in Iloilo.

Multibillion-peso commercial and real estate projects are also being implemented in the city including those of Megaworld Corp., Ayala Land Inc. and DoubleDragon Properties Corp.

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.

PHILIPPINES: Cement industry growth ‘to continue’

CEMENT manufacturer Cemex Philippines remains optimistic that growth in the cement industry will continue to grow stronger this year on the back of the robust construction industry and high government spending.

“We expect the growth to continue this year,” said Paul Arcenas, Cemex Philippines vice president for strategic planning at the sidelines of yesterday’s Build Unity launching rebuilding program of Cemex Philippines Foundation for the communities in northern Cebu.

Arcenas said the industry logged six percent to seven percent growth per year over the last three years.

According to industry reports, cement sales in 2013 grew 5.9 percent to 19.445 million tons from 18.356 million tons in 2012. The last quarter of 2013 added 4.503 million metric tons (MT) in sales or 2.1 percent higher than the 4.409 MT in the same quarter of 2012.

Highest

In 2012, the local industry posted a 17.5 percent growth, its highest in 15 years, having sold 18.4 million tons of cement from 15.6 million tons in 2011.

Cement firms attributed the growth to accelerated government and private sector projects. They predicted growth will be sustained in 2014 with the growing list of infrastructure projects under the private-public-partnership program and the increase in budget of the Department of Public Works and Highways for infrastructure and housing programs.

In anticipation of the huge demand, Arcenas told Sun.Star Cebu that the company is allocating $80 million to finance the additional 1.5 million metric tons capacity in its Naga plant this year as well as the expansion of terminals and improvement of distribution facilities.

According to Arcenas, it will add 40 percent to the total Cemex Philippines capacity.

The Naga plant expansion will come on stream by the second or third quarter this year.

Cemex Philippines has two production plants in Antipolo, Rizal and Naga, Cebu.

Asked about the company’s preparation for the Asean single market, Arcenas said they have been tracking the progress of the integration and they see the opening of the single economy both as a threat and as an opportunity.

Although cement production in the country and in other Asean countries is meant to fulfill the domestic demand, the opening of the single market will mean they will have to constantly upgrade products to remain competitive in the market.

Accessibility

On the other hand, Arcenas also said the integration will mean more market accessibility and that the flow of capital will translate to more projects that would spur more construction activities.

But even without tapping Asean neighbors yet, Arcenas said the Philippines is already a huge market for cement with other key provincial cities growing faster in Western Visayas, Mindanao and Northern part Luzon.

“We are hopeful that construction will continue to grow because this is the key to nation’s growth,” he said.

Amid the growth and opportunities, Arcenas identified energy price and availability as one of the challenges faced by the industry.

“The high cost of power and its limited availability is affecting the production and distribution of this energy-intensive venture,” he said.

PHILIPPINES: Holcim defers $550M cement plant investment

The country’s leading cement maker, Holcim Philippines, has put on hold the construction of a new cement plant costing as much as $550 million in Norzagaray, Bulacan, to review leeway in supply chain management arising from the proposed integration in 2015 of Southeast Asian economies.

The new plant was originally targeted to add 2.5 million metric tons to Holcim’s annual production capacity by 2016. As of late last year, Holcim was already shortlisting contractors to build the new plant.

At a recent briefing, however, Holcim Philippines chief executive officer Eduardo Sahagun said the plan to set up a new cement plant was still part of the company’s roadmap. “It’s not a question of will it still be built? It’s a question of when,” Sahagun said, adding that studies were now being conducted to determine the best course of action.

Sahagun said the creation of the Association of Southeast Asian Nations (Asean) Economic Community by next year would allow Holcim to absorb excess capacity from units in other markets like Vietnam.

Being a global company and especially with this regional integration, Sahagun said, strategic planning was now being made not just from the perspective of a single country. He said Holcim’s rosy outlook on an upswing in demand trajectory from the Philippines had not changed, adding that it’s the supply equation under review.

Cement market size in the Philippines is about 20 million metric tons a year, with Holcim having a market share of about one-third, Sahagun said.

In terms of labor and power costs as well as coal sources, he said, other neighboring markets like Vietnam offered lower costs. However, he said Holcim Philippines could compensate for higher variable costs by boosting productivity.

PHILIPPINES: Lafarge acquires Harbour Centre lot

Following a meeting, Lafarge said its board of directors “authorized the purchase of land situated at the Manila Harbour Center as well as the cement silo, packhouse and other improvements situated on the land.”

“The purchase will give the company full control of the facility, which is currently using under lease agreement,” it added.

Lafarge also said the strategic location of the facility allows the company to easily dispatch its products, giving Metro Manila customers a more accessible pick-up point for cement purchases.

The cement maker is enjoying brisk demand on the back of private and government-led construction boom.

In January to September, Lafarge’s net income attributable to equity holders of the parent firm surged 53 percent to P3 billion from P1.95 billion. Its net sales jumped by a fifth to P17.85 billion from P14.64 billion a year ago due to higher volumes and improvement in the selling price.

Last May, the company’s board of directors approved an investment for a new mill at the Teresa plant that will produce 850,000 metric tons (MT) per year starting 2015.

For the first time, nationwide demand exceeded 16 million MT at 18.4 million MT last year, up 18 percent from 2011 due to a huge infrastructure backlog in the country.

The company has five cement plants, of which four are in Luzon, that produce a total of 7.7 million MT of cement per year.

Lafarge, formerly Republic Cement, was incorporated in 1955 to primarily engage in the manufacture, development and sale of cement, marble and all other kinds and classes of building materials.

PHILIPPINES: Cement firm posts record sales amid strong gov’t spending

Cement manufacturer Holcim Philippines, Inc. (HPHI) posted record sales volumes in 2012’s second quarter due to government efforts to hasten infrastructure spending and the private sector’s steady rollout of projects.

The year’s first half has HPHI posting a net income of P2.02 billion. This is 40% higher than 2011’s numbers. Net sales rose by almost a quarter to P13.82 billion. 

Holcim Philippines COO Roland van Wijnen said in a statement that the company’s performance mirrors the strong industry growth. 

“We see that the government’s efforts to reform the system for public spending is contributing to a reinvigorated construction industry,” said Van Wijnen, “With strong infrastructure activities, the construction industry is again running on two legs as it did in 2010, when the construction industry contributed to strong economic growth.”

The Public Works department was earlier reported to have bid out most of its projects and released nearly three-fourths of its infrastructure budget to date.

Meanwhile, Wijnen noted that the private sector sustained its robust construction activities, particularly in the residential and commercial sectors. 

Van Wijnen also said that while the company benefited from a robust market, its good performance was also the result of the company’s deliberate initiatives in customer focus, continuous improvements in its manufacturing facilities, and effective cost management. 

He also stressed the important role of its manufacturing facilities in being able to consistently and reliably deliver the required volume and product quality. 

However, even as it enjoyed strong volumes, Holcim Philippines continued to be challenged by high input costs, particularly power as it continues to adversely impact its financial performance.

Van Wijnen said that this is particularly challenging in Mindanao where the company operates two cement plants. To proactively address this, the company has secured contracts with power suppliers while stepping up use of alternative fuels.

Van Wijnen also expects the cyclical dip in demand in the second half of 2012 as construction slows due to rains. But he sees sales exceeding last year’s as private-public partnership projects finally start and election-related spending trickles in.

PHILIPPINES: Cement firm Holcim to reopen plant in Batangas

Cement firm Holcim Philippines is reopening its grinding plant in Mabini, Batangas next year, as it sees continued strong demand for cement in the country.

In a disclosure to the stock exchange, Holcim said it is optimistic that demand for cement will continue to flourish, especially with the government's infrastructure projects and boom in housing.

Holcim will spend around P400 million to rehabilitate the Mabini plant, which will boost its capacity by up to 22.5 million cement bags a year. The Mabini plant, which was acquired in 2003, will be the company's second facility in Batangas, after its terminal in Calaca, Batangas was reactivated last year.

Holcim Philippines chief operating officer Roland van Wijnen said the planned reopening of the grinding facility shows its commitment to deliver adequate supply for the domestic market.

"South Luzon is one of the fastest growing areas in the country and we expect this growth to continue, fuelled by both public and private construction. We want to be sure we have the facilities, ready to deliver the volumes when and where these are needed," said Van Wijnen.

In the first quarter of 2012, Holcim Philippines' sales grew nearly 20% compared to the previous year, due to steady stream of private and public construction projects. Net sales in the first quarter stood at P6.6 billion, from P5.7 billion during the same period in 2011.

Volume may be growing, but the company's profits have been eroded by high production costs, especially electricity and coal. Van Wijnen noted the company has not achieved the price levels needed to recover from these costs.

"Prices are still below what they were in 2010, which puts us in a difficult situation as we are faced with increased cost of inputs, particularly electricity and coal," he said.

Holcim is hoping better prices will be achieved this year, and is implementing measures to improve operational efficiencies and increasing use of alternative fuels and raw materials.

The company, which has 2 plants in Mindanao, is keeping a close eye on the power crisis in the region. It said it is putting in place measures to address any disruption in power supply.

PHILIPPINES: Cemex, Lafarge Raise Cement Prices

Local cement manufacturers are raising prices by P5 per 40-kilogram bag since last week as increases in fuel prices have not shown any sign of abating and the peak of the construction season is starting.

Trade and Industry undersecretary for consumer welfare Zenaida C. Maglaya said that based on last Friday’s Price Monitoring report, prices of two brands of cement – Republic (Lafarge) and Rizal (Cemex) increased by P5 from P200 to P205 per bag now.

However, the price of Holcim Philippines Inc. dropped P5 to P195 now from P200 per bag the previous month.

In June last year, Holcim raised its prices by 6% in Luzon or P10 per kilogram bag to P200 per bag.

The local cement industry is dominated by the three global cement firms Lafarge, Cemex and Holcim.

Cost of power and coal accounts for 40 percent of a cement company’s total production expenses. Most of the cement firms source their coal supply from Semirara Coal Corp. but majority of their supplies is imported from Indonesia.

Construction activities are seasonally higher during the summer months, which normally starts early in the year and peaks in May.

Last year, construction activities were fueled by the private sector spending as government did not spend much for infrastructure projects.

The Aquino administration, however, has started accelerating investments and implementation of major infrastructure projects this year.

Government infrastructure projects and private sector investments in property developments, including housing and commercial establishments, are expected to boost demand for construction materials, including cement.

PHILIPPINES: Siam Cement Group sees Philippines as a key market

Thai conglomerate Siam Cement Group (SCG) said its Philippine operations showed strong sales in the fourth quarter of 2011.

Kan Trakulhoon, SCG president and CEO, said SCG and its subsidiaries posted 22 per cent increase in revenues from sales to $12.286 million for fiscal year 2011, mainly due to higher product prices.

In the Philippines, SCG’s fourth quarter operating results showed revenues from sales to have reached $22.367 million, leading to a total of $98.067 million in revenues from sales, for fiscal year 2011.

SCG considers the Philippines as a key market. To date, total assets of SCG in the country amount to $173.133 million.

Business prospects for 2012 are “promising” as SCG plans to invest heavily in high-value added (HVA) products and services in the Philippines.

SCG is increasingly focusing on the Philippine market as a source of increased and sustainable growth. The company has already made available its green building products such as the COTTO Eco Rockette Series, tiles made from as much as 60 per cent recycled material; and the SCG SmartBoard, which is a fiber-cement board resistant to termites and fungus.

SCG has several companies in the Philippines such as Mariwasa Siam Ceramics, United Pulp & Paper, CPAC Monier Philippines, SCG Trading Philippines, Green Siam Resources, Green Alternative Technology Specialist and SCG Marketing Inc.

Eye on Asean

SCG is continuing to make investments in innovations to achieve its vision to become an Asean sustainable business leader.

“To demonstrate SCG’s confidence in the region and specifically the emerging markets, the company has launched an Asean-wide campaign designed to strengthen confidence among foreign investors and businesses,” said Trakulhoon.

In 2011, SCG invested approximately $37.033 million in research and development.

Investments in R&D have been heavily focused on providing solutions for disaster risk management and the promotion of sustainability, advancements most relevant in markets such as the Philippines that are prone to natural calamities.

In the fourth quarter of 2011, SCG posted a 15 per cent jump in revenue from sales amounting to $2.931 billion, largely from continued high product prices from most business units. The profit for the given period decreased 81 per cent year-on-year to $106.7 million, as the flood disruptions resulted to lower demand and higher logistics expenses.

PHILIPPINES: Cement firm goes beyond green

Going green has become the new buzz word for many companies who are now adopting environmental sustainability programs as part of their corporate social responsibility.

At a time when the Philippines is at its most vulnerable to natural calamities, it is but the right moment for businesses to start thinking green.

But one multinational company is aiming to address not just the environmental sustainability of the community but its economic and social sustainability as well.

Swiss-based cement company Holcim Ltd. through its non-profit organization Holcim Foundation said it is committed to support the environmental, social and economic sustainability of the community through its centerpiece Sustainable Construction.

“We have five target issues namely, Progress, People, Planet, Prosperity and Proficiency,” Holcim Foundation general manager for Sustainable Construction Edward Schwarz told The Star in an interview.

“As the global provider of building materials, sustainable constr

ction is our obligation, it requires that the present generation meets its needs without limiting the opportunities of future generations. For an approach to enable long-term viability, it must integrate economic, environmental and social impacts, the three elements of the triple bottom line,” he said.

Schwarz stressed that the construction industry can contribute greatly to global sustainability “because everything that is built shapes the way people live today, and in the future.”

“Buildings account for up to 40 percent of primary energy consumption. Handling building design and management, material selection, and also energy and resource consumption in a sustainable manner would be a significant step toward ecologically and responsible development,” said Schwarz.

“In addition, advanced responses in terms of ethical and social responsibility and financially feasible projects that provide long-term economic benefits illustrate the important role that architecture, engineering, urban planning and construction have in achieving a more sustainable future,” he stressed.

Raising awareness on the importance of sustainable construction among professionals and the public is the Foundation’s main objective.

“We want to promote a mindset that views sustainability not only in terms of immense technical challenges, but that also incorporates architectural excellence and leads to a higher quality of life,” he says.

Here in the Philippines , Holcim has already implemented a number of initiatives that highlight Holcim Foundation's sustainable Construction.

Among these are the Holcim Journalism Awards which aims to educate the public about the importance and meaning of what sustainable construction is all about, and the Holcim coffee talks which enjoins local government units and local business companies to support Sustainable Construction in their communities.

“We are trying to raise awareness about Sustainable Construction, that there is necessity and building for the next generation. We want many people to be aware about making sure that resources for construction will still benefit the future generation, Sustainability goes beyond the environment, it should be holistic for the people and progress as well ” said Beng Prado, Vice-President for Corporate Communications.