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Republic Cement eyes construction up tick

Thursday, Wednesday, May 27, 2009 [ ]

Republic Cement Corp. said it is cautiously optimistic about the second semester as it remains bullish on the government infrastructure spending but sees slowing remittances and volatile weather as threats to private construction.

On the sidelines of the company’s annual stockholders’ meeting on Tuesday, Renato Sunico, Republic Cement president, said the company expects last year’s growth in the construction industry would spill over this year.

“The uptick in total construction spending last year was sustained by the private sector, which invested in office buildings, malls, residences, among others. The public sector was not as robust last year,” he said.

The continuous inflows of remittances from overseas Filipinos workers and low interest rates boosted construction spending last year, Sunico said.

However, the slowdown on remittances due to the global economic crisis and the earlier than usual start of the rainy season—which can reduce the normal period of construction activities—may dampen construction activities later this year.

The company is banking on the upcoming large-scale infrastructure projects under the government’s pump-priming initiatives to prop up construction, therefore, push cement demand higher.

Sunico did not provide growth projections for this year but company just hopes that the market growth experienced in the first four months of this year will continue.

At the end of the first quarter, Republic Cement’s net income reached P1.087 billion, up from P606.5 million last year while its profit last year reached P2.838 billion.

Last year’s earnings were higher than the P2.09-billion net income in 2007 but Sunico said the two figures cannot be compared at face value since the 2007 figure was impaired due to the merger of Republic Cement with Fortune Cement Corp. and FR Cement Corp.

Sunico said the company, which has cornered 31 percent of the local cement market, was able to book profits due to “comprehensive cost-management programs” and higher sales.

According to the company executive, the operational efficiencies that were implemented include the use of biomass—which makes up 20 percent of the company’s fuel needs—and running the plants’ mills at night to lower power cost.

In addition, the Batong Angono Aggregates Corp., which is 60-percent held by the consortium of Republic Cement Corp. and Lafarge Holding Philippines Inc., has already contributed to company revenues since June last year.

Republic Cement is an associated company of Lafarge in the Philippines.

During the annual meeting, the company declared cash dividends of 20 centavos per share to stockholders of record as of June 10, 2009, which will be paid on July 3, 2009.

-- Ben Arnold O. de Vera


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