Posted on August 10, 2011 10:12:06 PM [ BusinessWorld Online ]
WEAKER CONSTRUCTION spending continuing into the second quarter slashed profits of Holcim Philippines, Inc. by more than half from year-ago levels, the cement maker yesterday said, warning that it may no longer meet 2011 targets.
The local arm of Swiss firm Holcim Ltd. said in a filing its profits for April to June fell 54.9% to P622.312 million from the same period last year.
This, as revenues were down 14.7% to P5.504 billion for the period even as the firm already hiked cement prices last month to offset higher input costs.
Holcim attributed this to the lack of election campaign-related spending and cuts in government spending in efforts to curb the national budget.
Government projects usually comprise half of Holcim’s cement demand.
Cost of sales, meanwhile, were flat at P3.770 billion.
The second-quarter performance brought the first half profit tally down to P1.441 billion, a 48.7% drop from year-ago levels.
When asked about yearend targets, Holcim Chief Operating Officer Ronald Van Wijnen expressed doubt the firm would be able to meet its 3% to 5% volume growth goal in the face of lower demand in the year’s first six months.
Despite this, Eduardo A. Sahagun, Holcim senior vice-president and commercial director said: “We are still in good shape as we almost have no debt. We are not significantly exposed to major fluctuations in the foreign market.”
Mr. Van Wijen further said the company is hopeful the anticipated implementation of public-private partnership projects will hike its profits in the second half.
“Our people on the ground have started to see some government projects being approved, and the Public Works department has committed to spend 90% of its budget before the year ends so we are hopeful we will be able to report better performance in the future,” Mr. Van Wijnen said in a press statement.
Holcim shares fell by 0.94% yesterday to P10.50 from its previous close. -- FJGDLF
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