Holcim earmarks P700 million for cement plants' upgrade

MANILA, Philippines – Swiss cement giant Holcim will invest P700 million this year for the maintenance and improvement of their plants in the Philippines, a top company official said.

Holcim chief operating officer Ian Thackwray said their capital expenditure budget includes expenses for advertisements and promotions.

Likewise, he said there will be no price movement for cement in spite of the decrease in prices of other construction materials. He said they are not making any downward adjustment just because the price of other construction inputs went down.

Thackwray explained that the prices of other construction materials like steel went up significantly last year. As a result, he said there is much room for these products to lower their prices.

On the other hand, Thackwray said they have only raised their price twice last year, the last in October 2008. On the upside, there will be no price increase because he said they have already managed the cost of their coal imports.

Also, Thackwray said the competitive situation will not allow for any upward adjustment in prices. He said the move of the government to remove the tariff on imported cement has not put a dent on their market share. However, it has ensured that prices will not go up.

He said their cement plants are still operating below capacity as they produced only 4.6 million tons last year, out of a total capacity of 6.5 million tons. For this year, Thackwray said they are confident their production will be better than last year.

“The first half was strong. The second half depends on the infrastructure projects of the government,” he noted. “For 2009, anything better than zero is good news.”

For the first four months of the year, volume went up six percent to eight percent. He said there is a strong possibility that they will be able to sustain this growth until the end of the year.

Thackwray said that they have three lines that are currently not running. He said there are no plans to operate these lines this year in spite of the six percent growth in cement demand for the first quarter.

Holcim reported a 27 percent increase in first quarter revenues compared to the same period a year ago. Revenues for the first three months was at P5.5 billion from P4.3 billion.

“This certainly exceeds our expectations. We’re seeing higher than anticipated growth in the market including regions outside the National Capital Region,” Thackwray said.