Holcim profit falls 27% on soft prices

MANILA, Philippines - Holcim Philippines Inc. reported a net income of P625.9 million in the third quarter this year, down 27 percent on lower sales volume, soft prices and increased expenses.

Net sales declined 7.45 percent to P5.34 billion while gross profit dropped 21 percent to P1.6 billion.

Operating expenses rose 14 percent to P415.96 million from P365.14 million.

The company said the typhoon season slowed down construction activity, with Holcim’s sales volume falling down six percent in the third quarter.

Holcim chief operating officer Roland van Wijnen, however, noted that the volume decline was lower than in the previous two quarters, giving credit to the government’s move to increase spending for infrastructure.

“The increased implementation of government projects in the third quarter bodes well for the company and the industry in general. This would have pushed up monthly volumes had it not been for the typhoons,” he said.

In the nine months ending September this year, Holcim’s net earnings fell 43.7 percent to P2.06 billion as net sales slid to P16.5 billion from P18.65 billion.

Van Wijnen noted that while the cement industry is challenged by soft volumes and volatile prices, Holcim Philippines is doing what it can to mitigate the impact on its business performance.

“We’re managing areas within our control, seeing to it that all our plants run efficiently and instilling a mindset of better cost management across the entire organization. These initiatives will certainly help prepare us for whatever opportunities will come in 2012,” he said.

Another challenge faced by the industry is the continued increase in operating costs, particularly for coal and electricity. In addressing this challenge, Van Wijnen said Holcim is stepping up usage of alternative fuels and raw materials through its geocycle business.

Geocycle makes use of a responsible and environment-friendly technology of cement kiln co-processing which converts a range of waste streams into alternative fuel or raw material. However, even with these efforts, price adjustment will be necessary to ensure a level of profitability required to have a sustainable business than can make continuous investments to supply the growing demand.