DMCI Holdings Inc. expressed confidence it will be able to turn around losing Cemex Holdings Philippines (CHP) at the soonest possible time.
DMCI Holdings recently acquired the local cement manufacturing of Mexico’s Cemex SAB de CV for $305.6 million.
CHP, the Philippines’ fourth-largest cement manufacturer, reported losses of P2 billion last year on top of the P1 billion the year prior, primarily attributed to escalating costs and reduced sales volumes.
“We recognize CHP’s operational and financial issues, but we are positive we can turn it around by 2025 because of its ongoing capacity expansion and the clear synergies it brings to our group,” said Isidro Consunji, DMCI Holdings chairman.
“While cement demand is currently soft, we expect it to rebound as our turnaround plan progresses, supported by the Build Better More program and the anticipated easing of interest rates next year,” Consunji added.
CHP is constructing a 1.5-million ton integrated cement production line at its Solid Plant in Antipolo, Rizal.
This expansion will double the CHP’s capacity in Luzon and will boost its overall installed annual production capacity by 26 percent from 5.7 million tons to 7.2 million tons, Consunji said.
The new cement production line is scheduled to commence operations by September.
Consunji said the group expects power, fuel and other production supplies costs, which represent 73 percent of CHP’s cost of sales in 2023, to decrease due to normalizing market prices and the transition to a more affordable energy supplier under Semirara Mining and Power Corp. (SMPC), a DMCI unit and also part of the CHP acquisition group.
“Additionally, administrative and selling expenses, which accounted for 52 percent of prior-year operating expenses, are expected to decline from talent and business process onshoring initiatives, following the exit of Cemex,” Consunji said.
Consunji added as a result of the acquisition, SMPC expects a significant increase in its coal sales to CHP, estimating a 227 percent rise to 500,000 tons annually compared to 2024 levels.
“In addition to coal, the integrated energy company can also supply CHP with 50MW (megawatts) of electricity and fly ash,” he said.
DMCI and DMCI Homes source around 400,000 tons of cement from CHP.
“This volume has the potential to expand further, subject to growth in DMCI’s order book and a recovery in DMCI Homes’ project launches,” Consunji said.
