Republic Cement Building Materials has invested P10 billion for operational efficiencies but revenues remained suppressed due to competition from dumped imports from Vietnam, according Reinier Dizon vice president, Strategy and Business Development at Republic Cement.
But according to an industry, in contrast, the expansion plans of the two other big players have not been pursued, leaving supply gaps in the market.
Dizon told a Tariff Commission hearing last week the company’s gross profits declined year over year 36 percent from 2017 to 2019 but improved by 30 percent in 2020 only owing to Republic’s operational improvement and cost- cutting measures.
“We have invested something to the tune of P10 billion or $200 million. One would expect especially our shareholders, that there are improvements. We are seeing those improvements following significant capital investments that we have made. Yes, there are some financial improvements. But our revenues were still suppressed. There’s still price suppression because of imports coming in from Vietnam into the Philippines at dumped prices,” Dizon told the hearing on the petition by local manufacturers to slap dumping duties on Type 1 and Type 1P cement imported from Vietnam.
Dizon said the capacity utilization of Republic Cement’s plants has been affected by the dumping of cement from Vietnam, falling by 5 percent in 2019 and 19 percent in 2020.
Production decline by 6 percent and .1 percent 2019 and 2020, respectively.
Dizon said Republic’s finished goods ending inventory volume increased by 2 percent in 2018 and decreased by 6 percent in 2019 while finished goods inventory value increased by 20 percent in 2018, but declined by 12 percent in 2018.
However, due to dumping, by 2020, finished goods inventory volume and value rose significantly to 25 percent and 12 percent, respectively.
Republic Cement has six plants, four in Luzon and one each in Cebu and in Mindanao.
Dizon pointed to the competition posed by cement imports from Vietnam even during the strict lockdown, affecting their Luzon plants.
An industry insider said Cemex’s Solid plant expansion has long been delayed due to the pandemic while Holcim’s investments were put on hold in 2019 due to the plant divestment of the company.
The source said the imports have helped stabilize supply and prices and imposing additional duties at this time is ill-advised. – Irma Isip
