DMCI Holdings Inc. is slashing its planned capital spending for the year, expecting to spend just P19.4 billion compared to an earlier plan of P40.4 billion, a 52 percent cut.
Isidro Consunji, DMCI Holdings president, sees a period of weak demand as a result of the new coronavirus disease 2019 pandemic.
“We expect weak demand and low selling prices to affect most of our businesses. DMCI (D.M. Consunji Inc., the construction business) could show more resilience, if supported by massive public spending and timely issuance of permits and rights-of-way,” said Consuji.
“At this stage of the pandemic, we cannot predict how the business environment will evolve but it will definitely take some time before our company can rebound to its pre-pandemic income and dividend payout levels,” he added.
Consunji said the dramatic reduction in capex is a result of planned activities postponed or canceled for next year.”
DMCI said most of the reduction will come from unit DMCI Homes with plans to reduce spending to P14 billion from an earlier plan of P31 billion capex.
DMCI Homes said its land acquisitions will be capped at P4 billion, a 79 percent drop from the original plan of P19 billion.
The company is also in the process of recalibrating its plans, with D.M. Consunji looking at potential rightsizing of manpower.
Consunji said DMCI is also suspending its buyback program to use the money as cash dividend for shareholders.
As of end-June, DMCI had consolidated cash and cash equivalents of P14 billion and P52.6 billion in consolidated debts.
Consunji said only P14.6 billion of its total debt will mature in the next 12 months and that in the event of a protracted economic recovery, units DMCI Homes and Semirara Mining and Power Corp.–which account for the bulk of the consolidated debt–have P53 billion in unused credit lines to tide them over.
“We are debt-free at the parent level, which gives us the flexibility and financial standing to tap credit facilities and funding sources, if needed,” he said.
