Higher cement sales lift Holcim's H1 profit by 42%

By Judith Balea, abs-cbnNEWS.com

Posted at Aug 13 2010 07:18 PM | Updated as of Aug 16 2010 08:06 PM

MANILA, Philippines - Top cement producer Holcim Philippines reported a 42% year-on-year growth in first-half net income to P2.8 billion as election-related spending and private sector investments in real estate boosted sales.

Holcim's January to June net sales rose 13% from a year ago to P12.9 billion.

Holcim chief operating officer Roland Van Wijnen noted they continued to post growth despite higher input costs brought about by the power shortage in Mindanao.

He said persisting brownouts in the region forced Line 1 of the company's Lugait facility to shut down, resulting in limited production of clinker, a raw material for making cement. He said the company had to resort to imports.

He also said Holcim's power cost in Mindanao soared by over 40% as the El Niño-induced dry spell required more expensive energy sources. Power and fuel account for more than half of the company's variable costs.

Looking forward, Wijnen said the company remains "positive" about its prospects, although demand in the second half is expected to be lower with the onset of the rainy season and absence of election spending.

"I would expect that the growth in the first half will not continue," he said.

Holcim is spending P825 million for expansion this year, higher than the P600 million it spent in 2009.

The company plans to resume operations of its cement terminal in Calaca early next year to facilitate product deliveries to markets in Luzon. The Calaca facility will have a capacity of 1.5 million tons.