Concreat shrugs off peso slump, eyes expansion
Concreat Holdings Philippines Inc. (CHP) is pushing ahead with investments to improve its cement plants and expand logistics capacity, largely unfazed by the weakening peso as it relies mainly on local fuel and power supplies.
Speaking to reporters on the sidelines of the Annual General Membership Meeting of the Shareholders' Association of the Philippines on Tuesday, CHP President and CEO Herbert Consunji said the company has spent about P5 billion over the past two years on upgrading its facilities, with further improvements underway to boost efficiency and support its return to profitability next year.
According to Consunji, CHP remains largely insulated from the weakening peso as most of its operating requirements are sourced locally, while its dollar-denominated expenses are limited mainly to capital expenditures.
“We have no dollar-denominated imports except for capital expenditures, which are minimal,” he said.
The company also benefits from long-term fuel and power supply arrangements with Semirara Mining and Power Corp., helping cushion the impact of rising costs.
“So far, we're not affected yet. We have long-term contracts for supply and so on,” Consunji said.
CHP is focusing its investments on improving production efficiency and logistics, including the rehabilitation of a cement kiln in Antipolo, targeted for completion by 15 November.
It has also expanded its Cebu port to accommodate eight vessels simultaneously, up from two previously, with plans to increase capacity to 10 vessels.
“We've spent so much on efficiency, logistics, power,” Consunji said. “I hope the things that we have spent will pay back.”
Despite these improvements, CHP continues to record net losses due to substantial depreciation expenses from its investments.
“Well, net loss because of the depreciation. But in terms of operation, we're above water,” he said.
Its Apo cement operations in Cebu have already turned positive as the company regains market share from imported cement, while its Antipolo plant continues to recover from capacity upgrades.
Consunji said the weaker peso could further benefit CHP by making imported cement more expensive, strengthening the competitiveness of local producers.
With improving operations and higher sales volumes, CHP is targeting a return to profitability next year.
“Turnaround next year. We see for next year, as long as the prices will hold,” he said.
To support its recovery, CHP is also considering further cement price increases beginning in mid-November to offset higher fuel, coal and electricity costs.
Consunji said cumulative increases could reach P28 to P40 per bag for the year, although adjustments would be implemented gradually to avoid weakening demand.