Cemex eyes flat cement volume on infra project delays

Cement maker Cemex reports flat sales numbers in the third quarter owing to low construction activities during the period.

Cemex Holdings Philippines Inc. is expecting flat cement volumes for full-year 2019 after net sales in the third quarter dropped three percent due to lower volumes prompted by slower construction activity.

The cement maker said net sales in the July to September period declined to P5.86 billion from P6.02 billion in the same period last year.

Domestic cement volumes were down six percent in the period, Cemex said, due to delays in public infrastructure projects which has negatively impacted private investment.

Infrastructure activity slowed in the first half of the year due to reduced government spending driven by the four-month delay in the passage of the 2019 national budget. Still, Cemex said sales rose two percent in the first nine months of the year, to P18.2 billion from P17.905 billion in the same period last year.

In a presentation sent to the stock exchange on Friday, Cemex said it also benefited from higher operating earnings, foreign exchange gains and lower income tax expenses, bringing its consolidated net income in the first nine months to P875 million from a net loss of P663 million in the same period last year.

In the third quarter alone, net income also swung to P72 million from a net loss of P79 million in 2018.

“We continued to face lower construction activity during the third quarter. Nevertheless, we are pleased with what we have achieved through the first nine months of the year, particularly with our own efforts to optimize costs, maintain efficiencies, and improve our customers’ experience,” Cemex president and chief executive officer Ignacio Mijares was quoted as saying.

Cemex is spending P5.675 million in capital expenditures this year. Of the budget, P4.7 million is allotted for its solid cement plant expansion, while the rest is allocated for maintenance.

Cost of sales as a percentage of sales remained flat at 59 percent in the first nine months, while operating expenses were down three percent points with the reduction stemming from the distribution side. The company is aiming to lower its distribution expenses by two to three percent this year.

Operating earnings before interest, tax, depreciation and amortization (EBITDA) stood at P3.4 million, up 21 percent from P2.85 million last year.

On its planned $250 million stock rights offering, Cemex said it has initiated the corresponding processes with the Securities and Exchange Commission and the Philippine Stock Exchange. The company is aiming to finalize the offering by the first quarter of 2020.