Diversified engineering conglomerate DMCI Holdings Inc. is optimistic that Cemex Holdings Philippines (CHP), its biggest acquisition to date, will turn profitable as early as next year amid an ongoing expansion plan.
The Consunji-led firm said on Tuesday that it will target to cut CHP’s operational costs and boost volumes by expanding its capacity by 26 percent — translating to an annual capacity hike to 7.2 million metric tons (MT) from 5.7 million MT at present.
CHP is currently building a 1.5-million-ton integrated cement production line at its Solid Plant in Antipolo, Rizal, which is scheduled to start operations by September.
“We recognize CHP's operational and financial issues, but we are positive that we can turn it around by 2025 because of its ongoing capacity expansion and the clear synergies it brings to our group,” DMCI Holdings chairman and president Isidro A. Consunji said on Tuesday.
“While cement demand is currently soft, we expect it to rebound as our turnaround plan progresses, supported by the Build Better More program and the anticipated easing of interest rates next year,” he added.
CHP, the Philippines' fourth-largest cement manufacturer, suffered losses of P1 billion in 2022 and P2 billion in 2023 due to spiking costs and limited sales volumes.
According to DMCI Holdings, power, fuel, and other production costs, which took up 73 percent of CHP’s incurred expenses last year, are projected to decline as market prices start to normalize. It will also be tempered by the company's transition to a more affordable energy supplier through its affiliate, Semirara Mining and Power Corp. (SMPC).
Furthermore, administrative and selling expenses, which comprised 52 percent of the prior year's operating expenses, are likely to decrease due to onshoring initiatives for talent and business processes following the departure of CEMEX.
SMPC, for its part, also sees a significant surge in its coal sales to CHP by next year, projecting a remarkable 227 percent increase to 500,000 MT per year compared to this year's levels.
Beyond coal, the SMPC can also furnish CHP with 50 megawatts of electricity and fly ash.
Based on historical consumption patterns, DMCI and DMCI Homes are estimated to source around 400,000 MT of cement from CHP—with a potential to expand further once DMCI's order book grows and DMCI Homes' project launches recover.