Displaying items by tag: Philippines
Philippines: Aboitiz Equity Ventures Inc has signed a deal with CRH, which when completed would allow it to join CRH in investing in the Philippine cement plants of Lafarge.
CRH had earlier agreed to buy for US$7.34bn in cement assets from Lafarge and Holcim Ltd, whose asset divestments are part of preconditions to winning regulatory approval for their merger. Both Lafarge and Holcim have cement assets in the Philippines. Aboitiz Equity plans to join CRH in acquiring a majority of the shares of Lafarge Republic Inc and the shares in Luzon Continental Land Corp and Lafarge Cement Services Philippines Inc, which constitute the majority of Lafarge's local cement operations.
Aboitiz Equity president Erramon Aboitiz said that if the deal with CRH is finalised, it would provide it with an investment that dovetails with its plan to invest in infrastructure development. The company is already in banking, property development, food manufacturing and power generation and distribution. "Venturing into infrastructure meets our growth criteria. We are very optimistic of the potential gains this new core business will bring to the Group amid the huge demand for infrastructure in the Philippines," said Aboitiz.
The conclusion of deal is subject to the successful completion of the merger between Lafarge and Holcim as well as approval by the boards of both CRH and Aboitiz Equity.
Philippines: Cemex has announced that it is undertaking a new US$300m investment in the Philippines. The new investment will include the construction of a new 1.5Mt/yr integrated cement production line at its Solid Plant in Luzon. This will double the capacity of the Solid plant and will represent a 25% increase in its cement capacity in the Philippines.
"We see a positive outlook in the business environment and we are committed to be a reliable cement supplier given the growing need for high quality building materials required for public infrastructure, commercial projects and housing," said Fernando A Gonzalez CEO of Cemex.
Earlier this month, Cemex Philippines officially inaugurated the completed capacity expansion in its APO plant in Cebu, as well as a network of logistics centres in Visayas and Mindanao. The US$80m investment increased Cemex's cement production capacity in its APO plant by 40% and helped improve distribution capabilities with additional terminals in Iloilo and Davao.
"We are preparing our facilities for the increasing demand in the Philippines, reiterating our commitment to supporting the development of the country," said Joaquin Estrada, president of Cemex Asia. "We endeavour to be a partner of the Philippine government and the business community in ensuring growth and progress."
In addition, Cemex Philippines has set up a US$18.6m waste heat recovery (WHR) unit that will capture the excess heat in one of its cement production facilities to produce usable electricity. Cemex Philippines already uses alternative fuels like rice husks and refuse-derived fuel (RDF) as part of its fuel mix to minimise energy costs.
Philippines: The Philippine operations of Thailand's Siam Cement Group (SCG) recorded a double-digit growth in revenues in the first quarter of 2015 due to stronger demand. SCG's products being sold in the Philippines include building materials, ceramic tiles, sanitary wares, and paper.
SCG said that its revenues reached US$43m in the first quarter of 2015, 12% higher than the US$38m in the same period of 2014. The rise was attributed to growing demand in the sanitary wares and paper market in the Philippines.
"SCG in the Philippines currently focuses on penetrating the market as well as building the SCG brand to strengthen its position and recall among Filipino consumers," said SCG president and CEO Kan Trakulhoon.
For the Southeast Asian region, SCG's total revenues reached US$3.35bn in the first quarter of 2015, down by 10% year-on-year due to lower chemical prices as a result of declining oil prices. In line with its aim of developing more high-value added products and services to meet customer needs, SCG has set aside US$147m for investments for research and development in the Southeast Asian region in 2015.
Given the overall positive economic outlook in the region, SCG intends to continue to expand investments. "We are confident that the region's overall economy is continuing on an upward trend and is extremely favourable. Thus, SCG's investments regionally will continue to grow," said Trakulhoon.
Philippines: Cemex Philippines has recently completed a US$67.3m cement mill at its Apo cement plant in Naga, Cebu as part of its comprehensive expansion plan in the country. The mill increases the capacity of the Cemex Apo plant by 1.5Mt/yr and Cemex's production capacity in the Philippines by 40%.
"We in Cemex are proud improving the standards of life of the people, proud of producing and distributing valuable products and services and doing it in a way that has a positive impact to our communities," said Pedro Palomino, Cemex Philippines president. Aside from the cement mill in Cebu, Cemex Philippines has also finished the construction of new marine distribution terminals located in Manila, Iloilo and Davao amounting to a total of US$22.4m.
Philippines: Holcim Philippines has targeted an investment of US$40m over a three-year period to increase cement production capacity. Despite strong domestic demand for cement, revenue fell by 10% in the first quarter of 2015 due to rising costs.
The investment will mainly finance the 'debottlenecking' of existing facilities by bringing production capacity up to 10Mt/yr by 2017, according to Eduardo A Sahagun, president and chief executive officer of Holcim Philippines, in a briefing to local press. At present the cement producer has a production capacity of 8.2Mt/yr. Around 65% of the investment will go towards maintenance of existing facilities. Holcim Philippines remains committed to developing a brownfield cement plant in Norzagaray, Bulacan subject to the approval of the company's head office in Switzerland.
Sahagun blamed the fall in revenue on expensive clinker imports from Vietnam intended to support the market. Despite this the company expects annual profits for 2015 to exceed those in 2014.
Philippines: Lafarge Republic Inc expects to raise its cement output by 17% with the opening of new mills at its plants in Rizal and Bulacan. Lafarge Republic president Renato Sunico said that the company expects to produce >7Mt/yr of cement by the end of 2015, up from 6Mt/yr at present.
The US$20.1m grinding mill at the plant in Teresa, Rizal that was inaugurated in April 2015 is expected to produce 850,000t/yr of cement. This increases the plant's output to 2Mt/yr. The new mill will also contribute to Lafarge Republic's commitment to sustainability as it reduces the plant's energy consumption by 40%. A similar 850,000t/yr capacity mill will also be installed at the plant in Norzagaray in Bulacan by December 2015. "The reason why we put up a new mill in Teresa and why we want to put up a new mill in Norzagaray, is because we want to make sure that we can serve demand," said Sunico.
With regards to the LafargeHolcim merger, no consolidation of the two companies' operations in the Philippines is required as Holcim has expressed plans to purchase some of LafargeRepublic's assets such as Lafarge Iligan Inc, Lafarge Mindanao Inc, Lafarge Republic Aggregates Inc and the Star Terminal at the Harbour Centre in Manila. CRH has also been given rights to acquire the remaining assets of Lafarge Republic, including the plants in Rizal, Bulacan, Batangas and Cebu.
CRH has made good on its intentions. This week it stumped up Euro6.5bn to buy assets from Lafarge and Holcim in four continents. The move follows preparation since at least May 2014 when the Irish building materials group announced a divestment programme. In October 2014 it announced that it would sell its brickwork division.
CRH is finding the cash through a mix of existing cash, debt and equity placing. Interestingly, back in 2012 an Irish stockbroking analyst who was interviewed reckoned that the company could spend up to Euro3.5bn on acquisitions whilst remaining within its banking agreements. Throw in the recent sales and planned divestments and the planned acquisition from LafargeHolcim doesn't seem like too much of a stretch for CRH.
If completed, the purchase will see CRH take on 24 cement plants with a production capacity of 36Mt/yr. As a back of the envelope calculation suggests the sale price of Euro6.5bn isn't far off the occasionally used price of US$200/t for western cement production. The deal also includes aggregates, ready mixed concrete and asphalt assets.
The purchase marks a change in CRH's buying strategy both in terms of scale and distribution. Much of CRH's previous acquisitions have been minority shareholdings that make it difficult to accurately report the company's position in the cement industry. For example, in our Top 100 Report CRH was reported to have a production capacity of 6.49Mt/yr for majority shareholdings with another 19.9Mt/yr for minority shareholdings. The new cement capacity being purchased blows this away because it more than doubles CRH's total capacity and it appears to be all majority owned. CRH thinks that this will propel it to become the world's third biggest building materials manufacturer after LafargeHolcim and Saint-Gobain, leapfrogging Cemex and HeidelbergCement in the process. Strangely there is no mention of the huge Chinese players in the top five manufacturers in CRH's acquisition presentation.
CRH has avoided buying plants in southern Europe but it is relying on the slowly improving growing UK market, where CRH will pick up four plants, to balance the risk. Elsewhere in Europe, the three Holcim plants in France have been suffering from continued low construction rates in that country and the two Lafarge cement plants in Romania are unlikely to have recovered from a production fall in 2013. Outside of Europe growth has been poor in Quebec in 2013 and 2014, where CHR is buying two plants from Holcim. Both Lafarge and Holcim have also seen a slowdown in Brazil. However, the Philippines does seem like a better bet for CRH, with solid cement volumes growth seen by Lafarge in 2013 and the first three quarters of 2014.
With CRH now looking like a company that wants to produce cement rather than one that owns parts of companies that produce cement, all eyes are on the construction markets. 14 of the 24 cement plants CRH are buying are in Europe. Buying at the bottom of a sustained production slump makes sense because the asking price will be low. However, has the bottom been reached yet?
Philippines: Cement industry sales in 2014 increased by 9.6% year-on-year, according to the Cement Manufacturers' Association of the Philippines (CeMAP) president Ernesto M Ordoñez.
Ordoñez said that local market sales reached 21.3Mt in 2014, compared to 19.4Mt in 2013. Sales for the fourth quarter of 2014 jumped by 15.7% to 5.2Mt, up from 4.5Mt in 2013. The increase in sales of cement producers was supported by the continuous growth of construction projects. Data from the Philippine Statistics Authority (PSA) showed that construction activities in January - September 2014 amounted to US$6.17bn, 39% higher than the US$4.45bn in the same period of 2013. Non-residential projects had the largest amount of construction projects at US$3.25bn, while residential projects were pegged at US$2.45bn in the first nine months of 2014.
Philippines: Cash-strapped Pacific Cement Company (PACEMCO) has decided to extend the suspension of its cement plant operations for three months to complete ongoing negotiations regarding a possible investment of funds needed to re-open the plant.
"During this period of work suspension, management has committed to respect the benefits of the employees which are clearly spelled in the minutes of the conciliation conference held at the office of the Department of Labour and Employment (DOLE) Secretary on 14 November 2014," said Inocencio R Cortes, executive vice president of PACEMCO. "As a result of this extended work-suspension, all employees are hereby advised not to report to the main plant site or the port site as the case may be, as well as to those in the head office in Makati City, effective 17 November 2014 and until further notice," he added.
PACEMCO's cement plant halted operations on 5 May 2014 after the Surigao del Norte Electric Cooperative cut its power supply for unsettled obligations worth at least US$555,432. Edwin Batac, union president of Pacemco Mamumuong Nagkahiusa, said that the company has 343 employees who were on forced leave after the company stopped its operations. Batac added that the company is financially drained.
Philippines: The Cement Manufacturers Association of the Philippines' (CeMAP) president, Ernesto Ordonez, said that total cement sales for the first half of 2014 reached 10.72Mt, up from 10.14Mt for the first six months of 2013. For the second quarter of 2014 alone, cement sales climbed by 3.2% to 5.52Mt from 5.35Mt in the comparable period of 2013. Compared to the first quarter's 5.19Mt, cement sales in the second quarter of 2014 grew by 6.19%. The increase in sales was seen amid higher demand from both the public and private sectors.
Ordonez said that there was a Department of Public Works and Highways (DPWH) budget increase, while the private sector continued to grow because of increased confidence in the government. The latest data from the Department of Budget and Management (DBM) showed that government spending for infrastructure and capital outlay posted a 24.5% increase to US$2.16bn as of April 2014, compared to US$1.74bn in 2013. The notable infrastructure disbursements were channelled mostly to on-going reconstruction and rehabilitation efforts in communities devastated by Super Typhoon Yolanda. The DBM said that the increase in disbursements is also due to the Aquino administration's stronger focus on strengthening the economy through infrastructure and capital outlay investments.