Philippines: Holcim Philippines expects a modest growth rate of 5-6% in 2012 as it attempts to recover from a steep drop in net profit in 2011, according to its chief operations officer Roland van Wijen.
The Philippine subsidiary of Switzerland-based Holcim Ltd posted a net profit of US$47m in 2011, down by 47.1% from US$90m in 2010 because of weak demand and higher production costs. Sales revenues dropped 9% to US$496m due to a surge in prices of coal and electricity, the biggest cost components in cement production.
"Last year was a challenging year for us because reduced government spending meant that there was less structure built, which has a direct correlation to cement consumption. Also, the (operational cost) has been increasing which had a marked effect on our bottom line. Those are the elements we are recovering from," Van Wijnen said at the launch of Holcim's new CSR project. He added that the company is currently cutting production cost by stepping up the use of waste materials as an alternative to coal.
Holcim Philippines currently has a market share of one third of the cement industry and at present the company has no plans of expanding its market share. "We will go there when our customers want us to go. Right, now, the market has an over-capacity so significantly increasing our market share will not contribute to growth," Van Wijnen said.
Van Wijnen said the company's growth would be greatly driven by more projects that would be approved under the government's Public-Private Partnership (PPP) scheme. The company is pursuing opportunities for supplying winning bidders in the PPP projects. Van Wijnen said the company is optimistic that both the government and the private sector would increase infrastructure spending this year.
With a workforce of over 1700, Holcim Philippines operates four plants in La Union, Bulacan, Misamis Oriental and Davao. In January 2012 Holcim reopened its cement plant in Calaca, Batangas, to take advantage of an anticipated surge in demand for new buildings and infrastructure in Metro Luzon.
