• Local cement demand growth slowed down due to delayed public spending
• Holcim mitigated impact of weak demand and higher variable costs through diligent cost management
• Stronger performance in Q4 paves the way for a brighter outlook for 2012
The year 2011 was a challenging one for cement manufacturer Holcim Philippines, Inc., (HOLCIM). Coming from a very strong market demand in election year 2010, Holcim’s full-year sales revenues dipped by almost 9% to Php 21.62 billion. At the same time, given a continuous rise in prices for coal and electricity, which are the largest cost components in cement production, the energy costs per ton rose by 14%.
Amid the difficult external factors, Holcim achieved a profit of Php 2.03 billion. Holcim Chief Operating Officer Roland van Wijnen said, “The environment in 2011 was certainly tough, but I believe we were able to demonstrate our resilience as an organization by responding early to market challenges and focusing on areas within our control. We managed to keep our market share within our target range and put in place various initiatives that have helped us improve operational efficiencies and effectively manage our costs. All these help us to position ourselves well for future growth.”
Moreover, Van Wijnen noted the improved performance of the Ready Mix Concrete and Geocyle businesses. Geocycle enjoyed a record year, as Holcim stepped up the usage of alternative fuels and raw materials to reduce the company’s dependence on coal. Holcim's ready-mix concrete business registered a jump in volumes as it continued to gain the trust of its customers, especially premiere developers and contractors.
As for the company’s prospects this year, Van Wijnen said its outlook was one of “cautious optimism,” anchored on the government’s commitment to frontload infrastructure spending and the continued vigorous construction activity from the private sector—both of which were already apparent in the last quarter of 2011.
Even as Holcim looks forward to stronger demand, Van Wijnen added that the company will continue to explore ways to bring down costs through operational excellence and increased use of alternative fuels and raw materials.
“To ensure profitability levels that would enable us to make further significant investments to supply the market, cement prices will unavoidably have to be adjusted. For a sustainable operation, we need to return to 2010 price levels and recover the cost increases of 2011 and 2012,” he added.