• Holcim Philippines kept pace with strong industry growth in Q3, as robust demand persisted despite heavy rains
• As preventive maintenance shutdowns led to lower clinker production, the company opted to import clinker to keep strong market supplied, although at higher production cost.
• The company is confident that demand will be sustained on the country’s positive economic prospects, and is moving toward expanding capacity
In what is traditionally a weak season for the construction industry because of the monsoon rains, cement demand remained robust on account of sustained government infrastructure spending and steady rollout of residential and commercial projects. The Cement Manufacturers Association (CeMap) reported year-to-date growth at 20%.
Holcim Philippines, Inc. kept pace with industry, with year-to-date growth also at 20%.
Revenues for the past nine months reached Php 20.2 billion, up 22.5% from a year ago. Efforts to keep its markets supplied came at higher cost, however, as the company had to import clinker to augment production given that several of its facilities were under preventive maintenance.
Holcim Philippines Chief Operating Officer Roland van Wijnen explained: “We usually use the slowdown in the rainy season as time for maintenance and repair. But, as demand exceeded expectations this year, we were confronted with the possibility of insufficient supply. Given our commitment to ensure reliable supply, we chose to go for more expensive clinker imports.”
Van Wijnen says that the company expects to achieve double-digit volume growth this year. He expects better performance in the months ahead, especially as the plants achieve full efficiencies following the completed maintenance and repair initiatives.
Holcim Philippines continues to have an optimistic outlook on the industry, and is confident that growth will carry over to 2013 given the positive economic climate and as the impact of the Private-Public Partnership projects begins to be felt.
“The challenge for us is to meet increasing demand over the longer term,” said van Wijnen. “We have begun reactivating our idle facilities, beginning with our terminal in Calaca, Batangas last year. Our grinding plant in Mabini will be operational by the third quarter of next year.”
“What follows would be to build a new cement plant, and we hope to be able to take the first important step next year,” he explained. “We are now in the midst of preparing a proposal for a new cement plant to be submitted for Board approval in the first half of 2013.”
Van Wijnen shared that the company is looking at a brown field project which would take less than three years to complete. Getting approval for expansion, says Van Wijnen, would be the result of a journey started three years ago by Holcim Philippines to convince its Zurich-based headquarters that the market is ready for growth; that the business and political environment supports that growth; and that the company itself has earned the right to grow by demonstrating its capability to capture growth opportunities with its continuing focus on the things it considers most important safety, customer focus, people development and operational excellence.