Consunji-led conglomerate DMCI Holdings, Inc. said Tuesday it expects Cemex Holdings Philippines (CHP) to turn around as early as 2025 despite the weak cement demand and competition from imports.
DMCI Holdings president and chief executive Isidro Consunji said that while CHP has operational and financial issues, he is confident that the group can revitalize the cement firm by 2025 given its capacity expansion and the clear synergies with the conglomerate.
“While cement demand is currently soft, we expect it to rebound as our turnaround plan progresses, supported by the Build Better More program [of the Marcos administration] and the anticipated easing of interest rates next year,” he said.
DMCI last week signed an agreement to acquire the 100-percent interest in Cemex Asian South East Corp., which owns 89.86 percent of CHP.
CHP, the Philippines’ fourth-largest cement manufacturer, reported losses of P1 billion in 2022 and P2 billion in 2023, primarily attributed to escalating costs and reduced sales volumes.
The cement firm is in the process of constructing a 1.5-million-ton integrated cement production line at its Solid Plant in Antipolo, Rizal.
The expansion will increase CHP’s overall installed annual production capacity by 26 percent to P7.2 million tons from 5.7 million tons.
The new cement production line is scheduled to commence operations by September 2024.
DMCI also expects CHP’s power, fuel and other production supply costs to decrease on normalizing market price.
CHP will also the transition to a more affordable energy supplier, Semirara Mining and Power Corp. (SMPC), which is the coal mining and energy company owned by DMCI.
Power and fuel costs accounted for 73 percent of CHP’s cost of sales in 2023.
SMPC also sees a significant increase in its coal sales to CHP, estimating a 227-percent rise to 500,000 metric tons annually compared to the previous years’ level.
SMPC can also supply CHP with 50 megawatts of electricity.
CHP will also have a sure market as DMCI’s construction and real estate subsidiaries are estimated to source around 400,000 metric tons of cement from CHP.
The volume has the potential to expand further, subject to growth in DMCI’s order book and a recovery in DMCI Homes’ project launches.