Cement manufacturers are firming up expansion plans as they gear up for the expected increase in demand for cement and other construction materials as the government accelerates its “Build, Build, Build” program.
Cements producers like Republic Cement of the Aboitiz Group and Holcim Philippines announced de-bottlenecking plans that will add capacities to their current output, while Eagle Cement of businessman Ramon Ang is busy putting up a new plant in Cebu to expand its presence in the Visayas-Mindanao area.
The additional capacities are expected to supply the expected spike in cement demand from 26 million metric tons in 2016 to about 35 million MT over the next three to five years, after the government announced plans to roll out over P3.6 trillion in public infrastructure projects from 2018 to 2020.
Holcim Philippines said it would invest $54 million over the next two years to expand production to 12 million metric tons from the current 10 million MT.
“The company will invest $54 million in the next two years to add two million metric tons to its current cement capacity by the first half of 2019, particularly in La Union and Davao,” Holcim Philippines president and chief executive Sapna Sood said.
“This investment continues the company’s successful de-bottlenecking of all sites in 2016 that already raised cement capacity to 10 million metric tons from 8.5 million,” she added.
The expansion is expected to strengthen the company’s position as the leading cement company in the Philippines.
Republic Cement likewise announced plans to spend up to $300 million over the next three to five years to expand its capacity in the Philippines.
The expansion plans, which will add one million MT to the company’s current seven million MT capacity, involves the de-bottlenecking of six cement plants and the construction of a new kiln.
Eagle Cement is spending P12 billion to build a new cement facility in Cebu with a target capacity of two million MT per year. By next year, it will complete a third cement production line in Bulacan that will add another two million MT in capacity.
The expansion plans are expected to put Eagle Cement as one of the leading cement companies in the country in terms of production output.
Demand still weak
While the industry awaits the rollout of infrastructure projects that the government has committed to build, cement companies are grappling with declining profits and revenues due to a weak cement demand since the start of the year.
Compounding the weak demand are the decline in prices and surge in cement imports.
CEMEX Holding Philippines Inc. earlier reported a 69-percent decline in profits in the second quarter of the year to P136 million. Sales, meanwhile, dipped 12 percent to P5.6 billion.
Holcim Philippines also booked a 4- percent decline in second quarter profits to P1.2 billion as sales dropped 20.4 percent to P8.6 billion on year.
Only Eagle Cement that managed to post a higher income on efficient operations.
Cement companies, despite these current situations, however, remain bullish over the medium term period.