Eagle Cement reports flat earnings in ‘weak’ Q2
EAGLE CEMENT Corp. realized flat earnings for the April to June period, rising by only one percent on the seasonally weak quarter characterized by the rainy season.
The Ramon S. Ang-led cement manufacturer booked a net profit of P1.19 billion for the second quarter, compared to the P1.03 billion in the same period last year. This follows a 6% rise in net sales to P3.71 billion.
“Historically second quarter is slower because of the rainy season,” Eagle Cement President and Chief Executive Officer John Paul L. Ang said in a press briefing in Makati yesterday, adding that the Holy Week holiday occurred in the early part of second quarter.
Net income for the first half was up 13% to P2.2 billion, which the company attributed to “higher sales volume in the midst of tight competition and an industry decline in prices.”
Six-month net sales rose 12% to P7.5 billion due to higher volumes of both bagged and bulk cement, although most of the growth occurred in the first three months of the year.
Eagle Cement Chief Financial Officer Monica L. Ang said the company experienced price pressures during the January to June period, with average selling price dropping by high single digits due to stiff competition in the market.
“We are already coming off a high base, so you’ll see that the percent growth isn’t as large compared to the previous quarter,” Ms. Ang said.
Higher sales volume for the first six months drove cost of goods sold by 19%, alongside the increase of fuel and power costs as coal and electricity prices spiked during the period. Ms. Ang noted that Eagle Cement was able to mitigate the effects of higher electricity prices with the decline in the consumption of imported clinker, as it increased capacity utilization in Lines 1 and 2 of its cement plants.
Private consumption of cement boosted the company’s volumes for the period, as the government has yet to start the actual implementation of its massive infrastructure program.
“We believe the market grew in the first half, even with all the challenges in the industry. Lumaki ang market, overall Philippine market... by at least 5 to 6% range in the first half of the year,” Mr. Ang said, citing data taken after monitoring Customs and port terminals accepting cement products.
Meanwhile, Eagle Cement said it is on track to complete Line 3 of its Bulacan plant by the first quarter of 2018, which will add 2 million metric tons ( MT) to the firm’s annual capacity.
Construction on its Cebu cement plant will begin in the fourth quarter of 2017, and is slated for completion by 2020. With another 2 million MT in annual capacity, the plant is set to supply the Visayas and Mindanao region.
After the completion of these plants, Eagle Cement will have a total capacity of 9.1 million MT or 230 million cement bags annually. Eagle Cement said this would make it the largest cement firm in the Philippines, in terms of capacity.