AEV pins hopes on gov’t projects to lift ce­ment sales

Business World - - CORPORATE NEWS - By Arra B. Fran­cia Re­porter

ABOITIZ EQ­UITY Ven­tures, Inc. (AEV) is bank­ing on the im­ple­men­ta­tion of the gov­ern­ment’s in­fras­truc­ture projects to boost its ce­ment busi­ness in 2018, as the seg­ment suf­fered from lower vol­umes and in­creased com­pe­ti­tion dur­ing the first nine months of 2017.

Repub­lic Ce­ment and Build­ing Ma­te­ri­als, Inc., un­der AEV’s in­fras­truc­ture arm Aboitiz In­fraCap­i­tal, ex­pe­ri­enced an 80% drop in earn­ings in the Jan­uary to Septem­ber pe­riod to P1.3 bil­lion. Aboitiz In­fraCap­i­tal Sabin M. Aboitiz noted earn­ings will re­main flat­tish for the rest of the year, with a turn­around ex­pected next year.

“We had new do­mes­tic com­pe­ti­tion also, those two things brought the prices to where they are to­day. Next year we be­lieve the vol­ume will grow, that the DTI ( De­part­ment of Trade and In­dus­try) DAO ( De­part­ment Ad­min­is­tra­tive Or­der) will be im­ple­mented, and the build pro­gram of the gov­ern­ment will start. With those three is­sues then we will have the vol­ume growth,” Mr. Aboitiz, who also sits as AEV’s chief op­er­at­ing of­fi­cer, said in a press con­fer­ence late Wed­nes­day.

The Duterte ad­min­is­tra­tion has com­mit­ted P8 tril­lion in both pub­lic and pri­vate spend­ing un­til 2022 to con­struct roads and rail­ways, among oth­ers. The plan looks to place in­fras­truc­ture spend­ing at 5.3% of the econ­omy in 2017, and then up by 7% by 2022.

AEV is also in the process of in­creas­ing its ce­ment ca­pac­ity by a mil­lion tons in the next three to five years. The in­crease will be done in two phases, start­ing with the de­bot­tle­neck­ing of its ex­ist­ing six plants in the coun­try to max­i­mize pro­duc­tion. The se­cond phase will in­volve the ac­tual con­struc­tion of a plant that pro­duces both clinker and ce­ment.

Mr. Aboitiz noted ex­pand­ing clinker ca­pac­ity would help bring down costs as op­posed to im­port­ing the ma­te­rial from other coun­tries.

“Those with clinker ca­pac­ity ac­tu­ally has lower costs. We only have 4 mil­lion tons with clinker ca­pac­ity out of our to­tal of 7.5 mil­lion. So we’re gonna in­crease the clinker ca­pac­ity. We’re de­cid­ing whether to make it in Ili­gan first or Bu­la­can,” Mr. Aboitiz said.

Asked on the other fac­tors that would boost ce­ment de­mand should the gov­ern­ment ex­pe­ri­ence de­lays in its in­fras­truc­ture pro­gram, Mr. Aboitiz said con­struc­tion from pri­vate busi­nesses will drive growth.

“Res­i­den­tial is still very strong, we feel that next year res­i­den­tial will be very strong. But still the NHA (Na­tional Hous­ing Author­ity) pro­gram, the gov­ern­ment has talked about hous­ing, there are big re­quire­ments,” Mr. Aboitiz told re­porters.

On the com­pany’s other plans for in­fras­truc­ture, the ex­ec­u­tive noted their fo­cus re­mains to be in air­ports.

“The small air­ports we are wait­ing for a clar­i­fi­ca­tion from the gov­ern­ment whether they’re go­ing to make it un­so­licited or so­licited ac­tu­ally, so we’re very in­ter­ested in air­ports,” Mr. Aboitiz said.

The group said it is also will­ing to as­sist the gov­ern­ment in re­build­ing Marawi, which the gov­ern­ment has just de­clared free from ter­ror­ist in­flu­ence.

“Our ce­ment plant is 30 kilo­me­ters away from there. So we feel like we have a role to play, be it with con­trac­tors, we’ll bid for sup­ply of ma­te­ri­als for ex­am­ple. We plan to do that when the plan is there, but of course we need to see what the gov­ern­ment’s plan is,” Mr. Aboitiz said.

Shares in AEV added 85 cen­tavos or 1.16% to P73.90 each at the stock ex­change on Thurs­day.

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