Cemex posts $17.8M net loss despite high sales

CEMENT maker Cemex Holdings Philippines Inc incurred a 2018 net loss of 930 million pesos ($17.849 million), a reversal of the previous year’s net profit of 658.8 million pesos, due to lower operating cash flow, higher income tax expenses and larger foreign exchange losses.

For the fourth quarter alone, Cemex incurred a larger net loss attributable to equity holders amounting to 325 million pesos, compared to a net loss of 21.9 million pesos in the same period last year.

For the full year, cement sales volume increased by seven per cent, driven by robust demand from both the private and public sectors. The company posted record volumes in the third quarter and first half of the year, bringing full-year sales revenue to 23.4 billion pesos, seven per cent up from the previous year.

In the fourth quarter, the company’s financial performance was adversely affected by the landslide that happened in Naga City in Cebu on September 20.

Cemex was forced to obtain raw materials from farther sources, jacking up its cost of sales to 66 per cent in the last quarter from 58 per cent a year ago. This suggested that Cemex had to spend 66 centavos (cents) to sell every peso of its products.

As a result, the company’s operating earnings before interest, taxes, depreciation and amortisation (Ebitda) margin went down in the fourth quarter to seven per cent from 12 per cent. For the full year 2018, Ebitda margin eased to 12 per cent from 15 per cent in the prior year.

Ebitda margin is an indicator of a company’s financial health without pr i ci ng i n f i nancial decisions, accounting decisions or various tax environments.

The company’s lower operating Ebitda and higher financing and tax expenses resulted in the net losses in the fourth quarter and the full year.

“The past quarter was a very challenging one following the landslide in Naga City. It tested the strength and resolve of all who were affected. The perseverance of the community was very inspiring even as we worked on restoring our operations to normality,” Cemex president and CEO Ignacio Mijares said.

In October, one of the company’s main subsid ia r ies, Sol id Cement, signed a procurement, construction a nd i nsta l lat ion ag reement w it h China’s CBMI Construction Co Ltd for the new cement production line scheduled to start operations in t he fou r t h qua r ter of nex t yea r. The company continues to eva luate different options to f und t his expansion project.

“We are excited about the prospects for the company in 2019 and see continued strong cement demand in the country. For this reason, we remain focused on improving our operations and completing our expansion in a timely manner,” Mijares said.

A unit of Mex ico-based Cemex SAB, Cemex produces and markets cement and cement products in the Philippines, such as ready-mix concrete and clinker, in t he Philippines through direct sa les using its extensive marine a nd la nd distribution net work. Its brands include “APO,” “Isla nd” and “Riza l”. PHILIPPINE DAILY INQUIRER