Holcim’s net profit drops due to weak demand and higher expenses
HOLCIM Philippines, Inc. on Thursday reported that its first-quarter attributable profit fell 54% to 420.28 million pesos from 908.92 million pesos previously, partly due to soft cement demand and rising production and distribution costs.
The company recorded net sales of 6.7 billion pesos for the first quarter of the year, down 1% from the 6.8 billion pesos recorded during the same period in 2021.
“This is due to lower volumes sold despite improved prices, coupled with demand for soft cement from private infrastructure projects and higher production and distribution costs driven by higher prices for purchase, especially for fuels and energy,” he said in his report.
Meanwhile, its first-quarter EBITDA, or earnings before interest, tax, depreciation and amortization, fell 44% to 960 million pesos, from 1.7 billion pesos in the same period in 2021.
The company noted that margins were hurt by higher energy prices, net of lower consumption of imported clinker and cement.
“Distribution costs were higher than last year due to higher outbound and interunit volumes to deliver direct to customers, offset by lower carry/bag costs resulting from sourcing negotiations and logistics efficiencies” , did he declare.
“Production costs were higher, primarily due to higher production volumes, higher energy prices net of lower imported clinker consumption, lower imported cement and improved of the clinker factor,” he added.
At the same time, the company said it incurred higher financial charges related to its short-term accounts payable and lease liabilities due to borrowings obtained during the first quarter.
Both were needed to fund the company’s working capital needs, he said.
The company added that its financial position remained healthy with a stable cash position.
“Return on assets fell to 1.0% as of March 31, 2022, 1.2 percentage points lower than at the end of 2021 due to lower net income. Total assets stood at 41.6 billion pesos as of March 31, 2022, 3% more than at the end of 2021.”
Shares of Holcim Philippines closed down 4.14% at 5.10P each on Thursday. — Arjay L. Balinbin