Cement firm Holcim Philippines is reopening its grinding plant in Mabini, Batangas next year, as it sees continued strong demand for cement in the country.
In a disclosure to the stock exchange, Holcim said it is optimistic that demand for cement will continue to flourish, especially with the government's infrastructure projects and boom in housing.
Holcim will spend around P400 million to rehabilitate the Mabini plant, which will boost its capacity by up to 22.5 million cement bags a year. The Mabini plant, which was acquired in 2003, will be the company's second facility in Batangas, after its terminal in Calaca, Batangas was reactivated last year.
Holcim Philippines chief operating officer Roland van Wijnen said the planned reopening of the grinding facility shows its commitment to deliver adequate supply for the domestic market.
"South Luzon is one of the fastest growing areas in the country and we expect this growth to continue, fuelled by both public and private construction. We want to be sure we have the facilities, ready to deliver the volumes when and where these are needed," said Van Wijnen.
In the first quarter of 2012, Holcim Philippines' sales grew nearly 20% compared to the previous year, due to steady stream of private and public construction projects. Net sales in the first quarter stood at P6.6 billion, from P5.7 billion during the same period in 2011.
Volume may be growing, but the company's profits have been eroded by high production costs, especially electricity and coal. Van Wijnen noted the company has not achieved the price levels needed to recover from these costs.
"Prices are still below what they were in 2010, which puts us in a difficult situation as we are faced with increased cost of inputs, particularly electricity and coal," he said.
Holcim is hoping better prices will be achieved this year, and is implementing measures to improve operational efficiencies and increasing use of alternative fuels and raw materials.
The company, which has 2 plants in Mindanao, is keeping a close eye on the power crisis in the region. It said it is putting in place measures to address any disruption in power supply.