Cement sales soft on muted construction

Online stockbroker Colfinancial.com expects cement sales to remain soft amid muted construction activities.

In the third quarter of the year, all cement companies reported lower profits with the median decline at 31.4 percent.

Colfinancial noted a 39.8 percent drop in Cemex Holdings Philippines Inc.’s profit on the back of lower revenues and margins while the profits of Eagle Cement Corp. and Holcim Philippines Inc. declined by 31.4 percent and 21.3 percent, respectively, mainly due to lower margins.

Both Cemex and Eagle’s results ended below Colfinancial’s estimates.

Colfinancial said cement companies still reported higher topline as they raised their selling price with Eagle and Holcim’s revenue going up 23.4 percent and 7 percent, respectively.

Cemex, however, reported a drop in revenues by 5.2 percent, as the decline in volumes outweighed the increase in average selling price.

“Note that cement demand remained weak as a result of price increases,” Colfinancial.com said.

“Moving forward, we expect volumes to remain weak as construction activity will likely remain muted due to inclement weather. Moreover, higher borrowing costs and inflation are hurting construction activity especially low- and mid-income residential works. We also expect average selling price to continue rising as cement companies pass on higher input costs,” it added.