DMCI Holdings Inc. is confident the big bet it made in acquiring Cemex Holdings Philippines would pay handsome dividends on its own and as a result of synergies it would create with other companies in the listed diversified engineering conglomerate’s portfolio.
Cemex Asia B.V. agreed to sell all the shares of its unit Cemex Asian South East Corp. to DMCI for USD305.6 million. CASEC owns 89.86 percent of Cemex Holdings. The sale is expected to be finalized before the year ends.
Last year and in 2022, Cemex Holding posted losses of P2.0 billion and P1.0 billion, respectively, due mainly to escalating costs and reduced sales volume.
“We recognize CHP’s operational and financial issues, but we are positive that we can turn it around by 2025 because of its ongoing capacity expansion and the clear synergies it brings to our group,” said DMCI Holdings chairman and president Isidro A. Consunji.
“While cement demand is currently soft, we expect it to rebound as our turnaround plan progresses, supported by the Build Better More program and the anticipated easing of interest rates next year,” he added.
Cemex Holdings will effectively double its output once its 1.5 million-ton integrated cement production line at the Solid Cement plant in Antipolo is completed in September. It will also increase the cement company’s installed capacity by 26 percent to 7.2 million tons.
DMCI Holdings anticipates power, fuel and other production supplies costs, which represent 73 percent of Cemex Holdings cost of sales in 2023, to decrease due to normalizing market prices and the transition to a more affordable energy supplier, Semirara Mining and Power Corp., a subsidiary of DMCI.
Administrative and selling expenses, which accounted for 52 percent of prior-year operating expenses, are expected to decline from talent and business process onshoring initiatives, following the exit of Cemex Asia.
With the sale of coal to Cemex Holdings, Semirara Mining expects a significant increase in sales, which it projects would more than triple to 500,000 metric tons annually starting next year. Semirara Mining will also supply Cemex Holdings with 50 megaWatts of electricity and fly ash.
Based on historical consumption patterns, DMCI and DMCI Homes are estimated to source around 400,000 metric tons of cement from Cemex Holdings. This volume has the potential to expand further, subject to growth in DMCI’s order book and a recovery in DMCI Homes’ project launches.
