CHP reports first quarter 2023 results
CEMEX HOLDINGS PHILIPPINES, INC. ("CHP") (PSE: CHP), announced today that its consolidated net sales for the first quarter of 2023 amounted to PHP 4.6 billion, a decrease of 11% compared to the prior year due to lower volumes.
CHP’s domestic cement volumes decreased by 16% year-over-year for first quarter of 2023. The decline in volume was mainly attributable to lower cement demand.
CHP’s domestic cement price rose by 5% year-over-year for the first quarter of 2023, reflecting the company’s pricing strategy to offset the sharp input cost inflation the company has experienced in fuel, electricity, and transport, among others.
CHP’s cost of sales, as a percentage of net sales, was at 79.7% for the first quarter of 2023, an increase of 17.7 percentage points year-over-year mainly due to higher fuel and power costs. CHP’s fuel cost, as a percentage of net sales, was at 29.1% for the quarter, an increase of 10.9 percentage points year-over-year mainly driven by steep inflation in global energy prices in 2022. CHP’s power cost, as a percentage of net sales, was at 15.2% for the quarter, an increase of 3.2 percentage points year-over-year resulting from higher power rates due to renegotiations of electricity contracts in the second half of 2022.
Operating EBITDA for the first quarter of 2023 amounted to PHP 102 million, 90% lower year-over-year. The decrease was mainly due to higher cost of sales and lower volume, as well as an unfavorable first quarter 2022 comparison base for both for input costs and volumes, as global energy prices increased significantly in the second half of 2022, while volumes rose last year in anticipation of the May presidential elections. Operating EBITDA margin for the first quarter was 2.2%, a decline of 17.8 percentage points year-over-year.
CHP recorded a net loss of PHP 355 million for the first quarter of 2023, mainly as a result of lower operating earnings due to the significant year-over-year increase in cost of sales.
In light of significant input cost inflation and market challenges, CHP has remained focused on the variables within its control, especially on the cost side, with substantial progress.
In February 2023, CHP shifted to a more cost-efficient fuel mix in its APO Cement plant and has significantly increased the usage of alternative fuels in both Solid Cement and APO Cement plants. As a result, notable improvements have already been seen in CHP’s cost base. On a unitary per gigacalorie basis, after seeing its fuel cost reach its highest level ever in January, CHP’s fuel cost declined sequentially for the next two months of the first quarter. CHP’s unitary fuel cost in March 2023 was its lowest since April 2022.
In addition to its efforts with energy, CHP has launched a program to achieve efficiencies in all areas of the company, not only production and supply chain operations, but also targeting potential savings from operating expenses and fixed costs.
Through these efforts, CHP has seen its unitary distribution cost decline sequentially quarter-on-quarter. CHP’s unitary distribution cost in March 2023 was its lowest since March 2022.
Luis Franco, President and CEO of CHP, said: “As commented last February, we expect 2023 to be a year of transition for our company. Although we have already noticed an inflection point in costs such as fuel and electricity, our expectations remain that market conditions and cost inflation will continue to be challenging through the first half of 2023. With uncertain market conditions in the foreseeable future, we remain focused on finding efficient and sustainable ways of running our operations and improving results.”
For 2023, CHP is guiding for a low-single-digit percentage decrease for its domestic cement sales volume.
CHP, a listed company on the Philippine Stock Exchange, is one of the leading cement producers in the Philippines, based on annual installed capacity. CHP produces and markets cement and other building materials in the Philippines through direct sales using its extensive marine and land distribution network. Moreover, CHP’s cement manufacturing subsidiaries have been operating in the Philippines with well-established brands, such as "APO," "Island," and "Rizal," all having a multi-decade history in the country. For more information please visit: www.cemexholdingsphilippines.com
CHP is an indirect subsidiary of CEMEX, S.A.B. de C.V., a global construction materials company that is building a better future through sustainable products and solutions. CEMEX is committed to achieving carbon neutrality through relentless innovation and industry-leading research and development. CEMEX is at the forefront of the circular economy in the construction value chain, and is pioneering ways to increase the use of waste and residues as alternative raw materials and fuels in its operations with the use of new technologies. CEMEX offers cement, ready-mix concrete, aggregates, and urbanization solutions in growing markets around the world, powered by a multinational workforce focused on providing a superior customer experience, enabled by digital technologies. The shares of CEMEX, S.A.B. de C.V. are listed on the Mexican Stock Exchange and the New York Stock Exchange. For more information please visit: www.cemex.com
For more information on CHP, please visit website: www.cemexholdingsphilippines.com.
This press release contains forward-looking statements within the meaning of the securities laws. CHP intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the applicable securities laws. These forward-looking statements reflect CHP’s current expectations and projections about future events based on CHP’s knowledge of present facts and circumstances and assumptions about future events, as well as CHP’s current plans based on such facts and circumstances. These statements necessarily involve risks, uncertainties, and assumptions that could cause actual results to differ materially from CHP’s expectations, including, among others, risks, uncertainties, and assumptions discussed in CHP's most recent annual report and detailed from time to time in CHP’s other filings with the Philippine Securities and Exchange Commission, which factors are incorporated herein by reference, which if materialized could ultimately lead to CHP’s expectations and projections not producing the expected benefits and/or results. These factors may be revised or supplemented, but CHP is not under, and expressly disclaims, any obligation to update or correct this press release or any forward-looking statement contained herein, whether as a result of new information, future events or otherwise. Any or all of CHP’s forward-looking statements may turn out to be inaccurate. Accordingly, undue reliance on forward-looking statements should not be placed, as such forward-looking statements speak only as of the dates on which they are made. The content of this press release is for informational purposes only, and you should not construe any such information or other material as legal, tax, investment, financial, or other advice.