CHP reports second quarter 2023 results
CEMEX HOLDINGS PHILIPPINES, INC. ("CHP") (PSE: CHP), announced today that it continued to see improvements in its results, particularly due to the company’s efforts to contain inflationary pressures in its cost base.
Year-to-date results remained negatively impacted by challenging external conditions. Its consolidated net sales for the first six months of 2023 amounted to PHP 9.1 billion, a decrease of 15% compared to the prior year due to lower volumes. For the second quarter, net sales decreased by 18% year-over-year due to lower volumes and prices.
CHP’s domestic cement volumes decreased by 17% year-over-year for the first six months of 2023. The decline in volume was mainly attributable to subdued cement demand, a difficult prior year comparison, and heightened industry competition.
CHP’s domestic cement price was up by 2% year-over-year for the first six months 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. For the second quarter, CHP’s domestic cement price decreased by 2% year-over-year amidst a challenging market environment.
CHP’s cost of sales, as a percentage of net sales, was at 77.5% for the first six months of 2023, an increase of 15.9 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 26.8% year-to-date, an increase of 7.1 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 15.5% for the first half of 2023, an increase of 3.7 percentage points year-over-year resulting from higher power rates due to renegotiations of electricity contracts in the second half of 2022.
While CHP’s cost base remained elevated year-over-year, the company has now seen two consecutive quarters of sequential decline in cost of sales and in distribution cost, as a percentage of sales, mainly driven by significant reductions in fuel cost.
Operating EBITDA for the first six months of 2023 amounted to PHP 391 million, 82% lower year-over-year. The decrease was mainly due to higher cost of sales and lower volume, as well as an unfavorable first half 2022 comparison base for both input costs and volumes, as global energy prices increased significantly in the second half of 2022, and volumes rose last year in anticipation of the May presidential elections. Operating EBITDA margin for the first six months of 2023 was 4.3%, a decline of 15.6 percentage points year-over-year.
CHP recorded a net loss of PHP 662 million for the first six months of 2023, mainly as a result of lower operating earnings due to the significant year-over-year increase in cost of sales and challenging market conditions.
CHP is implementing an efficiency program, named “EVOLVE”, across all areas of the company, aiming to optimize production and supply chain operations, fixed costs, operating expenses, and working capital, to counteract cost pressures during the year.
Luis Franco, President and CEO of CHP, said: “We are cautiously optimistic for the second half of the year, in light of decelerating inflation and the government’s continued roll-out of its infrastructure programs. While we still have work in front of us, we are encouraged by the steady improvement in our cost base over the last two quarters. Even so, we expect to face challenging market conditions and cost pressures during the second half of 2023. In this year of transition for our company, we will continue to persevere and transform our company into a more resilient and more sustainable CEMEX Holdings Philippines.”
For 2023, CHP is guiding for a mid-single-digit to high-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, and the reports we will file or furnish in the future may contain, 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, unless otherwise indicated. 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, expected results, and/or projections expressed in this press release not being reached and/or producing the expected benefits and/or results. Forwardlooking statements should not be considered guarantees of future performance, nor the results or developments are indicative of results or developments in subsequent periods. Actual results of CHP’s operations and the development of market conditions in which CHP operates, or other circumstances or assumptions suggested by such statements may differ materially from those described in, or suggested by, the forward-looking statements contained herein. These factors may be revised or supplemented, and the information contained in this press release and the report referenced herein is subject to change without notice, 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, or to reflect the occurrence of anticipated or unanticipated events or circumstances. 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. Readers must consult their own legal adviser, investment adviser, financial adviser, or tax adviser for legal, investment, financial, or tax advice, as appropriate.