DMCI cuts capex to P19.4 B from P40.4 B
Diversified engineering conglomerate DMCI Holdings, Inc. is slashing its capital expenditure budget for 2020 by 52 percent to P19.4 billion from the original P40.4 billion.
During the firm’s annual stockholders’ meeting, DMCI Chairman and President Isidro A. Consunji explained that, “To preserve our cash resources, most of our companies are deferring part of their capital expenditures.”
He noted that the group is expecting a marked slowdown in consolidated earnings this year, as the COVID-19 pandemic continues to drag down economic activities, market prices and workforce productivity.
“Most of the (capex) reduction will come from DMCI Homes, which plans to slow down its land acquisitions this year. From P19 billion, their land banking expenses will be limited to P4 billion,” Consunji said.
DMCI Homes President Alfredo Austria said that, “For real estate, I think, generally, we’re expecting that things will slow down. But, for residential real estate…there is still a lot of people who need homes.”
He added that, “the sales of our projects are still encouraging…despite all my expectations. So, for the second half of the year, we plan to launch one or two projects.”
For its other units, Consunji said Semirara Mining and Power Corporation will cut its capex to P3.1 billion from P6.3 billion, construction unit DM Consunji Inc. will reduce its budget to P1 billion from P1.7 billion while DMCI Mining will halve its capex to P100 million from P200 million.
DMCI Power will retain its P1.2 billion capex for the year as the construction of its coal power plant in Palawan continues.
“We expect weak demand and low selling prices to affect most of our businesses. DMCI could show more resilience, if supported by massive public spending and timely issuance of permits and rights-of-way,” said Consuji.
He noted that, “At this stage of the pandemic, we cannot predict how the business environment will evolve but it will definitely take some time before our Company can rebound to its pre-pandemic income and dividend payout levels.” At the end of June 2020, DMCI Holdings had consolidated cash and cash equivalents of P14 billion pesos and P52.6 billion in consolidated debts. Only P14.6 billion of its total debt will mature in the next 12 months.