Cemex Holdings Philippines reported that its attributable net loss ballooned by 52 percent to P1.24 billion in the first nine months of 2023 from a loss of P819 million in the same period last year.

In a disclosure to the Philippine Stock Exchange (PSE), the firm said the loss is mainly a result of lower operating earnings due to a significant year-over-year increase in cost of sales and challenging market conditions.

Domestic cement volume for the third quarter increased sequentially and represented the highest quarterly volume for the first nine months of 2023.

However, net sales for the first nine months of 2023 decreased by 15 percent year-over-year largely due to lower volumes, with prices also showing a decline.

For the third quarter, net sales decreased by 14 percent year-over-year with lower prices amidst subdued cement consumption, while volumes remained lower compared with the same period last year.

Cost of sales, as a percentage of net sales, increased by 13 percentage points (pp) year-over-year for the first nine months of 2023 mainly due to higher fuel cost, driven by the steep rise in global energy prices in 2022, and power cost, resulting from higher power rates due to renegotiations of electricity contracts in the second half of 2022.

Operating expenses were 29.3 percent of sales for the first nine months of 2023, compared with 27.9 percent in the same period of 2022.

Distribution expenses, as a percentage of net sales, remained flattish year-over-year for the first nine months of 2023, at around 14 percent, supported by the company’s supply chain efficiency efforts.

Selling and administrative expenses, as a percentage of net sales, were higher by 1.7 pp year-over-year for the first nine months of 2023. Nevertheless, total selling and administrative expenses declined by four percent year-over-year for the same period.

While CHP’s cost base remained elevated year-to-date, the company continued to show resilience, with three consecutive quarters of sequential decline in cost of sales and in distribution cost, as a percentage of sales. 

These improvements were mainly driven by significant reductions in energy cost and enhanced operating efficiencies, in line with the implementation of CHP’s EVOLVE efficiency program to counteract headwinds during the year.

Financial expenses decreased year-over-year for the first nine months of 2023 primarily due to higher interest capitalization for the Solid Plant New Line project, as a result of higher project execution. 

For the third quarter, the year-over-year increase was mainly due to higher debt balances and interest rates.