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Manila Bulletin devider Business devider The Stock Market devider Consunji leveraging Cemex acquisition, secures electricity deal

Consunji leveraging Cemex acquisition, secures electricity deal

Published Jul 15, 2024 02:21 am

By JAMES A. LOYOLA

The Consunji Group has begun unlocking synergies with its newly acquired Cemex Holdings Philippines Inc. (CHP), starting with an electricity supply agreement for APO Cement Corporation (APO) in Cebu.

In a disclosure to the Philippine Stock Exchange (PSE) on Monday, July 15, CHP said its Board of Directors was notified that one of CHP’s principal operating subsidiaries, APO, has executed a supply agreement with Sem Calaca Res Corporation for the supply of electricity to APO’s cement plant facilities in Naga, Cebu. 

The supply contract with APO is for 44 MW of electricity. There is no fuel pss through provision.

Sem Calaca is the retail electricity supply business arm of Semirara Mining and Power Corporation. The term of this supply agreement will expire on Dec. 25, 2024.

Diversified engineering conglomerate DMCI Holdings Inc. aims to return to profitability by 2025 Cemex Holdings Philippines (CHP), its largest investment to date and its first acquisition in a decade, through synergies within the group.

CHP, the Philippines' fourth-largest cement manufacturer, reported losses of P1 billion in 2022 and P2 billion in 2023, primarily attributed to escalating costs and reduced sales volumes.

“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.

He noted that “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.”

DMCI Holdings anticipates power, fuel, and other production supplies costs, which represent 73 percent of CHP’s 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 Corporation (SMPC).

Additionally, administrative and selling expenses, which accounted for 52 percent of prior-year operating expenses, are expected to decline due to talent and business process onshoring initiatives following CEMEX’s exit.

Meanwhile, SMPC expects a significant increase in its coal sales to CHP, estimating a 227 percent rise to 500,000 metric tons annually compared to 2024 levels. In addition to coal, the integrated energy company can supply CHP with 50MW of electricity and fly ash in addition to coal.

On the other hand, based on historical consumption patterns, DMCI and DMCI Homes are estimated to source around 400,000 metric tons of cement from CHP.

This volume has the potential to expand further, subject to growth in DMCI's order book and a recovery in DMCI Homes' project launches.
 

Related Tags

Semirara Mining and Power Corporation Cemex Holdings Philippines Inc. Isidro A. Consunji APO Cement Corporation DMCI Holdings Inc.
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