The Philippine Competition Commission has cleared the Consunji Group’s planned acquisition of a controlling stake in Cemex Holdings Philippines Inc. (CHP).

In a disclosure to the Philippine Stock Exchange, the group said DMCI Holdings Inc., Dacon Corporation, and Semirara Mining and Power Corporation have received a copy of the Certification issued by the PCC.

The certification stated that the PCC has cleared the joint acquisition by the Purchasers of 100 percent shares of stock in Cemex Asian South East Corporation (CASEC) from Cemex Asia B.V. 

CASEC owns an 89.86 percent equity interest in publicly listed CHP, which primarily sells gray ordinary Portland cement, masonry or mortar cement, and blended cement.

DMCI said, “The clearance of the PCC is one of the conditions precedents to, and a regulatory requirement necessary before, consummating the joint acquisition. 

“Completion of the transaction is subject to the satisfaction of various other conditions, including, but not limited to, completion for the sale and purchase of shares in each of APO Land & Quarry Corporation and Island Quarry and Aggregates Corporation, and the execution of the mandatory tender offer requirement by the Purchasers to the minority shareholders of CHP.”

Diversified engineering conglomerate DMCI aims to return CHP to profitability by 2025 through synergies within the group.

CHP, the Philippines' fourth-largest cement manufacturer, reported losses of P1.0 billion in 2022 and P2.0 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.”

CHP is constructing a 1.5-million-ton integrated cement production line at its Solid Plant in Antipolo, Rizal. The new line is scheduled to commence operations by September 2024.

This expansion will effectively double the company's cement production capacity in the Luzon region. It will also boost CHP's overall installed annual production capacity by 26% from 5.7 million tons to 7.2 million tons.

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 from talent and business process onshoring initiatives, following the exit of CEMEX.

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 also supply CHP with 50MW of electricity and fly ash.

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.