DMCI Holdings Inc., the flagship of the Consunji family, expects that it will take three years for its newly-acquired cement firm Concreat Holdings Philippines Inc. (CHP), formerly Cemex Holdings Philippines Inc., to return to profitability instead of the earlier target of one year.
In an interview, DMCI Chief Finance Officer and Concreat President Herbert Consunji said though that the company will at least be “above water” this year after the new management work on operational efficiencies.
“There are a lot of things to do. There are room for improvement. We will try everything positive,” said Consunji in a chance interview at the Management Association of the Philippines (MAP) meeting last week.
The Consunji Group, through DMCI Holdings, Semirara Mining and Power Corporation, and Dacon Corporation, completed last December its acquisition of Cemex Asian South East Corporation (CASEC) for $272 million—lower than the earlier announced $305.6 million.
DMCI said the deal secures nearly 90 percent ownership in CEMEX Holdings Philippines, marking the group’s strategic expansion into the cement manufacturing sector, with the completion of the transaction taking effect on Dec. 2, 2024.
CHP, which wholly owns APO Cement Corporation and Solid Cement Corporation, currently has a combined annual production capacity of 5.7 million tons.
This capacity is expected to grow to 7.2 million tons by early 2025 upon the completion of the expansion plant at Solid Cement Corporation.
“We are excited to welcome CEMEX Holdings Philippines into the DMCI group,” said DMC, SCC and CHP Chairman of the Board Isidro A. Consunji.
He noted that “this acquisition aligns with our core expertise in engineering and construction and dedication to contributing to the infrastructure development of the Philippines.”
“Our priorities are to enhance the logistics network, optimize the product mix, manage production and operating costs, and leverage on potential operating synergies within the DMCI ecosystem,” said Herbert M. Consunji.
The acquisition is anticipated to strengthen the DMCI ecosystem, with captured markets for coal, long-term contracted power capacity, fly ash, and cement products.
At the financial close, DMC secured a 51 percent effective stake in CHP, while SCC and Dacon Corporation accounted for 10 percent and approximately 29 percent, respectively.
The closing of the deal was contingent on the satisfaction of several customary conditions including the approval of Philippine Competition Commission, the settlement of the mandatory tender offer by Dacon to the shareholders of CHP, and the disposal by Cemex Asia of its 40 percent interest in each of APO Land & Quarry Corporation and Island Quarry and Aggregates Corporation.
However, the parties have agreed to waive the completion of Solid Cement’s expansion program and the Agreement was amended to defer compliance with such condition.
CHP is in the process of constructing a 1.5-million-ton integrated cement production line at its Solid Plant in Antipolo, Rizal. The new cement production line was 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 percent from 5.7 million tons to 7.2 million tons.