CHP reports third quarter 2023 results

CEMEX HOLDINGS PHILIPPINES, INC. ("CHP") (PSE: CHP) President and CEO, Luis Franco, said: “I am pleased with the initial progress we have made in the implementation of our EVOLVE efficiency program and its results in optimizing our operations, streamlining processes, increasing supply chain efficiency, and improving our energy mix. Even so, much more work needs to be done, as we expect challenging market conditions and cost pressures to persist during the fourth quarter of 2023. In this year of transition for our company, we remain dedicated to finding opportunities to improve our overall efficiency and profitability by proactively managing the variables we can control.”

OPERATING AND FINANCIAL RESULTS

For the third quarter, volumes increased sequentially and represented the highest quarterly volume for the first nine months of 2023. Year-to-date, however, results remained negatively affected by the challenging external environment. CHP’s consolidated net sales for the first nine months of 2023 amounted to PHP 13.5 billion, a decrease of 15% compared to the prior year largely due to lower volumes, with prices also showing a decline. Net sales for the third quarter amounted to PHP 4.4 billion, a decrease of 14% year-over-year with lower prices amidst subdued cement consumption, while volumes remained lower than 2022.

Operating EBITDA for the first nine months of 2023 amounted to PHP 673 million, 76% lower year-over-year. Operating earnings before other expenses - net for the first nine months of 2023 was a loss of PHP 776 million, compared to a gain of PHP 1.4 billion in the same period of 2022. The year-over-year decline was mostly due to higher cost of sales, led by higher energy costs, and lower sales, as industry demand continued to be soft. Operating EBITDA margin for the first nine months of 2023 was 5.0%, a decrease of 12.7 percentage points year-over-year.

For the third quarter, operating EBITDA amounted to PHP 283 million, 58% lower year-over-year. Operating earnings before other expenses - net for the quarter was a loss of PHP 175 million, compared to a gain of PHP 208 million in the same period of 2022. The decrease year-over-year was mainly due to lower prices. Operating EBITDA margin for the third quarter of 2023 was 6.4%, a decrease of 6.7 percentage points year-over-year.

While CHP’s cost base remained elevated year-to-date, the company continues 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.

Year-to-date, CHP recorded a net loss of PHP 1.2 billion, compared with a loss of PHP 819 million in the first nine months of 2022. For the third quarter, CHP recorded a net loss of PHP 583 million, compared with a loss of PHP 552 million in the same period last year. The decline year-to-date and for the third quarter was primarily a result of lower operating earnings.

Regarding the company’s new line at Solid Cement plant, the limestone crusher system was completed during the third quarter. Activities currently ongoing include electrical installation, mechanical installation of various equipment, construction of material transportation system, and construction of the different buildings for the new line. CHP now expects the construction of the Solid Cement’s new line to be completed during the third quarter of 2024.

SUSTAINABILITY AND CORPORATE GOVERNANCE

On the sustainability front, CHP’s subsidiary APO Cement Corporation (APO) inaugurated a 4.5MW waste heat recovery facility in Cebu expected to produce 8% of APO’s electricity needs. Furthermore, the company’s circularity solutions unit, Regenera, has expanded waste management partnerships with nearly 40 local government units (LGUs) and with various private companies, looking to promote effective waste processing and materials recovery. CHP’s subsidiary Solid Cement Corporation has been honored with the 2023 Hall of Fame Award by the Environmental Management Bureau (EMB) for its outstanding solid waste management practices since 2017.

In line with its commitment to sustainable construction, CHP has actively engaged with LGUs, private contractors, and national government agencies, advocating for the adoption of low carbon cement products and solutions, which not only benefit the environment but also generate savings for infrastructure projects. During the recent second anniversary of the Net Zero Carbon Alliance (NZCA) of the Philippines, CHP emphasized its strategic roadmap for tackling crucial decarbonization challenges in the cement industry.

CHP also ranked in the 76th percentile of the Construction Materials industry in the S&P Global Corporate Sustainability Assessment (CSA) 2022 for its maiden performance in the CSA. The company ranked above industry mean for Environmental, Social & Governance, and Economic indicators.

CHP is pleased to have received its third Golden Arrow Award from the Institute of Corporate Directors (ICD) for its outstanding corporate governance practices. The award is based on the 2022 ASEAN Corporate Governance Scorecard which evaluates companies on various aspects such as stakeholder engagement, transparency, accountability, and strategic guidance by the board.

CHP, a listed company on the Philippine Stock Exchange, is one of the leading cement producers in the Philippines, based on annual installed capacity. CHP produces and markets cement and other building materials in the Philippines through direct sales using its extensive marine and land distribution network. Moreover, CHP’s cement manufacturing subsidiaries have been operating in the Philippines with well-established brands, such as "APO," "Island," and "Rizal," all having a multi-decade history in the country. For more information please visit: www.cemexholdingsphilippines.com

CHP is an indirect subsidiary of CEMEX, S.A.B. de C.V., a global construction materials company that is building a better future through sustainable products and solutions. CEMEX is committed to achieving carbon neutrality through relentless innovation and industry-leading research and development. CEMEX is at the forefront of the circular economy in the construction value chain, and is pioneering ways to increase the use of waste and residues as alternative raw materials and fuels in its operations with the use of new technologies. CEMEX offers cement, ready-mix concrete, aggregates, and urbanization solutions in growing markets around the world, powered by a multinational workforce focused on providing a superior customer experience, enabled by digital technologies. The shares of CEMEX, S.A.B. de C.V. are listed on the Mexican Stock Exchange and the New York Stock Exchange. For more information please visit: www.cemex.com

For more information on CHP, please visit: www.cemexholdingsphilippines.com.