Figures submitted by the Mindanao-based cement company to the Securities and Exchange Commission (SEC) showed the non-recurring gain offset the previous years’ losses and would have resulted in another comparable loss had the deal not been consummated.
In 1999, Alsons entered into an agreement with global cement giant Blue Circle for the sale of a 25-percent stake in Iligan Cement. This was increased to 28 percent in December 2000 and by January 2001, Blue Circle, through Republic Cement Corp., agreed to buy out the remaining shares.
Alsons vice president for finance Trevor Lau said while the past year’s net income was entirely due to the result of the divesting activity rather than an operating activity, the company’s operating loss of P1.05 billion was still a substantial improvement from the prior years.
He attributed this improvement to company decisions made in the past that yielded positive results, among which are the organizational restructuring in 1999 and 2000; expansion of product line to include clinker sales; expansion of market toward exports; and the mothballing of the Luzon terminal to make domestic sales concentrated in its stronghold the Visayas and Mindanao regions.
Aside from the benefits of the above initiatives, the most significant impact on the operating results came from a much lower foreign exchange loss, as the relative stability of the peso during 2001 reduced the forex loss from P1.37 billion in 2000 to only P223 million last year.
But Lau lamented that revenues from domestic sales continue to be weighed negatively by an overall market decline made worse by the heavy influx of imported cement. Total domestic demand contracted by another three percent in 2001, marking the fourth consecutive year the cement industry posted a negative growth.
He added that production cost, particularly electricity – one of the major cost components in the cement production process, had increased by 15 percent.
To reduce its financial debt, meanwhile, Alsons had converted $60 million worth of stockholders loan into equity which, together with a portion of the loan’s accrued interest, has been classified as deposit in future subscription, to be later reclassified as capital stock.
Late last year, Alsons and Holderfin B.V., the holding company of top global cement production Holderbank Financiere Glaris Ltd., announced the exercise of a debt-to-equity conversion that will involve about P3.53 billion of the former’s debt load.