Consunji Group maps out recovery plan for Cemex

MANILA, Philippines — The Consunji Group has mapped out a strategic plan to revitalize listed cement maker Cemex Holdings Philippines (CHP).

Under the company’s recovery roadmap, diversified engineering conglomerate DMCI Holdings Inc. said it has prepared a turnaround plan to reinvigorate CHP, its largest investment to date and its first acquisition in a decade.

“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,” DMCI Holdings chairman and president Isidro Consunji said.

CHP, the fourth largest cement manufacturer in the country, incurred losses of P2 billion in 2023, primarily attributed to escalating costs and reduced sales volumes.

The company also reported a loss of P1 billion in 2022.

“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,” Consunji said.

DMCI Holdings along with Dacon Corp. and Semirara Mining and Power Corp. (SMPC) of the Consunji Group signed last week a share purchase agreement with CEMEX Asia B.V. to acquire its entire holding of 42.14 million common shares in Cemex Asian South East Corp. (CASEC) for $305.6 million.

CASEC is the majority owner of CHP with 89.86 percent equity interest.

DMCI will acquire a 56.75-percent stake in CASEC, while Dacon will secure 32.12 percent and SMPC will purchase the remaining 11.13 percent.

CHP is in the process of constructing a 1.5-million-ton integrated cement production line at its Solid Plant in Antipolo, Rizal.

DMCI said this expansion would 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, the company said.

The new cement production line is scheduled to commence operations by September 2024.

DMCI expects power, fuel and other production supplies costs, which represent 73 percent of CHP’s cost of sales in 2023, to decline due to normalizing market prices and the transition to a more affordable energy supplier, SMPC.

Further, the company said administrative and selling expenses, which accounted for 52 percent of prior-year operating expenses, are seen decreasing from talent and business process onshoring initiatives, following the exit of CEMEX.

Integrated energy company SMPC, for its part, expects a significant jump in its coal sales to CHP.

It estimates a 227-percent surge to 500,000 metric tons annually compared to 2024 levels.

Aside from coal, SMPC can also supply CHP with 50 megawatts of electricity and fly ash.

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

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

The Consunji Group has a diversified investment consisting of construction, real estate, coal and nickel mining, power generation and water distribution.

The group said it has no intention to delist CHP from the Philippine Stock Exchange, subject to the application of the transaction with the Philippine Competition Commission and subsequent undertaking of a mandatory tender offer of the shares of CHP held by its minority shareholders.