Eagle Cement embarking on aggressive expansion

By: Doris Dumlao-Abadilla
Philippine Daily Inquirer
12:17 AM March 20, 2017
http://business.inquirer.net/226462/eagle-cement-embarking-aggressive-expansion

Eagle Cement, to date the fourth largest producer of cement in the country, pitches to prospective investors a story of a fast-growing domestic cement manufacturer with newer and more efficient production facility, lower carbon footprint, more competitive pricing, higher profit margins and a leaner organizational structure than most peers.

“We are the only one building new capacity and we’ve proven we can build capacity at a certain price range,” Eagle Cement president and chief executive officer John Paul Ang said in an interview with the Inquirer.

Net proceeds from the IPO will be used to partially finance the construction of a cement plant in Cebu, which will have a capacity of two million metric tons (MT) yearly. The Cebu facility will include a manufacturing plant, a distribution center and marine terminals. Project cost was placed at P12.5 billion.

Incorporated in 1995, Eagle Cement has a manufacturing facility in San Ildefonso, Bulacan which produces about 5.1 million MT or 130 million bags of cement per year. But with the ongoing upgrade of this factory, capacity will increase to seven million MT or 180 million bags by the first quarter of 2018. The Bulacan hub, which stands on a 200-hectare site, is the single biggest cement production complex in the country.

Right beside the Bulacan plant, Ang said, was the company’s quarrying site with about 300 MT in reserves that could supply three production lines in Bulacan for the next 50 years. Through its fully integrated business model, the company integrates critical raw material supply with modern manufacturing technology, resulting in one of the most efficient cement manufacturing operations in the country.

Eagle Cement also runs a grinding and packaging facility in Limay, Bataan which can process 12 million bags of cement a year.

“With the VisMin (project), which we plan to finish by the first quarter of 2020, we’ll have nine million metric tons so we should be second in the country in terms of capacity,” said Ang.

Last year, Eagle Cement sold 77 million bags of cement, an all-time high for the company. It posted net sales of P13.28 billion and net income of P4.11 billion last year.

The firm currently distributes its products in Luzon, which accounts for 65 percent of total cement demand in the country.

“We are most competitive in terms of pricing,” Ang said, noting that Eagle Cement’s products were typically P2 lower than competitors per bag. And yet, he said the company was able to generate the highest margins per bag compared to its peers. Net profit margins are at about 33 percent compared to competitors’ mid-teen margins.

Ebitda (earnings before interest, taxes, depreciation and amortization) margins were estimated at 47 percent compared to mid- to high-30s of competitors.