Eagle Cement Corporation (EAGLE), a fully integrated cement company, continued to turn a profit in the second quarter even as the Philippine economy fell into a recession after the government locked down Luzon starting mid-March to contain the spread of the COVID-19 pandemic.
Robust financial position to help Eagle Cement soar above COVID-19 storm
Jul 20, 2020
MANILA, Philippines—Eagle Cement Corporation (EAGLE) strengthened its balance sheet in the first quarter of 2020, improving it from the end-2019 level to provide the publicly-listed cement manufacturer the financial muscle to ride-out the adverse impacts of the COVID-19 pandemic on the economy.
“Our strong financial position will allow us to weather this health crisis battering the economy without giving up major components of our expansion plans, which will secure our future growth,” said EAGLE President & CEO Paul Ang.
EAGLE ended the first quarter with total assets growing by 2% to P49.9 billion from P49.1 billion in end-2019 while total liabilities declined to P11.4 billion from P11.7 billion. Its stockholders’ equity rose by 3% to P38.5 billion.
The Company’s current gearing gives it flexibility to continue pursuing investment plans moving forward, with debt-to-equity ratio at 0.30x and financial debt to equity ratio registering at 0.18x. This is still well below EAGLE’s loan covenant requirements. ?
The decline in EAGLE’s net profit to P1.2 billion from P1.6 billion in the year-earlier period reflected the impact of the imposition of the enhanced community quarantine (ECQ) in Luzon due to COVID-19 pandemic which offset its robust performance at the start of the year. Prior to the lockdown, the Company’s sales trend has showed that EAGLE would have outperformed last year’s first quarter results.
In 2019, the Company delivered double digit growth across the board, with net sales and net income growing by 20% and 25%, respectively.
According to Mr. Ang, while spending for noncritical projects and activities will be trimmed in view of the economic slowdown, expansion-related capital expenditures will continue. EAGLE has earmarked P1.5 billion capital expenditure for the construction of its fifth cement mill in its manufacturing plant in San Ildefonso, Bulacan. The new mill will add 1.5 million metric tons of cement output, pushing EAGLE’s annual cement capacity to 8.6 million metric tons by the end of the year.
Operations in the new normal
Mr. Ang added there are good signs construction activity will rebound in the second half of 2020 as community quarantines imposed to control the spread of COVID-19 have eased.
“In line with the government’s call to prioritize critical infrastructure projects that will help restart the economy, we have ramped up our production since we resumed commercial operations last month. EAGLE is fully prepared to supply the steadily increasing demand for cement as more and more construction projects both in the public and private sectors open up,” said Mr. Ang.
Furthermore, to achieve its goal of becoming the country’s leading building supplier, EAGLE is taking steps towards digital transformation. The firm has engaged an international provider of enterprise resource planning (ERP) system that is tailored fit for its cement manufacturing business.
The new ERP system will enhance customer experience through an online customer portal, which provides features such as booking, tracking and arrival of orders.
Prioritizing the health of employees and communities
Apart from this, EAGLE has also vowed to continue prioritizing the health and safety of its workers, business partners and host community amid the pandemic. In partnership with St. Luke's Medical Center Bonifacio Global City (SLMC BGC), EAGLE has conducted over 2,700 Reverse Transcription Polymerase Chain Reaction (RT-PCR) testing to all employees, haulers, contractors, distributors as well as some residents of its host community in Brgy. Akle, San Ildefonso, Bulacan. The Company is committed to conduct a monthly testing for at least 1,000 employees and various stakeholders. EAGLE has also mobilized the donation of 21,000 families in Bulacan and Cebu economically displaced by the COVID-19 pandemic.