Improving demand for cement, lower input costs and better efficiency are expected to buoy Holcim Philippines Inc.'s earnings this year following a 42 percent decline in 2008.

In a media briefing, Holcim chief operating officer Ian Thackwray said they are seeing an improvement in the company's finances in 2009 as evidenced by its strong first-quarter performance.

"This year will definitely be an improvement but it will be difficult to say by how much," he said.

Amidst the global recession, the Philippine construction industry managed to hold up early this year, with demand for cement up 6 percent in the first three months, against the 2 percent growth in 2008.

Thackwray attributed this to increased infrastructure projects, as the government frontloads spending to pump-prime the economy, as well as sustained commercial and residential construction activities.

He said the strong demand for cement resulted in company revenues of P5.5 billion in the first quarter, 27 percent higher than the P4.3 billion recorded in the same period last year.

Net income surged 71 percent from P463 million to P793 million while earnings before interest, taxes, depreciation and amortization grew 29 percent to P1.8 billion.

"This exceeds our expectations," said Thackwray, adding that "we’re seeing higher-than-anticipated growth in the market, including regions outside the national capital region."

But Thackwray noted they remain cautious as they continue to feel the impact of the steep hike in coal prices last year.

Coal is Holcim's main input cost and Thackwray said they have yet to deplete coal stocks purchased in 2008.

Holcim is now looking to secure a long-term coal supply contract, possibly with its long-time partner Semirara Mining Corp., to bring down costs this year.

Thackwray said domestic coal is cheaper than what they are getting from Indonesia.

Coal prices peaked at $140 a ton in July 2008, dragging Holcim's bottomline for the year to P1.29 billion from 2007's P2.21 billion.

Early this year, however, Thackwray said coal prices started to stabilize to $68.95 a ton as of May 8. He said they are hoping this trend will continue throughout the year.

For 2009, Holcim plans to spend P700 million for the maintenance and improvement of its production plants.

The company is owned by Union Cement Holdings Corp., a joint venture between Bacnotan Consolidated Industries Inc. and the Swiss company Holcim, one of the world's largest cement manufacturers.

Holcim operates plants in La Union, Davao, Bulacan and Misamis Oriental.