Caribbean has second best quarter in two years
The exit of Caribbean Cement Company's general manager, Anthony Haynes, is occasioned by one of the best quarterly profit recorded by the cement producer in years, even as sales remained flat.
Net profit of $248 million for the March quarter outperformed the year-prior period sevenfold and was almost double the $139 million made by the company for the full 12-month period in 2014.
Haynes' replacement is the latest in a series of changes at Caribbean Cement linked to a board takeover at parent company Trinidad Cement Limited last summer and subsequent restructurings of the group and its balance sheet.
TCL's net profit also quadrupled in the March quarter from TT$13 million to TT$46.6 million.
A new debt deal negotiated by the new TCL board with creditors in February, and which took effect March 30 - replacing a 2013 deal that was trashed by the new directors - has led to the reclassification of a portion of Caribbean Cement's debts - $3.8b of short-term liabilities were reduced to $2.8 billion at the end of March, while $867 million of long-term debt has almost doubled to $1.5 billion.
The Kingston-based plant's capital structure was untouched from the first debt deal, under which TCL forgave US$38 million of debt owed to it by Caribbean Cement. The debt was subsequently converted to capital. That, alongside another US$37 million worth of preference shares issued to TCL, were used to neutralise the J$7 billion of deficits accumulated by Caribbean Cement during the economic downturn.
After 12 quarters of losses, business began to grow again in 2013 with a resurgence of the local construction sector and growth in its overseas markets for clinker, leading to a record year for revenue - $14.3 billion - in 2014.
March quarter sales, however, were flat at $3.6 billion due to reduced domestic demand for clinker and cement, whose volume sales declined by 35 per cent and three per cent, respectively. Clinker exports climbed by 25 per cent.
Caribbean Cement grew quarterly net earnings from four cents per share to 29 cents per share, nonetheless, because of savings on production and operating costs, particularly its electricity and fuel bill, in a period of declining oil prices. It's the company's second best quarter in two years, next to the $359 million it made in the June 2013 quarter, occasioned by the conversion of US$75 million of debt to equity.
Haynes managed Caribbean Cement before and throughout the recession and held on to his job amid board changes at Rockfort that occurred in tandem with changes at Claxton Bay. His last day on the job at Rockfort was April 30, but he will continue as a consultant to the TCL group for six months.
Haynes is being replaced by Alejandro Vares, an executive at Cemex, which doubled its holdings to 39.5 per cent in the Trinidad Cement group, through subsidiary Sierra Trading, by way of a rights issue.
Through its interest in TCL, Cemex's share of ownership in Caribbean Cement would amount to 34 per cent, including the 4.96 per cent stake it holds through subsidiary Scancem International.
Vares takes up office on May 4.