Carib Cement triples profit despite halting exports
The Caribbean Cement Company (CCC) more than doubled its quarterly profit despite donating 3,000 bags of cement to flood victims and halting exports during the June quarter 2017.
Net profit grew to $606 million after tax,s over three months, or 174 per cent higher than the similar period a year earlier.
"This was achieved through cost-saving initiatives which were implemented, resulting in lower fixed and administrative costs," stated management in the financial report signed by Chairman Parris Lyew-Ayee and Director Jose Luis Seijo Gonzalez.
Earning per share (EPS) spiked to $0.71, up from $0.26 a year earlier. Over six months, EPS increased to $1.25 from $1.24 a year earlier.
The group made eight per cent less revenue at $3.9 billion, down from $4.3 billion a year earlier, "mainly due to the reduction in exports," said the company management. During the quarter, the company took the decision to focus all resources on the local market, thus suspending exports.
That reduction in top line revenue contributed to a drop in trading profit (EBITDA) from $1.3 billion a year earlier to $778 million in the review quarter. The group, however, benefited from booking no restructuring costs this year compared with $420.7 million a year, earlier. That resulted in decreasing overall expenses and increasing profitability.
The group improved its net cash and equivalents position, which totalled $1 billion, compared to $788 million a year earlier. The improvement was mainly due to the recovery of an advance payment in the first quarter of the financial year, according to the company's management.
"Without this, the increase would have been in excess of 300 per cent, resulting from the implementation of working capital strategies.," CCC management said.
Earlier this month, Carib Cement announced that it will invest US$24.7 million over the next 12 months to complete a coal mill and kiln, and implement green energy programmes. The capital expenditure would push cement production from 910,000 tonnes to 1.2 million tonnes annually by 2019.
At the same time, the company revealed that it plans to refinance its costly operating lease for the Rockfort plant in Kingston. The company said it will set up a dedicated advisory board to address its operating lease, payable to immediate parent company Trinidad Cement Limited. Both companies are now ultimately owned by Cemex of Mexico.
Last year, Carib Cement paid $3.3 billion to TCL as operating lease for the assets it owns at Rockfort. This year, it projects to pay roughly $2.8 billion. Carib Cement's management now indicates that the structure of the lease is not the most efficient use of resources.