Sat | Nov 28, 2020

Caribbean Cement headed for best year in negative times

Published:Wednesday | October 28, 2020 | 12:10 AMSteven Jackson/Business Reporter

Caribbean Cement Company, supplier to a resilient construction market, made $2.2 billion over three quarters to September, reflecting a one-third growth in earnings amid the pandemic.

Not only has Caribbean Cement outperformed its nine-month results in the prior year, but its earnings have already eclipsed the cement producer’s full-year earnings of $1.9 billion in 2019. It’s also on track to match or outpace the record annual profit of $2.47 billion made in 2018.

The company’s performance year to date rocketed the CCC stock to $51.29 on Monday, a gain of $7.46 or 17 per cent on the day. On Tuesday, CCC gained another 4.8 per cent to close at $53.76, but traded as high as $60 per share during the day.

Caribbean Cement’s revenue performance serves as a gauge for construction activity because it is the only cement producer in Jamaica, and commands the overwhelming majority of the market. Its cement supplies most commercial and residential developments.

Over nine months, sales at Caribbean Cement topped $15 billion, up from $13.5 billion in the year-prior period. Gross profit amounting to $7 billion already equates to what the company made over the full year in 2019, when sales reached $17.8 billion, suggesting that the company has been doing a better job of managing its production costs this period.

More than half of Caribbean Cement’s profit to date was made in the third quarter. It earned $1.2 billion from $5.8 billion of revenue. It reflected a near 1,500 per cent improvement at the bottom line compared to the $77 million of profit made in the July-September quarter of 2019 from sales of $4.4 billion.

Requests for comment on the results were unanswered.

“This solid operating result is attributable to higher volumes sold, prudent cost containment measures and operational efficiencies that have allowed us to keep operational costs and expense in check, despite the increased rate of production,” the company led by General Manager Yago Castro stated in its earnings report.

The third quarter sales might have benefited from the relaxation of the initial tight lockdown measures in the second quarter, particularly in April. Business that would have been done in that period likely bounced to the September quarter.

In response to the threat of the pandemic, the company said it enhanced safety protocols and “customer engagement”, as well as did targeted community support to ensure the continuity of business.

The profits that the company makes continues to buffer its capital which stood at $10.6 billion in September compared to $8 billion a year ago.

Caribbean Cement has invested more than $20 billion on capital projects in the past five years to modernise the Rockfort, Kingston-based plant. It’s indebted to its owners and has paid no dividends in 15 years, since 2005, a span that includes at least three years of multibillion-dollar losses.

steven.jackson@gleanerjm.com