Camilo Thame, Business Reporter

Left: Dr. Rollin Bertrand, CEO of the TCL Group of Companies, parent of Caribbean Cement Company, explaining what went wrong in the production of faulty cement at a March 24 press conference. With him, at right, is Anthony Haynes, general manager of Carib Cement. - Ian Allen/Staff Photographer   Right: The first shipment of Cuban cement unloaded at the Caribbean Cement Company's pier at Rockfort, Kingston yesterday. - Norman Grindley /Deputy Chief Photographer

Customers claimed an additional $100 million in compensation from Carib-bean Cement Company in the September quarter, pushing overall demand for damages so far for being sold a poor quality product to $260 million, the latest figures from the company show.

The company had made provisions of $160 million for the claims. However, a 15 per cent price increase in July - the company's third in a year - plus a 5.5 per cent increase in sales volume, not only helped jack up revenues by 26 per cent, but for Carib Cement to absorb the compensation demand as well as return net profit of $153 million, compared to a loss of $50 million for the corresponding period last year.

But perhaps more important for Carib Cement (JSE:CCC) the third quarter result meant a reversal of four consecutive quarter of losses, going back to June 2005, when the impact of a series of problems at the company began to manifest themselves in the profit and loss accounts.

Carib Cement was first hit by high, and rising energy prices, then its difficulties were compounded by heavy rains late last year when limited raw material supplies and slowed production and sales. Its biggest blow, however, came in April, when it had to recalled tens of thousands of tonnes of cement which did not meet quality standards, but had been sold in the market.

Reputation took a battering

Its income apart, Caribbean Cement's reputation took a battering, especially when an independent inquiry into the issue found that the quality problems were developing for more than a year before the management took serious notice.

Until the profit for the July-to-September quarter, Carib Cement had wracked up losses of $360 million over the four quarters of negative returns. But now, as it said at the time of the price increase in July, expects that it has positive momentum for the rest of 2006.

In the quarter under review, CCC sold 214, 690 tonnes of cement, compared to 203,449 tonnes for the corresponding quarter in 2005 - a modest increase of 5.5 per cent.

But revenue, at $1.83 billion for the quarter, was up 26 per cent in year-on-year comparisons. Opera-ting cost of $1.57 billion for this year's third quarter was marginally higher - two per cent - than the $1.54 billion for the same period last year

For the current quarter which runs to December 31, the company is expecting to clear the $81 million accumulated net loss for the nine months to September 30.

Said the company in a directors' statement to shareholders: "The forecast production volumes, efficiencies, revenue and the improved profit margin for the last quarter of the year should result in a full recovery of the net loss sustained the first nine months."

- camilo.thame@gleanerjm.com