Sun | Dec 3, 2023

Caribbean Cement to pay 2% royalty fees to Cemex

Published:Saturday | January 29, 2022 | 1:04 PM
Caribbean Cement Company complex, Rockfort, Kingston.
Caribbean Cement Company complex, Rockfort, Kingston.

Subsequent to shareholder approval for Caribbean Cement Company Limited to pay royalties to ultimate parent Cemex, the Kingston-based cement producer says it has agreed to a rate of two per cent in fees, starting from January 2022.

The initial master arrangement had specified fees of ‘up to four per cent’.

The sole manufacturer of cement in Jamaica and maker of Carib Cement also announced that the proposal on the resumption of dividend payments should be ready for board consideration within this quarter, “with a possible first dividend under the programme in 2022”.

Cemex assumed majority control of Caribbean Cement in 2017 at the takeover of Trinidad Cement Limited, which held more than 70 per cent of the Jamaican operation.

Caribbean Cement said in a statement to which Cemex’s logo was also affixed, that since that time, the plant at Rockfort has relied on Cemex’s global expertise, including its safety management systems that resulted in the reduction of lost-time worker injuries from nine incidents to zero last year. It also touted low COVID infection rates, 38,000 hours of training, consultations with 130 multidisciplinary experts over the five years, a 28 per cent increase in cement production due to improved operational efficiencies, and a swing from losses to profits, and debt reforms that have reduced long term borrowings from $12 billion in 2017 to $560 million as at September 2021.

“With this turnaround largely complete, CCCL is now in a position where we can formalise the relationship between the company and its parent,” said Caribbean Cement, under a services and intellectual property agreement to compensate Cemex for the future utilization of its trademarks and financial and operational expertise.

The agreed fee is equivalent to 2.0 per cent of net sales, half of the cap initially telegraphed to shareholders.

“With CCCL’s turnaround programme largely achieved, it is also time for the company to introduce a dividend programme for shareholders,” Caribbean Cement added. “Our largest shareholders have indicated full support of this programme,” the cement maker said.