Mon | May 29, 2023

Caribbean Cement outlook tempered by shocks

Published:Wednesday | November 2, 2022 | 12:08 AM

Shocks and plant maintenance are weighing on the outlook of Caribbean Cement Company Limited.

“Like most companies, we have been impacted by inflationary pressure caused by the COVID-19 pandemic and the war affecting eastern Europe, resulting in higher fuel, power, and shipping costs. Notwithstanding, we will remain vigilant and continue to employ the necessary strategies to mitigate the effects of these exogenous shocks,” the cement company said in its third-quarter financial report.

The maker of Carib Cement told the Financial Gleaner that it already increased prices twice this year – by eight per cent in January and a further seven per cent in May – but would not be drawn on whether it would implement another price hike in the wake of its depressed outlook.

Annual inflation climbed down to 9.3 per cent in September, coming from a high of 11.8 per cent in April.

Caribbean Cement posted “strong” operating results for its September quarter. The company delayed major planned maintenance at the kiln, keeping its expenses in check and elevating its bottom line. Maintenance would have spiked expenses in the quarter and slashed profit, as it did a year earlier.

“The postponement of the planned maintenance is attributed to the excellent output of the cement kiln this year, as well as the delay in the arrival of key spare parts needed to conduct the general overhaul works,” Caribbean Cement said.

Cement sales totalled $6.2 billion over the July-September period, up 13 per cent relative to sales of $5.5 billion in the comparative 2021 quarter. Profit climbed dramatically to $1.2 billion, compared to $44 million in the prior quarter.

The market inched the stock 2.2 per cent higher on Monday to $58.79, the day the results were released to the market. But it lost all that gain on Tuesday, having closed trading at $57.54 per share.

In August, the company launched a US$40-million project to increase annual production capacity at its Rockfort plant in Kingston by one-third to 1.3 million tonnes a year.

“The project is expected to be completed by the second half of 2024 and will strengthen the self-sufficiency of the national cement industry, while setting the basis to export in the region,” Caribbean Cement said.