Caribbean Cement recorded a solid 48 percent increase in pretax profit to $2.6 billion, from $1.7 billion in 2022 for the third quarter, with the nine months at $5.6 billion, marginally lower than the $5.8 billion reported in 2022. After taxation of $617 million in the third quarter and $517 million in 2022, profit ended at $1.94 billion, up a healthy 60 percent from $1.2 billion in 2022. For the nine months of 2023, profit after accounting for taxation of $1.5 billion and $1.86 billion in 2022 ended at $4.39 billion, from $4.25 billion in 2022.
Earnings per share for the quarter was $2.28, up from $1.42 in 2022 and $5.15 versus $5 for the year to September.
Revenues jumped a robust 13.4 percent to $7.0 billion for the third quarter to September this year over the $6.2 billion in the 2022 period and were up 8 percent to $21.27 billion for the nine months to September 2023 compared to $19.68 billion in 2022.
While revenues were racing ahead, cost of sales remained flat during the third quarter at $3.48 billion against $3.42 billion in the September 2022 quarter, but it rose 18 percent in the year to date period from $10.8 billion in 2022 to $12.77 billion. Gross profit in the quarter jumped 28 percent from $2.75 billion to $3.5 billion in the September quarter and, for the year to date, declined from $8.85 billion in 2022 to $8.5 billion. Administrative expenses rose a significant 36 percent from $225 million in the September 2022 quarter to $304 million in 2023 and popped 17 percent from $695 million in the year to September 2022 to $811 million in 2023.
Notwithstanding the increase in revenues, distribution costs fell from $433 million in the September 2022 quarter to $354 million in the current year and moved from $1.2 billion down to $1.1 billion in the nine months to September.
Other expenses, mainly fees paid for management and royalty to the parent company that was flat year over year, rose to $254 million in the September quarter from $166 million in the prior year, and for the nine months, it was marginally down to $669 million from $680 million in the preceding nine month period.
Finance costs for the September quarter fell to $48 million, down from $154 million in the 2022 quarter and for the nine months, from $430 million to $142 million in the current fiscal year to September.
In relation to the cash flows, “Net cash provided by operating activities” was $5.7 billion for the nine months and $2.46 billion for the quarter. The cash flow generation during the quarter and the available cash at the beginning of the period have allowed the Group to invest $4 billion during the nine months of the year and $2 billion during the second quarter, leaving the company with $639 million in cash and bank balance at the end of the period.
As a result of the excellent performance, the company paid a dividend of $1.8976 per share, amounting to $1.6 billion, a 37 percent rise over the $1.17 billion paid in 2022 and resulting in Shareholders’ equity ending at $22.76 billion at the end of September, a sizable improvement over the $18.75 billion at the end of September 2022 and $20 billion at the end of December last year.
Total current assets ended at $10.67 billion as of September 2023, compared with $7.47 billion in 2022, with inventories being $4.68 million and $4.53 billion in 2022. Receivables from related parties amounted to $4.1 billion, up from $1.1 billion in 2022, with the 2023 balance including a deposit investment account of J$4 billion, the equivalent of US$26 million in CEMEX Innovation Holding Limited, which generates interest at a rate equal to the Western Asset Institutional Liquid Reserves Fund rate plus 30 basis points on a daily basis.
Caribbean Cement silos
Total current liabilities stood at $7.1 billion, down from $8.2 billion in 2022. There was only $228 million in other financial obligations outstanding at the end of September, down from $1.89 billion at the end of September 2022.
Caribbean Cement “implementation of its requisite business strategies has been paying dividends as the company continues with expansion and the achievement of significant milestones. It also included the company’s ability to adequately supply the local market, having enough spare capacity to export 3,500 metric tonnes of high-early strength cement to the Turks and Caicos Islands. In the next quarter, the company expects to build on its current achievements and maximise its performance as it remains optimistic about its future. The company will also continue to undertake its flagship social impact initiatives of installing concrete pavements in certain communities across the island,” the company stated in their commentary on the results.
With ICInsider.com projected earnings at $7, the stock still has the potential to go higher from the current price of $50.32, with the current PE at just 7 times 2023 earnings compared to an average of 12 for the market. Not to be ignored are a few developments that augurs well going forward. The continuing expansion to hotel rooms and road expansion should ensure continued demand for cement for several years ahead. Immediately, the September quarter profit suggests that earnings in 2024 could exceed $9 per share if the current trend continues into 2024.
