Carib Cement wipes off losses

Profit at Jamaica’s sole producers of cement soared 234 percent in the quarter to March, to $1.1 billion from just $347 million in 2018 and wiped out the years of losses and plunging it into a surplus of $124 million.
The improved profit grew out of sales that rose a mere 2.5 percent to $4.45 billion from $4.34 billion and reduction in certain cost. The results places the company in a position to be able to commence the payment of dividends that seems likely this year.
Improvement in gross profit margin, was significant and may have resulted in profit margin climbing to 66 percent from 56 percent in the 2018, excluding depreciation cost. Input cost fell with the cessation of imported cement, being a part of the cost mix.
Depreciation cost rose 210 percent, to $391 million resulting from the acquisition of Kiln 5 and Mill 5, previously leased from Trinidad Cement. Employee related cost rose just 2 percent to $554 million. Administrative expenses dropped 73 percent to $300 million from $1.1 billion in 2018, a direct result of termination of the kilns. Marketing and sales expenses declined by 7 percent to $169 million. Finance cost climbed in the quarter by 756 percent to $169 million.Earnings per share came out at $1.33 for the quarter. IC Insider.com is forecasting earnings of $7 per share for 2019, based on sales increasing faster than in the first quarter. On the low end, the forecast is for earnings not less than $6 per share. At the latest price of $64 for the stock, the PE would 10.6 on the high side and 9.2 times at the lower end. It is worth noting that tax losses amounted to $1.6 billion at the end of 2018. Half of taxable profit can be set off against the tax losses, in any year assessment. The effect is a lowering of the amount of taxes to be charged against profit for the year, as the company did not book deferred tax assets for these losses in the past.
Gross cash flow brought in $1.8 billion, but after making loan payment of $1 billion and making some other payments cash at bank on hand, declined to $303 million from $421 million at the end of December last year. Shareholders’ equity stands at $7.5 billion with borrowings at $10.3 billion, down from $11.39 billion at the end of December. Repayment of preference share will consume $822 million in 2019 with $3 billion, payable annually, to September 2026.