Profit up in Q3 at Carib Cement

Caribbean Cement reported profit of $78 million for the September 2014 quarter, losses of $89 million in the second quarter, helped pull the results down to just $25 million, for the nine months to September this year.
A profit of $32 million was reported in the nine months to September last year. The 2013 profit performance includes exceptional income of $591 million arising from the reversal of charges previously accrued from the debt restructuring with the parent company, Trinidad Cement, but the results for that year also had some exceptional charges, that have not recurred in 2014, including foreign currency losses amounting to $689 million.
Sales Volume| Both domestic and export cement sales volume grew over the nine month period, 2 percent in the local market and 7 percent for exports, while clinker sales grew from 6,700 tonnes to 80,400 tonnes to satisfy the contract to supply clinker to Venezuela. Overall, the plant sold a total of 650,000 tonnes of cement and 80,000 tonnes of clinker, well below the rated capacity of the plant. Sales revenue amounted to $3.5 billion in the September quarter and $10.75 for the year to September, up from $3.2 billion for the September 2013 quarter, and $8.9 billion for the nine months. While the volume of local sales rose, export of cement fell but clinker is up in the quarter.
Outlook| “The recent trend in the domestic market is expected to continue as well as improvement in the export earnings. In addition, we have entered into a new agreement to supply 240,000 tonnes of clinker to Venezuela, starting shipments in October 2014. We therefore remain cautiously optimistic that these favourable results can be sustained.” New chairman Christopher Dehring stated.
The 2015 year, could well experience further growth in domestic sales, as the local economy slowly improve as interest rates should continue to recede, thus lending some life to the construction industry.
But the company continues to be saddled with high debt and the cost of servicing it, which for the nine months is $250 million. With profit after depreciation, but before interest being $270 million, the risk of falling into a loss is great, unless volumes increase at a faster pace that is has so far this year.
The company has accumulated a pile of losses and will require several years of profitable trading to wipe it off and commence the payment of dividends, until then investors will have to look to growth in profits and movement in the stock price for compensation.