Jamaica’s sole cement processing company, Caribbean Cement recorded a modest 2 percent increase in revenues to $4.5 billion for the quarter ending March 2020, over the 2019corresponding period and finished with a 57 percent decline in profit to $483 million, down from last year’s $1.1 billion for the March quarter.
The quarterly performance followed a weak December 2019 quarter when profit dropped from $1.1 billion in the 2018 December quarter to just $319,276.
Helping to pressure the company’s performance for the latest period was a 16 percent rise in direct production cost that moved from $2.3 billion to $2.6 billion, with repairs and maintenance increasing $100 million and equipment hire moving up by $170 million over the 2019 period with raw materials accounting for most of the balance of the increase. The Directors pointed to the fact that the annual maintenance shutdown occurred in the first quarter this year versus the second quarter in 2019. As a result, operating profit decreased by 23 percent, moving from $1.58 billion to $1.22 billion resulting in profit margin falling from 35.5 percent in the 2019 first quarter to 27 percent in 2020.
Other operating expenses rose 15 percent from $568 million to $651 million in the quarter. Finance cost declined in the quarter, from $236 million to $164 million as the company paid down loans during the past year. Foreign exchange losses rose to $281 million for the quarter, from a surplus of $67 million in the previous year’s corresponding period.
The Directors note that “the full impact of COVID-19 on the company’s operations, particularly in its export market, is yet to be seen.”
The company continues to enjoy a healthy cash flow with the quarter bringing in $1.1 billion, just a few million dollars lower than for the 2019 period. Shareholders’ equity stood at $8.8 billion and total borrowed funds of $12 billion down from $14.8 billion in March 2019. Current assets ended the period at $3.1 billion inclusive of trade accounts receivables of $450 million and cash and bank balances amounting to $348 million. Current liabilities rounded out the quarter at $4.9 billion, including short-term borrowings of $1.7 billion.
Earnings per share came out at 57 cents for the quarter, down from $1.33 in 2019. IC Insider.com is forecasting around $4 per share for the year with the PE currently at 12.5 times 2020 earnings, but a lot will depend on if there are not many dislocations to cement demand from the current economic slowdown. The stock last traded at $51.50 on the Main Market of the Jamaica Stock Exchange.
Q1 profit down 57% at Carib Cement
May 19, 2020 by
