Trinidad Cement is reporting a huge turn around in its fortunes in a release to the stock exchange. Revenues jumped to T$482 million up from $365 million in the first quarter of last year. Profit before tax climbed to $16.657 million from a big $85 million loss in 2012. Profit after tax amounted to $14 million versus a loss of $74.9 million before minority interest. The group has been saddled with problems which led to financial restructuring that took quite a while. Last year the Trinidad operation was closed as workers went on strike. Cement was imported from Jamaica to help fill the gap. Jamaica with its loss remains a big drag on the parent company’s operation. Last year total losses amounted to $390 million. (All currency is the TT$)
The company stated in its quarterly report that revenue for the quarter, increased by $117 million compared with the prior year as a result of higher cement sales volumes (in Trinidad and Tobago by 52 percent, in Jamaica by 7 percent and in export markets by 29 percent) and higher selling prices in most markets. Concrete volumes have also exceeded the prior year period by 10 percent. As a result of the significant expenditure made in the latter part of last year, plant performance has been more reliable and efficient with clinker production exceeding prior year by 32 percent (partially due to the TCL strike in 2012) and cement production by 21 percent.
TCL equity remains strong with nearly TT$700 million, working capital is tight with it being a little more than one to one.
Management concluded their statement as follows: The Trinidad and Tobago market has recorded very strong demand and it is anticipated this will continue. While there was declining demand in Jamaica and Barbados, it is hoped that with a post IMF agreement in the former, and general elections in the latter, growth will return to these markets. In addition, growth being experienced in Guyana and Suriname and the initiatives by the Group in the pursuit of additional export markets, plant efficiency and cost containment are likely to contribute to the continuation of the good results for the coming months.
Stock outlook | The group is still loaded with debt with finance charges of $65 million in the quarter, an increase over the $51 million paid in 2012. With such cost and principal repayment there is little room to slip as debt servicing is a large part of income. The debt to equity ratio seems well out of line and the call ought to be for them to go to the stock market for fresh long term capital.
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