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Financial News

Oct 2014 Financial News

Carib to commence new cement supply deal with Venezuela this month

Oct 22, 2014

THE island's sole cement manufacturer Caribbean Cement Company (Carib) plans to resume exports to Venezuela this month amid posting a positive outlook for its financial year.

The outlook also serves as a broader indicator of sustained economic activity for the ailing island.

Carib already recorded near 10 per cent year-on-year growth in sales during the three months to September 30, when it generated $3.5 billion in revenue.

"The recent trend in the domestic market is expected to continue as well as improvement in the export earnings," said Carib in a joint notice accompanying the financials signed by new chairman Christopher Dehring and director Hollis Hosein. "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."

Between July and September, the company supplied 149,000 tonnes of cement to the local market, or two per cent more than year-earlier levels.

It also exported 17,100 tonnes of clinker, or 155 per cent more than a year ago.

But its exports of cement are down by one-quarter to 58,500 tonnes, which it expects to rebound based on shipments to Venezuela.

Carib earned $78 million in net profit for its September quarter, or half the amount the cement manufacturer posted for the comparative three months last year.

Nine months' profit at $20 million also fell compared to a profit of $32 million a year earlier.

"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 Limited," stated Carib.

The local cement maker previously indicated that its share of the local marketplace increased from roughly three-quarters to four-fifths. This is based in part on a deal signed last year between the company and Arc Systems to sell only Carib cement exclusively.

The agreement reduced Carib's major competitors from three to two -- Tank-Weld and Buying House.

Last year, Carib supplied 100,000 tonnes of clinker to Venezuela under the Trade Compensation Mechanism of the PetroCaribe Agreement. The first shipment left the island in December 2013.

It previously indicated that the Venezuela market offered vast potential to grow its annual sales by 50 per cent.

Already, total sales rocketed to $12 billion for the financial year ending December 2013 compared with $9 billion a year earlier. The local cement manufacturer started negotiations to enter Venezuela years ago but it was stalled due to the ill health and eventual death of president Hugo Chavez.

Last year Carib also restructured US$75 million in debt owed to its parent Trinidad Cement Limited by converting US$37 million into preference shares and converting US$38 million as capital.

 

Source:
Jamaica Observer
Wednesday October 22, 2014    

http://www.jamaicaobserver.com/business/Carib-to-commence-new-cement-supply-deal-with-Venezuela-this-month_17782736