Jun 2015 Financial News

Caribbean Cement lands big contracts

Jun 17, 2015

Caribbean Cement Company Limited (CCCL) has secured a deal to supply cement for use in stabilisation of a 46-kilometre stretch of the north-south leg of Highway 2000, which is currently under construction.

The local cement manufacturer is also on board projects that will see 640 hotel rooms being built by BahÌa PrÌncipe and 460 rooms for student accommodations being constructed at the University of the West Indies.

"We believe we have passed the rougher times," said recently appointed general manager, Alejandro Vares, at Caribbean Cement's annual general meeting on Tuesday.

"We are now on a path to improve profitability on a sustainable basis," he told shareholders.

Indeed, 2014 was the first full financial year in which the cement maker posted a profit after five years of drought - it racked up more than $8 billion in losses from 2009 to 2013. Moreover, earnings for the first three months of 2015 totalled $248 million, compared with $35 million in the corresponding quarter last year.

Export Market

This year's performance is expected to be supported by four per cent growth in the domestic cement market in 2015 and a second clinker supply deal to Venezuela, which runs to November. The contract requires the company to ship 240,000 tonnes of the cement input, compared with 100,000 tonnes in the first supply deal under the PetroCaribe Trade Mechanism.

Caribbean Cement also started 2015 with its products carrying an average price that is 7.5 per cent higher than it was at the beginning of last year - after three price increases in the first half of 2014 - while energy prices have slumped from year-earlier levels.

Still, the cement maker is sitting on unused capacity that it has been unable to utilise due to stagnant demand for cement, costly production, and a limited range of products.

Even with record production of clinker last year, it still had 40 per cent of its kiln capacity unutilised - just over 40 per cent of the company's cement milling capacity is being used.

Vares, who took over management of the company from Anthony Haynes in May, reckons that improving operational efficiency and lowering production cost, and, consequently, the price to consumers, can make CCCL's cement competitive enough for the export market, which could easily eat up the local manufacturer's unused capacity.

He hopes to increase kiln efficiency from 78 per cent in 2014 to 85 per cent this year to more than 90 per cent next year.

Lower prices on the existing products it makes could also squeeze out imported cement.

But Caribbean Cement also has to go after new markets. It is currently analysing the feasibility of exporting gypsum, according to Vares. The company has already lab tested a sulphate-resistant cement that is particularly useful in the development of seaports as the product is better at withstanding the effects of the ocean.

The cement maker's own ports, such as the Jamaica Gypsum & Quarries' pier, which was dredged last September to permit loading of 25,000-tonne shipments of clinker, also presents an opportunity for Caribbean Cement to explore handling other companies' shipments.

"We are talking with a few companies, but I am not authorised to discuss details at this time," said Vares regarding Caribbean Cement's flirtation with renting the capacity of its ports.

Source:
Camilo Thame
camilo.thame@gleanerjm.com
Jamaica Gleaner
Wednesday June 17, 2015

http://jamaica-gleaner.com/article/business/20150617/caribbean-cement-lands-big-contracts