Jul 2015 Financial News

Lower oil prices should raise cement sales -- CCC

Jul 22, 2015

Cement manufacturer Caribbean Cement Company Ltd (CCC) expects consumer demand for cement to rise based on savings derived from falling oil prices.

It comes as the group reported net profit of $621.3 million for its June second-quarter 2015 on revenues of $3.9 billion, which reversed a loss made in the corresponding quarter a year earlier.

"Lower oil prices have had a significant impact on electricity and fuel prices and this is expected to create more disposable income in the local market which should in turn result in greater demand for our product," according to the directors' statement in its financials signed by chairman Christopher Dehring and Jose Luis Seijo Gonzalez, group chief executive officer.

Oil closed at US$50.39 a barrel on Monday or nearly half the levels recorded last July due to an abundance of supply from key oil-producing nations. However, the latest drop in prices since this month are linked to the prospects of oil export from Iran and a strengthening US dollar.

CCC remains optimistic that consumers will drive higher sales. Already increased buoyancy in the local market resulted in an 8.0 per cent rise in CCC sales over the period.

"Small increases in local cement sales volumes have been realised and this is expected to continue for the remainder of the year," the directors' statement continued.

The statement added that modest growth in the economy will also support its improved outlook despite the tight fiscal policy stance of Government.

The group's cash position improved by $534 million mainly as a result of the improved earning before interest taxation depreciation and amortisation performance.

"We remain encouraged by the continued improvement in the performance of the company," stated Dehring and Gonzalez.

In March 2015, the parent company of CCC, Trinidad Cement Ltd (TCL) Group, negotiated new terms under an 'override agreement' with lenders to restructure its debt.

In May 2015 the TCL group prepaid the override debt in full net of prepayment discount of TT$ 194.2 million with the proceeds of a bridge loan and internal cash of TT$ 99.2 million. Further to this, the TCL Group is in the process of securing a syndicated loan facility to repay the bridge loan.

In September 2014, TCL suspended principal debt repayments due under its restructured loan agreement which effectively created a condition of default at year end. Its auditors indicated that it rendered all outstanding debt covered by this agreement to become due immediately, resulting in the reclassification of all long-term debt, amounting to TT$1.8 billion, to current liabilities. The group negotiated new terms with lenders with the restructured debt agreements which came into effect as at March 2015. CCC assets were pledged as security for loans in 'default' by TCL, according to the auditors in a statement accompanying the financials as at December 2014.

Source:
BY STEVEN JACKSON
jacksons@jamaicaobserver.com
Business reporter
Jamaica Observer
Wednesday July 22, 2015

http://www.jamaicaobserver.com/business/Lower-oil-prices-should-raise-cement-sales----CCC-_19219949