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Financial News

Nov 2009 Financial News

Carib Cement cuts price to ease stockpile - Production halted to clear inventory

Nov 04, 2009

With no word yet on whether the cement waiver on imports will stay in place for another year, Caribbean Cement Company Limited (CCCL) is looking to other tactics to take share and offload a stockpile of the commodity it says has built up in inventory.

The company said it has shut down production in the interim to clear the excess from its warehouse.

Three months after a one-week nationwide promotion to rebuild interest in its its branded product, Carib Cement, the company has sliced $40 off each bag of the commodity, in a campaign that will run indefinitely.

CCCL has 85 per cent of the market, but says it needs 100 per cent to pay for its new cement mill and kiln.

Carib Cement's price took effect last week Monday and according to Alice Hyde, marketing manager at the Rockfort, Kingston-based company, will continue until the inventories are brought down to levels at which it makes sense on restart production.

"We have an indefinite timeline so we can reduce our high inventory levels which are causing us to stop our mills," she told Wednesday Business.

It is the second time in months that the company has resorted to the price cutting strategy ostensibly to reduce high inventories.

A similar campaign in July this year has been described as successful by Hyde.

"We increased sales over the period," she said.

The price cut is on offer to merchants and others purchasing directly from CCCL, but Hyde said the savings should flow to retail consumers.

CCCL now sells the product for $547.55 ($470, plus GCT), while Tank-Weld, which control large segments of the market for imported cement, sells the Vulcan brand of the commodity to its distributors for $530, plus GCT, which one retailer sells to the public for $672.21 per bag.

Decrease in effect

Last week, Mainland Hardware in Spanish Town, St Catherine, quoted a new price for Carib Cement at $630, down from $670.

Another distributor in Kingston was selling the Carib Plus brand for $624.25 and its imported rival, Anchor brand of Dominica, for $635.

Another only reduced the cost by $14, from $626 to $612.

Carib Cement has sufficient capacity to produce 1.8 million tonnes of cement.

Its sales last year topped 720,000 tonnes, reflecting an 84 per cent share.

Jamaica has petitioned the CARICOM's trade body, the Council for Trade and Economic Development, for extension of the waiver of the 15 per cent Common External Tariff that would safeguard 15 per cent of the market for importers.

The Ministry of Industry, Investment and Commerce said on Tuesday that Jamaica was still awaiting official word from CARICOM on whether the waiver was approved.


Source:
mark.titus@gleanerjm.com
Jamaica Gleaner
Wednesday November 4, 2009

http://www.jamaica-gleaner.com/gleaner/20091104/business/business6.html