Oct 2010 Financial News

Carib Cement cuts price...aims to recapture market share

Oct 20, 2010

In an effort to recapture share in the domestic market defined by economic downturn and an insurgence of dumped cement, Caribbean Cement has dropped the price on its main product — Carib Plus — by 7.5 per cent.

Carib Cement's general manager, Anthony Haynes, said the company is also saw this as "an opportune time to be aggressive with pricing and give people an opportunity to rebuild at the lower price", following the effects of Tropical Storm Nicole.

"We are trying to stimulate sales — the dumped cement that comes in from the DR (The Dominican Republic) and the US has been discounted below our product, which has been eroding market share," Haynes told the Business Observer in a telephone interview yesterday. "This is a direct response to win back market share and we also hope to stimulate demand."

Haynes said the new price of $525 per 42.5 kilogram bag of Carib Plus was determined by market surveys and through direct discussions with customers.

"It's not an exact science but $50 (discount) is a nice number... we hope it will cpature the interest and imagination of the people," he said.

Prior to the latest move, Carib Cement had increased the price of its cement by an average of 3.2 per cent in mid-June this year.

However, Lower domestic demand — approximately 18 per cent less than the same period last year and down by 36 per cent since the start of the recession by Carib Cement's estimation — has hurt the manufacturers' sales. While an aggressive export thrust that led to 30 per cent of the company's production for the year thus far being exported did not generate enough revenue to compensated for the loss in domestic revenues.

By Haynes reckoning exporting the product helps bring down the fixed unit cost but he ihopes that "the increased sale wiill compensate for the price reduction and that we will have a net positive revenue and contribution benefit".

The reduction in the local sales volumes has come just after the company invested US$177 million in the modernisation and upgrade of its plant and equipment, which put exceptional pressure on the company's ability to meet its financial commitments.

Carib Cement even kept its new Kiln 5 clinker manufacturing line out of service for 40 days -- starting in August -- to reduce high inventory levels of both clinker and cement.


Source:
Jamaica Observer
Wednesday October 20, 2010

http://www.jamaicaobserver.com/business/Carib-Cement-cuts-price_8071429