Oct 2010 Financial News

Carib Cement trying to cut J$1.4b salary bill

Oct 27, 2010

Starved of operating cash while inventory builds in its warehouses due to a drop in demand and competition from imports, Caribbean Cement Company Limited has revealed plans to reduce its workforce, but says the number is subject to union talks.

No timeline was given for the job cuts or how many persons would be sent home, but it is expected to affect all levels of employment in the company, as Caribbean Cement seeks to reduce its fixed costs by 20 per cent.

It currently employs 320 full-time staff and 50 casual workers, and its wage and salary bill was J$1.4 billion in 2009.

"Carib Cement has been adversely affected by the general economic decline, the decrease in demand for cement, reduced sales, reduced market share, and unfair competition from dumped cement," the company said in a statement.

Export sales were up at June 2010, but domestic volumes have seen declines quarter to quarter, cutting into revenues. Top-line income across revenue streams fell from J$4.9 billion at half-year 2009 to J$4.3 billion.

Embarrassing position

The cement producer also closed the half-year with negative working capital, a J$139 million deficit, with current assets of J$3.31 billion falling short of the J$3.45 billion of current liabilities.

Carib Cement also reported net negative cash flow of J$101 million.

Its liquidity crunch put the company in an embarrassing position last August of being three days late with the payment of monthly salaries, sparking concerns and forcing the company to formally explain its dilemma to the stock market.

In January, it made its first big adjustment to free the company of debt-servicing charges resulting from its US$177 million modernisation by converting J$1.4 billion of debt owed to parent TCL Group to preference stock.

To cut operating costs and to save on its energy bill, the company took its Rockfort plant offline for more than a month in August.

And followed up last week with a price cut of 7.5 per cent or J$43 to J$525 for a 42.5kg bag of cement to boost domestic demand for its product in order to grow sales. The reduction followed a 3.2 per cent price hike on June 14 on small and jumbo bags of cement.

But on Monday, Carib Cement advised the market that it had to make even more adjustments if it were to make it through the current downturn.

Negotiations were ongoing with the unions, it said, while advising that the internal restructuring may result in job cuts.

Last week, the company also advised the market that at the management level, Shaun Lawson-Laing had resigned as manager, legal and corporate services, and was replaced as company secretary by Bernadene Crooks.


Source:
mark.titus@gleanerjm.com
Jamaica Gleaner
Wednesday October 27, 2010

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