May 2015 Financial News

CCC upbeat on economy as profits soar

May 06, 2015

Caribbean Cement Company (CCC), whose fortunes are tied to construction prospects, remains optimistic based on stable macroeconomic indicators.

The cement manufacturer made $248 million net profit after tax for its March 2015 quarter, or six times the profit made a year earlier due to reductions in its operating costs, led by the effects of the fall in the price of oil. It stated that the multilateral lending agencies continue to express confidence around Jamaica's economic prospects and that local business and consumer confidence also hit a two-year high in the last quarter of 2014.

"The low oil price environment also provides an opportunity to consolidate the fiscal and structural reforms that can boost long-term growth and development. At the same time, lower electricity and fuel prices not only reduce our costs but create more disposable income in the marketplace. With the improved macroeconomic conditions, we have seen a small rise in domestic demand, and this is expected to hold going forward. We are encouraged with the improvement in the performance of the company," according to statements in the financials signed by chairman Christopher Dehring and acting group chief executive Alejandro Ramirez.

The company explained that total revenue was on par with the previous year, despite a decline in domestic sales volumes of 3.0 per cent. However, lower energy costs, improvements in operational inefficiencies and lower financing costs contributed to the improved financial performance. CCC has equity of $5.1 billion as at March 2015.

In September 2014, the parent company of CCC, Trinidad Cement Ltd (TCL) Group 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.

"As a consequence of the TCL Group restructuring its debt with its lenders, our short-term loans have been reclassified to long-term liabilities. The Company's liquidity position has improved over the quarter and cash in bank has moved from $178 million to $543 million," stated Dehring and Ramirez, in the CCC financials.

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. The main elements of this restructuring included the reduction of the interest rate on the outstanding debt; forgiveness of the default moratorium interest from September 30, 2014; adjustment to the amortisations of the debts based on TCL's new cash flow projections and the ability to prepay originally secured and unsecured debt on a discounted basis within 90 days of the effectiveness of the restructuring.

Source:
BY STEVEN JACKSON
jacksons@jamaicaobserver.com
Business reporter
Jamaica Observer
Wednesday May 6, 2015

http://www.jamaicaobserver.com/business/CCC-upbeat-on-economy-as-profits-soar-_18885708