Carib Cement posts $431-m loss - JamaicaObserver.com

Saturday, November 21, 2009 8:33 AM

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Carib Cement posts $431-m loss

Berger 'brightens' leading up to yuletide period

Wednesday, November 04, 2009

The continued slowdown in activity within the construction sector painted two separate pictures for Berger Paints and Caribbean Cement Company during the three months ending September 30.

Carib Cement blamed its loss during the quarter on the continuing contraction in the Jamaican economy and the resultant decline in market demand for cement

The cement manufacturer's $431-million pre-tax loss for the quarter under review contrasted with Berger's improved profit before tax of $19 million, up from a loss of $8 million during the comparative quarter in 2008.

For the paint manufacturer, which doesn't rely on construction as much as Carib Cement, increased productivity and higher efficiencies stemming from a 20 per cent reduction in work days at its Spanish Town Road factory resulted in better margins.

But the Berger also pointed to a "slowdown in rate of decline in volume sales compared to the previous year", which it said was evidenced "by the fact that year-to-date sales volume was down by 16 per cent whereas our volumes for the (September) quarter was down by 6.5 per cent".

Carib Cement blamed its loss during the quarter on two main factors - the continuing contraction in the Jamaican economy and the resultant decline in market demand for cement, and low clinker production that arose from challenges with the introduction of a new fuel mix".

"However, we had a significant stockpile of clinker and the problem has since been corrected," said the company.

During the three months to September 30, 2009, Carib Cement sold 152,280 tonnes of cement into the local market compared to 165,806 tonnes in the comparative period last year. Cement and clinker exports rose, however, from 9,342 tonnes to 21,163 tonnes and from zero to 8,128 tonnes, respectively.

This did not translate into an increase in sales, which for the review period was down 1.3 per cent to $1.99 billion, when compared to the comparative period last year.

The cost of the manufacturer's new kiln now being fully realised in the company's profit and loss was reflected in higher interest payments of $48 million for the three-month period compared to $13 million during the comparative period last year.

But the company already made an operating loss of $372 million during the quarter, compared to a $40-million operating loss the corresponding quarter last year.

Carib's subsidiary, Jamaica Gypsum and Quarries, also experienced a fall in demand during the review period and reported a profit before tax of $14 million for the quarter and $170 million for the nine-month period.

"It is anticipated that the domestic market will remain soft for the remainder of the year, but there are encouraging signs that our efforts to sell into new export markets are achieving some measures of success," added Carib Cement.

Berger had a different take on what the rest of the year will bring.

"Despite the ongoing recession, Berger Jamaica is hopeful that the sector's traditional upswing in business at Christmas, when paints play an important role in brightening up lives and lifting the spirits of the Jamaican people, will result in an improved fourth-quarter company performance," said the paint manufacturer.

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