Cemex, SAB de CV and its Caribbean subsidiaries have restarted their dividend programmes to return capital to shareholders as the cement companies see improved financial performance.

Trinidad Cement Limited (TCL) posted its 2024 annual general meeting (AGM) notice on Monday, which was accompanied by a dividend announcement. TCL shareholders will vote to declare the proposed dividend of TT$0.08 as the final dividend with respect to the 2023 financial year (FY). If approved, the dividend totalling TT$29.97 million would be paid on September 9 to shareholders on record as of August 13. TCL generated a consolidated earnings per share (EPS) of TT$0.288 in 2023.

This would be the first dividend TCL shareholders would have received since the TT$0.02 dividend paid in July 2017 and highest total dividend payment since the TT$0.12 dividend paid in May 2005 totalling TT$29.97 million. TCL’s biggest shareholders are Sierra Trading (Cemex SA de CV) and The National Insurance Board of T&T with stakes of 69.83 per cent and 11.92 per cent, respectively. The TCL AGM will take place on July 5 at 2:00 pm by The Ballroom Trinidad Hilton and Conference Centre, Port of Spain, Trinidad & Tobago.

The TCL dividend announcement comes two months after Cemex shareholders approved a US$120-million (MX$2.03-billion) dividend payment to be paid quarterly between June 18, 2024, to March 11, 2025. Cemex last paid a US$150-million dividend in semi-annual payments in June and December 2019. According to investing.com the last dividend paid prior to 2019 was in June 2008.

“Now as far as the dividend concerned and the allocation of cash flow to dividends, we would not have announced the dividend payment unless we really were very confident that sometime this year, we would get our investment-grade rating, but also it’s a very important sign of our confidence of the outlook that we have in terms of the business, free cash flow generation and having sufficient operating free cash flow to continuously systematically provide the dividend payments that we have,” stated Cemex Chief Financial Officer Maher Al-Haffar at the company’s February 8 earnings call.

Cemex’s February press release noted that it would seek shareholder approval for subsequent dividend distributions following the current quarterly program up to March 2025. Cemex’s Chief Executive Officer Fernando A González Olivieri presentation on March 20, dubbed Cemex Day, highlighted that capital allocation would include maintaining a systematic and progressive dividend policy, continuing to strengthen the capital structure by reducing leverage and a sustainable investment strategy.

Cemex’s long-term global credit ratings were upgraded to BBB– by S&P Global Ratings within the last three months, which means that Cemex now has an investment grade credit rating. This comes on the heel of Cemex continuing to reduce its leverage ratio from 4.17 times in 2019 to 2.06 times in 2023. Cemex also plans to reduce its leverage ratio to 1.50 times over the next two to three years.

Caribbean Cement Company Limited (CCC) hasn’t published its notice of AGM as yet, but it’s likely that the company will request shareholders to approve a final dividend for the 2023 FY. Carib Cement had paid a J$0.07 dividend in June 2005 totalling J$59.58 million before going on a 17-year hiatus which ended in August 2022 when it paid a J$1.5032 dividend totalling J$1.28 billion. It then went on to pay a J$1.8976 dividend in October 2023 totalling J$1.62 billion.

Cemex Operaciones México, SA De CV directly owns 4.96 per cent of CCC which meant it would have been paid J$143.47 million over the last two years in dividends. Cemex and two of its subsidiaries also collected J$975.68 million in royalties and service fees over the last two years from CCC. The master services and intellectual property agreement currently results in two per cent charge relative to CCC’s consolidated net sales between January 2022 to January 2027.

However, despite TCL collecting J$403.56 million in management fees from CCC over the last two years, Cemex has only been able to collect TT$72.97 million (J$1.65 billion) in royalties and management fees from TCL since the Trinidadian company didn’t pay dividends during the period. TCL and its subsidiary TCL (Nevis) Limited directly own 74.08 per cent of CCC which would have translated to J$2.14 billion in dividends over the last two years.

Carib Cement generated J$27.72 billion in consolidated revenue and J$5.58 billion in net profit during 2023 which translated to an EPS of J$6.55. This was against the backdrop of bagged cement volumes declining 4.3 per cent while bulk cement sales increased 9.6 per cent.

CCC’s first quarter saw revenue increase 12 per cent to J$7.62 billion which was driven by tourism, infrastructure and commercial (I&C) projects happening in the domestic market. Due to the absence of major maintenance and plant shutdown in the current quarter, Carib Cement’s gross profit jumped 176 per cent to J$3.61 billion. With expenses remaining relatively flat during the period, net profit totalled J$1.93 billion and an EPS of J$2.27. Carib’s cash pile also swelled to J$6.26 billion with J$5.7 billion (US$36.6 million) held in a deposit investment account with Cemex Innovation Holdings Limited.

Carib Cement’s impressive first quarter performance was a key driver for TCL which reported that Jamaica was responsible for 87 per cent of its adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of TT$167 million. Jamaica’s performance was also largely responsible for the consolidated net profit of TT$78.32 million compared to the TT$1.69 million consolidated net loss in Q1 2023. TCL’s total assets at the end of the quarter were TT$2.55 billion plus consolidated equity of TT$1.08 billion, with equity attributable to shareholders of TT$852.51 million.

Carib Cement is currently continuing work on its 30 per cent capacity expansion which is set to be completed in 2025. The local company upgraded its combustion chamber last year and introduced Ultimate Technology for Industrial Savings (UTIS) device to use water electrolysis to further enhance its specific heat consumption. The US$40-million project has been ongoing since 2022 and is set to result in the annual production capacity moving from 1 million metric tonnes to about 1.4 million metric tonnes. The additional 300,000 metric tonnes of cement capacity is equivalent to about 27 per cent of Jamaica’s national cement consumption.

Cemex is planning to add 2.7 million metric tonnes of cement capacity in Colombia, the Dominican Republic, Jamaica, and Guatemala between 2021 – 2025. TCL’s stock price jumped ten per cent on Monday from TT$2.56 to TT$2.82 which left the stock down nine per cent in 2024 with a market capitalisation of TT$1.06 billion.