Caribbean Cement looks to exports as local market sends mixed signals
Caribbean Cement's expansion is set to come on stream by 2025. (Photo: Joseph Wellington)

Despite a slight reduction in cement volumes during the first half of the year, Caribbean Cement Company Limited (CCC) is looking to grow its export business with its additional spare capacity.

This was revealed by Managing Director Yago Castro at the company's virtual annual general meeting (AGM) last Friday. He noted that while volumes were down two to three per cent year-to-date, the company would have had its annual shutdown in January relative to the September/October timelines that would have impacted comparative numbers. CCC produced 957,204 tonnes of cement in 2022 which was two per cent lower than the record 979,297 tonnes produced in 2021. CCC exported $41.96 million worth of cement in 2022 and sold 960 tonnes in 2021 to the export markets.

"We are more than capable to fully supply all the needs of Jamaica today. We're starting to target other export markets to allocate the spare capacity. We'll be doing our first exportation of cement to some Caribbean island and that will happen as soon as the 15th of September. That's a real game-changer and also an example of how big our spare capacity is right now as the company has been able to upgrade the production output," Castro said in response to queries about volumes in 2023. The Caribbean country to which the shipment will go is Turks and Caicos.

Caribbean Cement is looking to significantly increase its exports following the planned US$40-million ($6.18-billion) expansion of its facilities to grow its production capacity by 30 per cent. The original timeline was for the first half of 2024, but the new timeline has been moved to the first quarter of 2025 based on the company planning to complete the necessary connections during the general shutdowns.

"The project is coming along very well. Yesterday, I was meeting with a team of more than 20 engineers that Cemex has sent from Mexico. They are working on pushing forward the project. The project will be very well-advanced next year and will likely have to wait until the beginning of 2025. It's precisely that time frame why we're going to do the general shutdown of the kiln in 2025," Castro explained.

CCC's sales peaked at $25 billion in 2022 with its net profit jumping 24 per cent to $5.38 billion. This improved performance allowed for the company to clear its bank debt and pay $1.5032 per share or a $1.28-billion dividend, the first payment in 17 years.

When Castro was asked how the multibillion-dollar expansion would be financed, he said, "The company is financially wise in a very strong situation. So, zero worries about how we're going to structure the financing of the project. We have internally the resources to do it. It might be that the company decides to use some bank debt. We have corporate finance guys who are designing the optimal financing structure to fund a project like this."

CCC had $2 billion (US$12.7 million) in a deposit investment account with Cemex Innovation Holdings and $715.73 million in cash at the end of the second quarter.

Higher cement prices and a five per cent rise in sequential quarterly sales pushed revenue for the second quarter up 12 per cent to $7.48 billion. A reduction in fuel costs and operating expenses resulted in net profit rising 49 per cent to $2.16 billion.

For the six-month period, revenue was marginally up to $14.28 billion, but net profit was down 20 per cent to $2.45 billion as it incurred higher costs related to the January shutdown. Earnings per share was down from $3.57 to $2.87.

Total assets increased seven per cent to $31.49 billion with current assets rising 34 per cent to $8.66 billion. Total liabilities and shareholders' equity closed the period at $9.06 billion and $22.43 billion, respectively.

CCC's share price marginally increased to $50.84 on Friday which pushed the company's market capitalisation to $43.27 billion. However, the stock price is down 16 per cent year-to-date. Shareholders on record as of August 24 are set to receive a $1.8976 dividend or $1.62 billion on October 6 following the approval of the resolution at the AGM.

The decline in cement sales has been attributed to the slowdown in self-construction customers that buy bagged cement. However, the significant jump in high rises and hotel rooms continue to remain robust.

"We're seeing a slight decline in the cement sales in the first half of 2023. At the same time, we're seeing very robust growth and you can see it out there with the high-rise buildings and hotels. Retail is very important in Jamaica and we're very bullish about the country," Castro closed.

BY DAVID ROSE Observer business writer

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