Caribbean Cement Company (CCC) blamed the recession and the State of Emergency for its "disappointing" J$218m net loss in its second quarter, despite internal operational challenges related to its Mill-5 plant.
Additionally, the cement manufacturer was operating with negative working capital of $140 million as at June 2010, whilst the deficit on its cash flow worsened some 66 per cent to $100 million compared with the prior year’s quarter.
For the review period, revenues were down 8.4 per cent to $2.13 billion whilst expenses were up 14.2 per cent to $2.4 billion compared with the prior year’s quarter.
It resulted in CCC recording an operating loss of $344.6 million versus a trading profit of $191.9 million in the prior year’s quarter.
"The very disappointing financial performance during the second quarter of 2010 is due in the main to a 19 per cent reduction in local sales volumes. In an environment where the economy and construction sector continue to contract, the civil disorder that led to the declaration of a State of Emergency further constrained sales," said company statements endorsed by Brian Young, chairman and Dr Rollin Bertrand, group chief executive officer.
The statement which accompanied financials posted to the Jamaica Stock Exchange, added that the reduction in total revenues occurred despite more than doubling its export sales volumes. During this quarter CCC exported 50,079 tonnes of cement and 23,006t of clinker – equivalent to approximately 80,000 tonnes of cement.
The company stated that compared with 2009, its cost of sales has also been impacted by increased operating lease costs as Mill-5 was not in operation in the second quarter of 2009, and increases in electricity and diesel fuel charges. It added that the civil unrest led to a complete shutdown of the plant "which proved very costly to the company".
CCC, ultimately owned by Trinidad Cement Limited, argued that it would appeal a ruling of the Anti-Dumping and Subsidies Commission which it said found "no threat of material injury to the local industry" regarding a July 2010 final determination on cement dumping.
"Having reviewed the Commission’s Statement of Reasons, we intend to exercise our option to appeal the decision. We have a second matter before the Commission with regard to imports from the Dominican Republic. At the time of writing the preliminary determination has not been released," the director’s report stated.
Its outlook remains bleak in regard to local sales, but it expects to focus on exports going forward, the company stated.
"With the continuing contraction in the domestic economy and the re-entry of a third importer of dumped cement, we do not anticipate any improvement in domestic sales in the short term. Notwithstanding the foregoing, we continue to achieve increased export sales, including now regular exports to Haiti. We will continue to proactively develop these markets, while at the same time, continuing to defend the local market using all legal avenues available," it stated.