Lawrence swings to profit on higher prices

Lawrence swings to profit on higher prices
Published: 02 August 2006

St. Lawrence Cement Group Inc. swung to a second-quarter profit on Tuesday, as a lower Canadian income tax rate and higher selling prices for construction materials helped offset a decline in sales volumes.

The Montreal-based firm, in which Swiss-based cement giant Holcim holds a 63 percent stake, earned C$35m ($31m), or 83 Canadian cents a share, in the quarter.

That compares with a loss of C$15.5m, or 37 Canadian cents a share, in the corresponding period a year earlier.

St. Lawrence, which produces cement, concrete and aggregates in Canada and the U.S. Northeast, said its results included a reduction of C$8 million in future income tax expenses related to a cut in the Canadian federal tax rate.

The company’s 2005 second-quarter results were dragged down by a writedown of C$65.5 million, or about C$37.8 million after tax, after it scrapped plans to build a new cement plant in Greenport, New York.

"They are reasonable results, and the outlook is good," said Dundee Securities analyst Richard Stoneman.

Higher selling prices of construction materials helped offset lower demand for St. Lawrence’s products as well as a negative foreign exchange impact of about C$8.7m on the translation of U.S. sales into Canadian dollars, the company said.

"As we had anticipated, the early start to the construction season in March took some of the volume from the second quarter," President and Chief Executive Philippe Arto told analysts in a conference call.

"We also experienced a very rainy month of June in our markets," Arto said.

Despite seeing some sluggishness in demand ahead, the company said it expects to post improved results in the second half of the year compared with the second half of 2005, citing a good backlog, firm selling prices and cost controls.