Caribbean Cement sold 14 per cent more of its products for the first three months of this year than during the comparable period last year, with gross revenue lagging slightly at 11 per cent over the 2003 first quarter. But a steep rise in costs, largely attributable to a new labour agreement, ate away at the gains in revenue and slashed group net profit by $8 million to $154.8 million.
For the quarter, the cement manufacturer, whose products have enjoyed a monopoly control of the market since the increase in duty paid on imported brands, reported sales of $1.53 million, or $155 million more than the $1.38 billion earned during the similar quarter in 2004.
The gross revenue earned during the review quarter reflected sale of 231,349 tonnes of cement, 14 per cent above the 202,674 tonnes sold during the first quarter in 2004. The difference in operating profit was even more stark - $222.6 million during the review quarter or $31 million below the $253.8 million earned during last year’s first quarter.
Caribbean Cement’s chairman Brian Young, and Dr Rollin Bertrand, the CEO of its parent company Trinidad Cement, blamed the fall-off in profit on increased employee compensation. "This is a consequence of increases in payroll costs," they said of the profit reduction in a shareholder note accompanying the quarterly statement. The increase, they noted, followed "the settlement of the collective agreements for the hourly rates and weekly-paid employees and increases in energy and freight rates".
But the directors said they were optimistic about the medium term, based on their expectation for continued robust demand generated by Jamaica’s buoyant construction industry and the opening of a fourth depot in April - in Spanish Town. The company also reported that the new product it launched earlier this year, called Carib Cement Plus, had been "well received by the market" and that it now accounted for 42 per cent of stakes since the launch.
According to Young and Bertrand, discussions with financial institutions were now advanced for the financing of the US$100-million plant expansion and modernisation project. Importantly, Carib cement had put the project on hold while it awaited a response from the Jamaican government to its request for an increase in the tax on imported cement. The increase that was granted has virtually shut down the importation of cement, placing Carib Cement in a monopoly control over the Jamaican market.