St Lawrence Cement Group reported sales of $428.6m for the third quarter ended September 30, 2004, compared to $401.3m for the same period last year, an increase of 7 per cent. Net earnings were up 11 per cent to $39.2m ($0.94 per basic share), compared to $35.3m ($0.85 per basic share) for the third quarter of 2003.
The improved performance resulted from firm pricing for cement, higher sales volumes of aggregates and increased construction services revenues. Cement price increases announced mid-year took effect during the third quarter in its Ontario and US markets, offsetting lower sales volumes caused mainly by the unavailability of cement experienced by our United States division.
St Lawrence Cement aggregates operations contributed positively to the earnings improvement
with higher sales volumes resulting from recent acquisitions. Construction services revenues increased in the third quarter while ready-mix sales volumes were lower. The stronger Canadian dollar had a negative impact of $4.2m on our US sales in the third quarter when reported in Canadian dollars.
Gross profit for the third quarter increased to US$111.9m compared to US$97.1m for the same period in 2003. The main drivers of this positive variance were the two cement price increases implemented since the beginning of the year and the contribution from our recent aggregates acquisitions. The third quarter gross profit in 2003 was significantly impacted by lower US cement prices. This situation was successfully reversed during the second and third quarters of 2004.
Based on activity levels in its markets at the end of the third quarter, St Lawrence Cement is maintaining its expectation of increased sales and margins in the fourth quarter compared to the same period in 2003. In particular, cement demand and prices remain firm in all markets and it has announced price increases to take effect at the beginning of 2005. Given the seasonal nature of the construction industry, weather conditions are a major risk factor in the fourth quarter. In addition, a further decline in the value of the US dollar could adversely affect its financial results.