Trinidad Cement Limited sees revenue up 4% but 20% EBITDA cut

For the six months ended 30 June 2011 Trinidad Cement Limited (TCL) reported a loss per share (LPS) of JMD0.59 (from continuing operations) which compares with an LPS of JMD0.28 (from continuing operations) for 1H2011.

TCL's revenue was up 3.9 per cent but reported earnings before interest, tax and depreciation (EBITDA) of JMD33.9m (US$381,413) a 20 per cent decline YoY. EBITDA was significantly affected by the general labour strike at the Trinidad plant, which persisted for three months. At a higher cost to the group, cement and clinker were imported to fulfil the needs of the domestic market. Simultaneously, the Jamaica and Barbados facilities were also unable to achieve expected production levels.

Restructuring expenses of JMD40.2m was recorded for the period and finance costs rose to JMD110.7m. Taken together, restructuring expenses and finance costs increased by JMD52.2m or 53 per cent from a year ago. This restructuring exercise, which was scheduled to be completed by 3Q11, was not completed until 15 June 2011, impacting on this line item for the period under review. These led to a loss before tax from continuing operations of JMD189.9m (loss of JMD137.1m in 2011) and loss after tax from continuing operations of JMD169m (loss of JMD87.7m in 2011).

An advanced payment of US$12m received from the execution of two sales contracts, will facilitate plant refurbishment to allow for improvements in plant performance. The Trinidad works has returned to full production. However, there are matters still pending with the union.

TCL is currently trading at a price of JMD1.83, an increase of 2.2 per cent year to date. The company has not paid dividends since 2008, the same period from which the downward trend in EPS began. Based on this performance and a sluggish construction sector, Bourse maintains a ‘sell’ on the stock.