Carib Cement pays out additional compensation
Customers claimed an additional J$100m in compensation from Caribbean Cement Company in the September quarter, according to reports from the ’Jamaican Gleaner,’ pushing overall demand for damages so far for being sold a poor quality product to J$260m, the latest figures from the company show.
The company had made provisions of J$160m for the claims. However, a 15 per cent price increase in July - the company’s third in a year - plus a 5.5 per cent increase in sales volume, not only helped jack up revenues by 26 per cent, but for Carib Cement to absorb the compensation demand as well as return net profit of J$153m, compared to a loss of J$50m for the corresponding period last year.
But perhaps more important for Carib Cement the third quarter result meant a reversal of four consecutive quarter of losses, going back to June 2005, when the impact of a series of problems at the company began to manifest themselves in the profit and loss accounts.
Carib Cement was first hit by high, and rising energy prices, then its difficulties were compounded by heavy rains late last year when limited raw material supplies and slowed production and sales. Its biggest blow, however, came in April, when it had to recalled tens of thousands of tonnes of cement which did not meet quality standards, but had been sold in the market.
Its income apart, Caribbean Cement’s reputation took a battering, especially when an independent inquiry into the issue found that the quality problems were developing for more than a year before the management took serious notice.
Until the profit for the July-to-September quarter, Carib Cement had wracked up losses of J$360m over the four quarters of negative returns. But now, as it said at the time of the price increase in July, expects that it has positive momentum for the rest of 2006.
In the quarter under review, CCC sold 214, 690t of cement, compared to 203,449t for the corresponding quarter in 2005 - a modest increase of 5.5 per cent.
Published under Cement News
