Caribbean Cement rides construction wave to bigger earnings

Caribbean Cement Company Limited, the sole maker of cement in Jamaica, racked up more than $7 billion in sales over three months ending March and reported increased profits, reflecting the robustness of the construction sector.

Its performance also resulted in a new quarterly earnings record for the Rockfort, Kingston-based maker of Carib Cement.

The company made $1.9 billion profit for the March first quarter, which was a $290-million improvement relative to the corresponding quarter in 2023; and also outpaced first-quarter earnings of $1.6 billion in 2022, $1.5 billion in 2021, and $480 million in 2020.

In the 2023 corresponding quarter, Caribbean Cement’s financial performance was negatively affected by the higher costs it faced from maintenance of the plant during January and February of that year. However, it also positioned the cement maker to better serve the market.

Sales in the current review quarter, at $7.6 billion, were up 12 per cent relative to 2023 amid strong construction activity across Jamaica.

“This increase in revenue was driven by the continued strong domestic demand being experienced and the company’s capacity to supply the local market,” said Caribbean Cement in its financial report.

The company did well to contain its total operating costs, which inched up by just $2.4 million to $672 billion.

FOCUSED

Its outlook for this year is focused around the big upgrade project that is under way – a US$40 million investment being made to enlargen different sections of the kiln, install a new coal-dosing system, upgrade the clinker cooling section, and implement a new design for the clinker transport system.

The plant is operating at near full capacity. At completion of the upgrade programme in 2025, its production capacity will increase from one million tonnes to 1.3 million tonnes, annually.

Caribbean Cement said it would undertake another scheduled maintenance of the plant later this year.

After a bad spell, arising from debt linked to a major modernisation and expansion project executed in phases in the 2000s, a downturn linked to its production of faulty cement in the middle of that decade, and the divvying up of the market via quotas to accommodate imports, Caribbean Cement eventually returned to profit a decade ago. And two years ago, it began paying dividends again under the ownership of its current ultimate parent, Cemex of Mexico.

In 2023, Caribbean Cement’s annual earnings set a new record of $5.58 billion. That year, it paid a dividend amounting to $1.63 billion, bettering the distribution of $1.26 billion in 2022. The dividends were paid out within or around the third quarter of both years.

The returns to shareholders ended a dividend hiatus lasting nearly two decades, dating back to 2005. The crafting of a new dividend policy came amid controversy after minority shareholders raised concerns that they were getting no returns from their investment in the cement maker, while Cemex was about to start collecting royalties and service fees under agreements cobbled with both Caribbean Cement and its direct parent, Trinidad Cement Limited.

The royalties and fees paid by Caribbean Cement amounted to $494 million in 2022 and $501 million in 2023.

steven.jackson@gleanerjm.com