After enduring years of sluggish results and a mountain of debt, Caribbean Cement Company Limited (CCC) has shrunk its long-term debt from $11.39 billion in 2018 to $500 million as at June 30, 2021.
At the same time, the company set a new profit record of US$3.09 billion for the six months ended June 30. Its profit for all of 2020 was $3.2 billion.
The performance follows a challenging decade for the cement producer which had consecutive years of losses from 2009 to 2013.
In 2013 alone, the final year of those losses, Carib Cement recorded $3.35 billion in losses. Over the four years, the accumulated deficit of the company totalled $7.39 billion.
Following a transformation lead by Mexico-based Cemex, which took over the entity in 2017, coupled with a booming construction sector, Carib Cement has returned to profitable ways with revenue topping $20.1 billion in 2020 and cement production peaking at 940,005 tonnes. In March 2021, the company produced a record 100,000 tonnes of cement, the highest for a single month.
Given the push to deal with its long-term debt, the next major hurdle before the company can consider dividends is redeeming the remaining United States-dollar preference shares owed to its direct parent company, Trinidad Cement Limited (TCL). These preference shares were issued in 2010 and 2013 as a way to remove some of the direct debt on Carib Cement’s books during its year of substantial losses. At the end of June 2021, Carib Cement’s other financial obligations, which comprises of preference shares and lease liabilities, stood at $2.44 billion.
Carib Cement repaid $2.03 billion in long-term debt during the quarter. When the Jamaica Observer queried with Carib Cement about a possible timeline to clear up the preference share debt and for dividends to be considered, the company refused to speak on the matter.
At the 2019 annual general meeting, former General Manager Peter Donkersloot mentioned that the company should have been on target to pay down its remaining debt by 2023, which would have made the consideration of a dividend or share buy-back a talking point.
Carib Cement last paid a $0.07 dividend in June 2005, when the stock’s price reached $14.50. At the end of trading last Thursday, the share price ended at $94.50. The debt repaid during the quarter would have equated to a dividend per share of $2.38.
TCL recorded a net profit attributable to shareholders of TT$19.43 million ($428.75 million) for its second quarter relative to a net loss of TT $6.31 million in the prior period. With businesses in Barbados, Grenada and other parts of the Eastern Caribbean, TCL’s segment earnings before taxation for cement was TT$133.23 million, which is well ahead of TT$87 million earned in 2020.
Cemex earned US$270 million in net profit attributable to shareholders for the second quarter with the company planning to lower its leverage further in the year through the repayment of US $776 million in debt. Operating EBITDA (earnings before interest, tax, depreciation and amortization) for the South, Central America and Caribbean segment grew from US $66 million to US $117 million.
According to the company’s earnings presentation, cement prices in the segment was two per cent higher as prices increased in Costa Rica and Jamaica. The Dominican Republic has seen performance increase due to bagged cement while Colombia saw a 44 per cent rise in volumes due to self-construction and infrastructure albeit social unrest.