THE CARIBBEAN Cement Company said it was expecting the Jamaican economy to rebound during the months ahead - despite its sluggishness during the past year - and that the market for cement sales would continue to grow.
Francis Haynes, the company's general manager, in a report released at the end of March, said the business environment remained very challenging in view of the United States-led war in Iraq, as well as rising oil prices, the imminent start of the Free Trade Area of the Americas (FTAA) agreement and continuing social issues of poverty and crime.
However, he said that at Carib Cement, they "remain optimistic about the future and will look to maintain the growth path that was embarked upon in 1999 when the TCL Group acquired majority shareholding in the company."
Carib Cement saw its net profit increase by 28 per cent for the year to the end of December 2002, as well as increases in its earnings per share and shareholders' equity.
However, Brian Young, the company's chairman, said the considerable increases in those indicators aside, the return on investment was still far from satisfactory.
The $81 million increase in net profit attributable to shareholders, which grew to $375 million, was achieved against the background of record performances in every business centre and the highest performance in the 50 year history of the company, according to Mr. Young.
In a report to be considered by shareholders during the company's annual general meeting at the Pegasus Hotel, New Kingston next Tuesday, Mr. Young said earnings per share also increased by 28 per cent to 44 cents, while shareholders' equity grew by 16 per cent to $1.93 billion.
EXPECTED RISING COSTS
However, the chairman said that during the course of this year, Carib Cement, as well as other cement plants which require a large amount of energy in the manufacture of the product, would be especially challenged to raise efficiencies "once again to counteract the expected rising costs."
Mr. Young said the focus this year would be to optimise the existing plant and technology, and over the next three years, steps would be taken to retire low productivity lines and upgrade the existing dry process line so that electricity and fuel consumption would be reduced while increasing productivity.
Initiatives such as those, he said, "require us to conserve the cash generated from operations and plough this back into the company." At the same time, he said, Carib Cement intended to continue defending its market against dumped cement and would continue to vigorously pursue all legal options.
In the same report, Mr. Haynes said group revenue increased by 16 per cent to $3.7 billion, primarily because of increased cement sales.
He said cement sales volume actually grew four per cent during the year, while its market share grew one per cent to 88 per cent. Despite the continued anaemic economy, he said, islandwide cement sales increased moderately over the previous year.
The continued focus on cost control and prudent management resulted in Carib Cement achieving a 24 per cent increase in operating profit to $640 million, while cash generated from operating activities increased by 66 per cent to $493 million, cash and short-term funds improved by $238 million, and the working capital deficit improved by $364 million.
SHORTFALLS IN PRODUCTION
Mr. Haynes said that despite cost savings through efficiency and productivity, during the year the company was adversely impacted by its importation of 53.56 million tonnes of clinker to cover shortfalls in production and provide security stock. Its financial performance was also impacted by several external factors, especially the depreciation in the exchange rate, rising electricity costs associated with the movement in world energy prices, and increased insurance costs following the September 11, 2001 airborne attacks on sections of New York and Washington.
"While some of these issues fall outside our present control and deliberate strategies are being developed to counteract the threats they pose, management's attention in 2003 will mores be focused on raising performance of clinker production," Mr. Haynes said.
According to the general manager, Carib Cement's environmental programme had mixed results last year. "While some progress has been made in developing the environmental management system and in controlling fugitive emissions, there is still room for improvement," he said, adding that "the ongoing programme for the disposal of waste oil in Jamaica continued."
