Towering silos at the Caribbean Cement Company in Kingston. - File

Caribbean Cement Limited has raised cement prices, the second time this year, pushing up the ex-factory price per bag of Carib Plus cement by six per cent to $510 as of August 1.

Anthony Haynes, general manager of the Kingston-based operation, said that no more hikes were contem-plated in Jamaica for this year, though parent Trinidad Cement Limited has warned its shareholders that more increases were pending across 'all' its markets.

"The TCL publication referred to price increases in Barbados in August and future increases in Trinidad," said Haynes.

Challenging six months

Both companies, which reported on their financial performance this week, said the first half-year had been challenging, with Caribbean Cement saying it had lost almost a tenth of its domestic market on lower sales volume in the first half of the year.

The Rockfort company, however, reported higher revenues and profit in the period to June 30, on the back of more expensive cement to the market and a focus on export sales.

Carib Cement, which sold 394,068 tonnes of cement - 15,369 tonnes or near four per cent less than the corresponding period last year - blames a softening of the market for the dip, but has still gone ahead with the commissioning of the new Kiln no 5, which it put into production last month.

It simultaneously removed kiln 3.

The new kiln is rated at 2,800 tonnes of clinker per day, said Haynes, a 50 per cent boost in capacity.

"Kiln 3 has been retired and will not run any more," Haynes told the Financial Gleaner. "Kiln 4 will be shut down for improvement works and be restarted when the market conditions support this. At that time the total clinker capacity - Kiln 5 and Kiln 4 - will be double what it was with kilns 3 and 4."

Plan for growth

In the first half of the year, Caribbean Cement grossed $4.58 billion or $11,633.43 per tonne of cement sold, compared to $3.67 billion or $8,962.62 per tonne in the 2007 period. Profits rose by $20 mil-lion or by eight per cent, from $252 million or 30 cents per share to $272 million or 32 cents per share.

At the end of July, exports were two per cent of total sales, but Carib-bean Cement plans to grow its overseas market to between five and seven per cent by the end of this financial year, Haynes said.

Offsetting soft market

Using Caribbean Cement's figures as proxy, cement was 30 per cent more expensive per tonne year on year, but the company raised prices again this month - the last adjustment was in January - to offset what it says is a 'soft market' and build up cash to help finance its negative working capital position.

At the end of June, CCC had $34.6 million in cash, down from $236 million in the matching 2007 period, even while the cash used for investment activity had ballooned by more than $400 million or 76 per cent to $936.5 million.

The company's short-term liabilities overshot matching expenses by close to a hundred million dollars, which the Haynes-led operation linked to its massive and ongoing US$177 million expansion programme at the Rockfort plant.

"Expenditure on the expansion and modernisation programme during this six-month period contributed to a deficiency in working capital of $95.5 million at balance sheet date," the company said.

Rising oil prices

Caribbean Cement expects the cement and concrete markets to remain soft in the short to medium term. On that basis, Haynes said the company had to continuously monitor its cost and prices.

"During the first six months of the year, in a market that declined nine per cent, kiln fuel costs rose 12 per cent, electricity costs rose 22 per cent and transportation costs rose 33 per cent, all driven by rising oil prices," he said.

But, he added: "Having just adjusted prices there is no immediate plan to increase further."

Future plans

In his outlook on production, Haynes said Carib-bean Cement expects to pro-duce 470,000 tonnes in the last half of its 2008 year ending March 2009.

If that projec-tion holds, the company will beat last year's annual production by more than 50,000 tonnes. It sold 813,448 tonnes in the one-year period ending March 2008.

Haynes said production in the first half year was "constrained by the low domestic sales and the presence of competitive products."

Two Kingston retailers, who buy cement from the company, but also sell imports, said their sales have not waned, and that the increase has not affected sales.

"As long as it's here, it goes," said Kerry Hamilton, manager of Rapid TrueValue's retail store on Spanish Town Road.

Currently a bag of Carib Cement at Rapid TrueValue is $549.47, while the imported commodity from China is priced at $503.63.

At Phil's Hardware Limited, the price for a bag of Carib Cement is $676, and $641 for the Chinese import.

lavern.clarke@gleanerjm.com