3 months ago
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Air-conditioning company CAC 2000 Limited is feeling the effects of logistical delays compounded by pirate activity in the main shipping routes of its suppliers.
CEO Gia Abraham adds that customers are not settling their bills quickly.
And the convergence of those factors has pushed the company deeper into the red for the January quarter.
“The reality of the situation is that quite a few customers want vendor financing, where they stretch out the payment as long as possible. The suppliers are not increasing their financing credit terms to us, and the shipment times have increased,” Abraham told the Financial Gleaner.
Receivables in the quarter climbed to $702.39 million, well above the $551.76 million recorded for the similar period in 2024.
CAC 2000’s financials also indicate a drop in revenue, from $213.07 million to $190.36 million year-on-year, while its cost of doing business climbed to $140.58 million. And the company ended up with a net loss of $58.6 million for the period, nearly five times greater than the $12.5 million loss suffered in the January 2024 period.
Abraham said due to the nature of the business, CAC’s performance tends to be cyclical.
“If you take a look, you will see that CAC has always been that kind of company. We come up and then dip and then come up and then dip. My goal is that at the end of the year, I hit the numbers that I am aiming for,” Abraham said.
She adds that business is generally good, but global events are having an impact.
“We definitely feel it in all aspects of our business because what we have is instead of the world becoming more efficient, I would actually say that the world is becoming more inefficient,” Abraham posited.
Logistics, she added, is a major bug-bear.
“We’re spending about probably three times more of people time on logistics than we ever had to do in the past,” she said, noting that the cost per shipping container is now as much as US$27,000 – ten times what it used to be before the coronavirus pandemic.
“The reality is that from a cash flow perspective, there was no way that you’re going to the customer and they were going to be willing to give you US$27,000 and US$24,000 and US$21,000 because even if you tried a variation, they’re not going to come up to that because all of them are looking at it as capital expenditure,” Abraham said.
She said that while the cost of inputs has been falling, there are still shipping issues to contend with coming out of China.
“If you don’t get on the ship, you are not guaranteed, and even when you pay for it, sometimes you don’t get the guaranteed 25 days or 30 days” for delivery, she said.
To compound matters, shipments destined for Jamaica from China, those transiting the Gulf of Aden and the Red Sea, must run the gamut of Houthi rebels who are disrupting shipping activities in the Red Sea area while Somali pirates have become more active in recent times, according to BBC reports.
CAC’s focus amid the turbulence is improving financial discipline to ensure greater efficiency and cost management while relying on the book of business to generate sales and improve revenue. It says it is also implementing supply-chain solutions to mitigate future disruptions and improve inventory management.
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