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Caribbean Cement outlook positive after resurgent second quarter

Caribbean Cement Company Limited expects to benefit from new and ongoing projects across Jamaica and build on earnings that doubled in the June quarter.

The company, which reported earnings per share of $2.53 in the three-month period, up from $1.71, foresees continued robust business in the periods ahead.

However, its June performance wasn’t enough to overcome its poor showing in the March quarter, when the construction sector was in overall decline. As such, its half-year earnings were lower than last year’s by nearly 20 per cent. But the company is eyeing projects on the north coast especially to propel business.

“The company remains optimistic about its financial position, buoyed by the large number of real estate developments slated to come on stream, especially in the parishes of Trelawny and St James,” said Caribbean Cements new earnings report.

“Furthermore, recent pronouncements about the new high-end tourism developments in the eastern part of the island, which feature premium villas, augur well for the company,” it said.

The maker of Carib Cement operates Jamaica’s sole cement manufacturing plant, and dominates the market under protective government policy that limits the trade in foreign-made cement through assigned import quotas. About 10 per cent of the market is supplied by a rival called Buying House, which imports product from the Dominican Republic into Montego Bay.

Caribbean Cement made profit of $2.16 billion on revenue of $7.5 billion during the April-June quarter. That represented a 48 per cent rise in profit from $1.45 billion, and a 11.5 per cent rise in revenue from $6.7 billion a year earlier.

But over six months, extending from January to June, profit dipped 19.5 per cent to $2.5 billion, even as revenue climbed 5.6 per cent to $14.3 billion.

The company said that its costs were higher due to planned major maintenance during the period, as well as excess inventory, and the hiring of additional manpower.

“Also, the company experienced lower production levels of clinker and cement, which resulted in the importation of cement to cover the shortfall,” it said.

Caribbean Cement expects strong activity going forward.

Its underperformance at half-year comes within the context of an overall decline of the construction sector in the March quarter, according to Statin and Planning Institute of Jamaica data. Both reported a dip of four per cent in real construction GDP.

PIOJ’s estimate reflected downturns in both the building construction and ‘other construction’, which includes roadworks and other non-building activities. In particular, the performance of the building construction component was affected by a one-third contraction in housing starts by the National Housing Trust and a 9.1 per cent contraction in the real sales of construction inputs, according to the PIOJ.

The decrease in the ‘other construction’ component was due to lower capital expenditure on civil engineering activities, the planning agency added.

For the March quarter, Statin estimated the real value of construction activity at just shy of $16 billion, down from $16.7 billion the previous year.

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