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BUSINESS GUARDIAN guardian.co.tt MARCH 2 • 2017
TCL 2016 profit
down 87 per cent
One month after becoming a
subsidiary of Mexican ce-
ment giant Cemex, Trini-
dad Cement Ltd (TCL) has
recorded an 87 per cent
decline in its profit after
tax for the year ended December 31, 2016.
The company's profit after-tax fell from
$428.7 million in 2015 to $52.4 million in
2016 with overall group sales moving from
$2.1 billion in 2015 to $1.9 billion in 2016, a
decline of 11 per cent.
The Claxton Bay-based cement producer
attributed this significant decline to a com-
bination of weak regional sales associated
with a slowdown in construction activity,
and the ongoing effects of restructuring
"Our group's results for Q4 2016 was
significantly impacted by the adverse eco-
nomic conditions affecting one of our major
"According to the Central Statistical Of-
fice, construction activity contracted by
approximately 7.6 per cent in 2016 which
was a further deterioration over the 3.7 per
cent in contraction in 2015," the company
said in its summary consolidated audited
According to data from the Central Bank,
the domestic cement market shrank sub-
stantially in 2016. Cement sales on the local
market fell from a total of 665,997 tonnes
in 2015, to 524,279 tonnes in 2016; a 21.3
per cent year-on-year reduction.
Commenting on restructuring exercis-
es, the company said that during 2016 it
incurred significant costs associated with
one-off charges, but anticipated that re-
structuring activity would strengthen its
operations moving forward.
The statement said: "During the year,
the group absorbed a number of one-time
charges amounting to $140m including:
• $44.5 million from manpower restruc-
• $72 million in respect of overstocked
spares which exceed the foreseeable oper-
ating requirements of the group;
• $7 million in relation to obsolete in-
ventory items and; $16.7 million based on
a revision of the estimated life of installed
"Going forward however, these restruc-
turing activities will help reduce the overall
cost structure and will enable the group to
be even more competitive in the future."
The Wilfred Espinet-chaired company
noted that it generated positive cashflows
amounting to $530.8 million in 2016 which
allowed it to reduce its overall debt profile
and make much-needed capital expenditure
"We are encouraged that the group gener-
ated very healthy cash flows from operations
of $530.8 million during 2016. This allowed
the group to make: total loan payments of
$193 million, including a prepayment of
$67.3 million, reducing the loan balance
to $968 million and resulting in a 27 per
cent reduction in net interest expense from
$151.8 million to $110.8 million. And capital
expenditure investments of $200.5 million
across our plants in Trinidad, Jamaica and
Barbados to complete extensive repair and
maintenance programmes in each territory.
"This investment was absolutely essential
to enhance plant reliability and to ensure
the achievement of our production targets
at the lowest possible cost."
The company stated that it expects the
outlook for construction activity in the
region to remain "sluggish" for 2017, but
that it would continue to focus on bolstering
its market position in the face of aggressive
competition in the region.
TCL has been involved in an intense battle
for market share with new entrant in the
regional cement market, Rock Hard Cement.
The company has put out a series of public
alerts, calling into question the quality of
Rock Hard's cement. TCL also reduced the
price of its 42.5kg bag of cement ostensibly
in response to competitive forces.
It said: "The board will focus on three
key elements to reinforce the position of
1. Implement health and safety initiatives
in all our plants to create a better work en-
vironment for our people;
2. Seek out and develop new markets for
all our products, and
3. Focus on comprehensive operation-
al and restructuring programmes in each
A crane transports sacks of cement at TCL's Claxton Bay operations.
Jamaica-based Caribbean Cement Company Ltd
(CCCL) has recorded a 15 per cent decline in its profit
after tax for its financial year ended December 31,
Some 74 per cent of CCCL is owned by TCL, which
was itself taken over by Mexican cement giant, Cemex,
which now owns over 70 per cent of the Claxton Bay-
According the CCCL's summary consolidated
audited financial report, profit after tax declined
from J$1.5 billion in 2015, to J$1.3 billion in 2016 (J$1
= US$0.0078). Despite the decline in after tax profit,
the company registered an overall increase in revenue,
up from J$15.4 billion in 2015 to J$15.7 in 2016, an
increase of roughly 1.9 per cent year on year.
Commenting on the decline in profit after tax, the
company noted the impact of capital expenditure in-
vestments on its bottom line.
"During the year, the company embarked on a major
kiln overhaul which lasted 45 days and impacted the
income statement by $957 million. This along with
the capital expenditure of J$1.7 billion made during
the year are expected to improve the operational ef-
ficiency and reliability of the plant."
CCCL also pointed out that other mitigating factors
impacted its profitability.
"Other factors impacting the year's performance
were cement mill #4 overhaul which cost J$65 million,
increased manpower restructuring costs and stock-
holding and inventory restructuring costs."
The company added that the increase in its reve-
nue was "mainly due to the increase in local cement
volumes by 16 per cent mainly arising from the posi-
tive trend of the infrastructural projects, government
projects and retail trade."
CCCL also said that external markets for its ce-
ment and clinker products remained constrained as
export volumes fell by 21.2 per cent and 78.1 per cent
The director's statement noted that the company
"remains committed to improve and promote the
health and safety standards in our operations to create
a better work environment for our people, as well as
to reinforce the profitability and competitiveness of
Readymix records loss for 2016
Local concrete and aggregate manufacturer
Readymix Ltd (RML) has recorded a loss of $8.9
million for its year ended 2016. This represents
a significant financial reversal for the compa-
ny after registering an after tax profit of $9.3
million in 2015.
The revenue of Readymix---which is 71 per
cent owned by TCL---fell by 35 per cent, moving
from $216.7 million in 2015 to $139.9 in 2016.
In the directors' statement accompanying
its summary year end results, the company
attributed the loss to the prevailing econom-
ic circumstances underpinning the domestic
"The T&T economy remained in recession
for 2016. The Central Bank in its September
bulletin, advised that real gross domestic
product was projected to fall by 6.7 per cent
for 2016 with the construction sector activity,
in particular, declining by 23.5 per cent for the
second quarter of 2016."
Commenting further on the local business
climate, RML said: "This challenging envi-
ronment in which RML has been operating is
further exacerbated by the significant sums of
money still owed to contractors and the major
challenges to access foreign currency locally."
RML added that its loss position was a result
of the combination of "lower sales volumes and
prices (for concrete and aggregate), increased
payroll costs, one-off accruals and write-down
of surplus inventory."
RML stated that its restructuring programme
continued in 2016 with "a further rationali-
sation of manpower" and that the company
had "settled some older employee-related
The company added that should construc-
tion activity rebound in 2017, it would be in a
solid position to benefit from such a pick up
in the local market.
"There are some signs of improvement in
construction activity for 2017 that, if realised,
the company would be well positioned to cap-
italise on, especially due to the restructuring
and cost containment measures which were
implement during 2016," this according to the
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