Cement price goes up tomorrow

Caribbean Cement Company Limited has increased the price of bagged cement by 9.2 per cent, but said the ex-factory price will still be among the lowest in five other regional markets.



Effective tomorrow, the ex-factory price of Carib Cement Plus will be increased from $705 based on the inclusion of General Consumption Tax (GCT) calculated at 17.5 per cent, to $761.91 based on the new 16.5 per cent GCT rate.



In a statement to the Jamaica Stock Exchange yesterday, Carib Cement advised shareholders that the rebound in sales seen towards the end of last year has not been maintained and the domestic market appears to be going into contraction again.



At the same time, it said, in the first four months of this year oil prices continued to rise and are up 12 per cent over the end of year prices.



"This has translated into 9 per cent increase in electricity costs and we are likely to face (a) similar increase in our solid fuel costs when next we order," Carib Cement said, adding that "these increases directly impact on mining, manufacturing and distribution costs."



The company said it has "critically reviewed all strategies that affect the company's performance and are left with no choice but to institute an average 9.2 per cent price correction, which will come into effect on June 1, 2012."



Carib Cement said its situation was not very different to other manufacturers in the region who have also been adjusting their prices in the face of escalating energy and other costs.



However, their checks revealed that after this price adjustment, Carib Cement's ex-factory price will still be the lowest among the manufacturing countries of Mexico, Columbia, the Dominican Republic, Barbados and Trinidad.



Carib Cement said the percentage of cement used in home construction varies depending on the house, but it typically accounts for about 10 per cent of building costs and the price increase would add about one per cent to costs.



In its first quarter financial statement for the period ending March 2012, the company reported a consolidated loss of $625 million, compared to a loss before tax credits of $374 million in the corresponding period of 2011.



Carib Cement said that while sales volumes grew by five per cent, revenue increased by $239 million or 11.6 per cent as a result of price increases implemented in both the local and overseas markets.



The price adjustments, which came into effect in January, were designed to cover inflationary price movements, especially the cost of energy, the company said. However, over the period oil prices continued to rise, driving up heavy fuel oil costs by 11 per cent and electricity by 15 per cent, according to the financial statement.



Similar increases in mining and transportation costs impacted the cost of production, thereby eroding much of the benefits targeted with the price adjustment, Carib Cement added.



"Our performance was further impacted by operational challenges in the clinker manufacturing department, leading to an increase in repairs and maintenance charges and a significant drawdown in inventory, with a consequential charge to the financial statements," the company said.



“There were also general increases in our fixed costs, including foreign exchange translation loss of $43 million as a result of the depreciation in the domestic currency during the period, whereas the currency had appreciated during the first three months of 2011," Carib Cement said.



mcpherse.thompson@gleanerjm.com