Caribbean Cement Company’s Q1 Net Profit Recovers

•  Supported by higher revenues and a reduction in the cost of sales, Caribbean Cement Company’s (CCC) net profit grew by 566.7% (or $1.64Bn) to $1.93Bn for the quarter ending March 31, 2024.
• Quarterly revenue rose by 11.9% year-over-year (yoy) to $7.62Bn, primarily driven by the continued strength in domestic demand, and the Company’s capacity to supply the local market.
• Furthermore, the cost of sales for the quarter declined by 27.1% (or $1.49Bn) to $4.01Bn, reflecting normalized operations compared to the prior period, when it incurred significantly higher costs in January and February 2023 due to planned maintenance. In light of the reduction in costs, there was a 28.18 percentage point improvement in gross margin to 47.4% (Q1 2023: 19.2%).
• Overall, operating profit increased by 728.3% (or $2.31Bn) to $2.63Bn as expenses normalized in 2024. In 2023, the company incurred higher costs due to excess inventory items, additional hired manpower, general higher maintenance costs and higher changes in inventories of finished goods and work in progress. Additionally, the company incurred costs to import cement to make up for the reduction in the production of clinker and cement, which usually occurs during planned maintenance.
• Caribbean Cement’s stock price has fallen by 1.5% since the start of the year, closing Wednesday’s trading session at $58.39. At this price, the stock trades at a P/E of 6.9x earnings, which is below the Main Market Energy, Industrials and Materials Sector Average of 9.4x earnings.
• In the near term, CCC continues to work towards expanding its operation. The company recently announced that phase one of its US$40Mn expansion project, which will deliver an increase of up to 30% in production capacity, is progressing towards full completion next year.

(Sources: Company Financials & NCBCM Research)