TCL cements profits amid price hikes

TRINIDAD Cement Ltd (TCL’s) profits after taxes almost tripled year-on-year, according to its summary audited financial report for the year ending December 31, 2023.

The increase in profits comes amid multiple price increases and the exit of its only competition, Rock Hard Cement, from Trinidad and Tobago markets in 2021.

In its statement on its yearly performance, TCL reported $170.1 million in profits after tax, a $113 million increase in profits over the same period the year before, when it reported a profit of $57.8 million. TCL earned revenue of $2.229 billion for 2023, a $168 million increase in revenue from the year before when it earned $2.061 billion.

In the chairman’s report, David Inglefield said the group’s adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), which reflects its core profitability, was $514 million, a one per cent decrease compared to the same period the year before.

Inglefield said about 85 per cent of the EBITDA performance for the year comes from operations in Jamaica.

“Guyana also continues to improve its profitability with an increase in EBITDA of over 53 per cent compared to last year due to higher sales volumes and stronger pricing.

In Trinidad and Tobago, he said, "We continue to work diligently to improve efficiency and contain increases in input costs to maintain profitability.”

For the final quarter of 2023, TCL reported $946,000 in profits after taxes, as compared to a loss of $1.09 billion for the same period the year before. The group earned revenue of $527 million, a four per cent increase for the same period the year before. Its core profitability remained steady as it reported an EBITDA of $118 million, a one per cent increase to the same period for the year before.

“This result signals the impact of higher sales volumes in Trinidad and Tobago and Guyana and stable sales volumes in Jamaica,” Inglefield said.

Since Rock Hard’s departure from the Trinidad and Tobago market in 2021, TCL, the country’s only local manufacturer, has increased prices four times.

Rock Hard Cement cited input costs and high tariffs as some of the reasons behind its exit from the TT market.

In a report in Newsday's Business Day, Rock Hard Cement managing director Ryan Ramhit said the company's cement, classified as portland cement, was subject to a duty of 15 per cent. The company challenged the tariffs legally and was successful, but tariffs on hydraulic cement were increased to 35 per cent, and in some cases went as high as 50 per cent in 2020. The company was also subject to the 55,000-tonne importation limit in 2021.

The latest increase from TCL came in February, when TCL issued a statement to hardware stores announcing an increase in the ex-factory prices of cement effective February 19.

The ex-factory price of a 42.5 kg sack of eco-cement went up from $49.10 to $52.88, VAT inclusive. Premium plus cement increased from $53.81 to $57.38 for a 42.5 kg sack.

The three other times the prices increased were in December 2021, August 2022 and March last year.

In 2021, through the Ministry of Trade and Industry, the Government approached the Council for Trade and Economic Development (COTED), the body responsible for the promotion of trade in Caricom, to reduce the Common External Tariff on hydraulic and other cement, from 50 per cent to 20 per cent.

Last December, COTED approved the suspension of the CET to increase the rate of duty on cement to 20 per cent.

In February, Government announced a suspension of the maximum quota for cement and the registration system for importation, in response to TCL’s price increases. This means that there will be no ceiling on the volume of cement that can be imported. In 2021, the quota was 75,000 tonnes of cement, and in 2022 the maximum quota was increased to 150,000 tonnes.