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TCL profits fall in 2016

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World Cement,

Trinidad Cement (TCL) reported a significant fall in pre-tax profits in 2016 to TTD89.6 million, according to the company’s latest annual report, as cement sales in Trinidad and Tobago market fell 20%, leading Jamaica as the company’s main market by revenue.

Jamaica accounted for 41% of revenues in 2016, compared to only 35% from Trinidad and Tobago – the market that has traditionally been responsible for the majority of TCL’s revenue. This trend is likely to continue, according to a research note from Bourse Investment, as Jamaica’s economy continues to grow in 2017. In contrast, the economy in Trinidad and Tobago is forecast to shrink by 2%.

Pre-tax profits at the company fell 443.9% over the year from TTD446.3 million in 2015. Earnings were down 26.7% to TTD464.2 million on revenues of TTD1.89 billion – a 12.1% fall on the previous year.

Earnings were hit by a TTD72.0 million writedown related to overstocked inventory on hand. Manpower restructuring costs were also up to TTD44.5 million from TTD31.1 million the year before. A loss of TTD8.9 million a TCL subsidiary, Readymix Ltd, also dented the company’s financial performance.

Looking ahead, the company is facing competition in its home Trinidad and Tobago market from Rock Hard Cement, which is currently undercutting TCL. “Should be ongoing price and image duel continue, TCL could feel the impact of lower market share,” said Bourse Investment.

TCL also faces a higher effective tax rate in 2017 of 30% on profits over TTD1 million. “This in turn will weigh on after-tax profits,” Bourse Investment added.

In a separate announcement, TCL also said that it had applied to delist from the Jamaican Stock Exchange. The company will remain listed in Trinidad and Tobago and Barbados. TCL is controlled by Cemex, which recently increased its stake in the company to 69.83%.

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