CCC’s Experienced Rocky Q3, but 9-Month Profit Cemented

• Dampened by the impact of Hurricane Beryl, Carib Cement Company’s (CCC) earnings declined by 67.5% in its third quarter, However, buoyed by strong performances in Q1 and Q2, the company reported earnings of $4.91Bn, a 12.0% increase year on year.
• Despite strong revenue growth of 12.0% in Q1 and 7.1% in Q2, revenues rose just 1.0% as sales fell in Q3 as Hurricane Beryl disrupted production following a major maintenance shutdown. The shutdown led to a 11.2% decline in quarterly revenue, which weighed on the cumulative performance. With the falloff in production, there were several reports of cement shortages in the media during the quarter, which led to delays in construction activity.
• CCC’s cost of sales rose sharply, climbing 27.9% to J$4.45Bn in Q3, while total operating expenses increased by 5.5% to J$749.9Mn, largely due to higher costs associated with its planned maintenance in August aimed at boosting capacity and efficiency. These increased costs chipped away at Q3’s margins, putting pressure on the overall nine-month results.
• Despite Q3's setbacks from Berly, CCC expects to rebuild momentum in Q4, with supply levels expected to reach pre-Hurricane Beryl levels. This recovery, along with the company's ongoing investments in operational efficiency, should set a strong foundation for future performance.
• CCC is strategically positioning itself to meet market demand, especially in the western region of the island, aiming to capitalise on ongoing investments in infrastructure development in that region. Management anticipates that these moves will cement CCC’s position as a key supplier in the market.
• CCC’s stock price has risen by 21.8% since the beginning of the calendar year despite cement being unable to meet local demand. The stock closed Thursday’s trading session at $70.25, with a P/E ratio of 9.8x, higher than the Main Market Energy, Industrials and Materials Sector average of 9.5x.

Source: JSE & NCBCM Research)