Still facing the prospect of further competition from imports, monopoly cement producer Caribbean Cement Company Limited's domestic sales slumped in the June quarter but were offset by cement and clinker exports.

As those sales fall, and the debate rages over whether the local producer should be protected from competing products made overseas, Carib Cement has also signalled it will be taking legal action to safeguard its interests.

Its cement sales in Jamaica fell 54 per cent relative to the March quarter and 15 per cent compared to the 2008 period, but the company made a marginal gain on revenue - $2.32 billion versus $2.27 billion in the June 2008 quarter - on the back of exports.

The sales overseas pushed the company's quarterly operating profit higher by 8.7 per cent to $192 million, while the six-month result rose 36 per cent to $610 million.

In the six-month period, Carib Cement sold 343,903 tonnes of cement domestically, and exported 38,553 tonnes of cement and 80,125 tonnes of clinker - earning revenue of $4.9 billion or $330 million more than the first half of 2008.

The 80,125 tonnes of clinker, the company said, was equivalent to 101,424 tonnes of cement.

But while sales grew, factors outside the company's direct control conspired to erode net profit which slumped 21 per cent - from $272 million to $216 million in the half year.

Debt financing charges and foreign exchange losses erased $314 million of profit.

The second-quarter profit was also down 21 per cent from $109 million to $86 million.

Carib Cement blames some of its misfortunes on its own maintenance and repair programme due to kiln 5 being taken out of commission in the June quarter. But it also fingered competing imports, saying 95,000 tonnes were brought in over six months.

Minor setbacks

Between April and June CCC sold 24,644 tonnes less cement than the 190,858 tonnes it sold in the previous three months.

The company is reporting a shrinking of its domestic market share in the period to 82 per cent from the 85 per cent share it previously enjoyed. The shortfall has been offset by higher export sales.

"This decline has resulted in an increase in export sales to keep the cement mills turning and mitigate adverse operating performance," the company declared this week.

The company suffered a further setback at the start of the third quarter when a material storage bin dislodged, but says it was minor and would delay commissioning only by a few weeks.

"The technical guys are working along with the consultants to determine a new date for start-up, but for now we are looking at a time of about mid September," said Carib Cement marketing manager Alice Hyde.

The delay, the company said, would not significantly impact production.

The cement plant's capacity has been ramped up from 1.0 million tonnes to 1.8 million tonnes, under a US$177-million expansion and modernisation project.

Overseas opportunities

The project and other liabilities pushed Carib Cement's financing charges above half a billion dollars last year, explaining the company's renewed and aggressive lobby for a protected local cement market to recoup the investment in the upgrade programme within the shortest time frame.

A decision is pending from the industry and commerce minister in September. But Carib Cement says it will continue to press its case and would "seek legal redress" against what it defines as "unfair competition", but did not say whether it was the government or cement importers that would be targeted.

The company also has to contend with the downturn in the broader economy which continues to act as a check on the local market, but sees opportunities overseas.

"It is anticipated that both the local and export markets will remain soft for the remainder of the year and recognising the competition that exists in the local market, increasing our export sales is critical to maintaining our operating performance," said chairman Brian Young and director Rollin Bertrand in a statement to shareholders appended to the June quarter earnings report.

mark.titus@gleanerjm.com