TCL adjusts base price of cement

Jul 13, 2011 News

… first time homebuilders to be spared

Builders and contractors will feel the squeeze in the coming months as news of an increase in the price of cement hits the market.
In a press release issued yesterday TCL Guyana Inc (TGI) announced what it called a “marginal adjustment” of 9.3 percent to the base price of its cement which is scheduled to take effect on Friday (July 15).
The company stated that it will continue to honour its commitment to the government’s Low Income Earners Housing Initiative that sees them offering a 20 percent discount on the price of cement for first time home owners.
The release pointed out that in recent years global economic pressures have resulted in a contraction of the construction industry, effectively driving the demand for cement downward. Despite the acknowledged fact that the construction sector here in Guyana continues to experience “robust growth” in defiance of the global trends the company stated that “cement supply far outstrips current demand”.
According to the release, TGI has been offering price reductions for some time now in order to effectively compete in the market as well as support the construction boom in the country.
The release states, “In spite of TGI’s increased operational efficiencies and rigid cost management, there have been inflationary realities over the years in relation to the production of cement, which are negatively impacting on the company’s financial performance.”
In the Directors’ Statement issued with the 2010 financial reports of the company, the Directors called 2010 one of the most challenging years in the history of the TCL Group. They cited “continued weak demand” as the reason for a ten percent or TT$179M decline in revenue for the group of companies.
A 16 percent drop in domestic sales volume which generates the bulk of the group’s profit margin occurred in 2010 as compared to 2009. Inventory is reported to have grown to such unsustainable levels that kilns in Barbados and Jamaica needed to be shut down for extended periods. Higher operating costs were also assigned to several factors such as higher fuel costs as well as higher personnel costs for termination and pension benefits – the bottom line being that operating profit for the group of companies declined by TT$254M or 99 percent in 2010.
In the first quarter report of 2011, the Directors commented that the group continued to be challenged by weak demand as critical domestic volumes declined by 13 percent whilst export volume margins only rose by 1 percent in comparison to the previous year.
Revenue declined apace by TT$47M or 11 percent and the group reported losses of TT$23M as compared with a profit of $31M for 2010.
In their release yesterday the company pointed out that, “TGI is, therefore, left with no alternative but to implement a price adjustment in order to safeguard the organization’s long-term viability.
This is also in keeping with its duty to ensure that superior quality cement is available locally to sustain the buoyant construction sector.”
The full force of the impact of such an announcement on the industry which has indeed grown by leaps and bounds in the last few years remains to be seen.

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TCL adjusts base price of cement

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