In 2010, Trinidad Cement Ltd declared an after-tax loss of $80.3 million-its worst performance in 11 years and a sharp decline from the $96 million profit that the company declared in 2009. Last year, the company experienced a 10 per cent decline in its revenues following a 16 per cent decline in 2009. Due in large part to the continuation of recessionary conditions in the Caribbean, the group-which has production capacities in three Caricom member states (T&T, Barbados and Jamaica) and exports to all 14 members of the community outside of T&T-experienced a further 11 per cent decline in its revenues in the first quarter of 2011. In an interview two weeks ago, at the company's Claxton Bay offices, TCL's chief executive Rollin Bertrand and corporate secretary Alan Nobie, said the performance of the company was due to the contraction in the demand for cement throughout the Caribbean. As a result of the declining revenues and the 2010 after-tax loss, the cement producer declared a moratorium with the approval of its lenders on its debt payments at the beginning of this year. The main reason for TCL financial woes is the sharp decline in the sale of cement in many of its markets in 2010. Bertrand said that TCL had "fully complied with all loan obligations up to the end of 2010" and that it projected it would have been able to continue making interest payments on its debt of $1.7 billion, but that "principal payments would have been difficult."
According to the TCL executives, about 52 per cent of TCL's debt of $1.7 billion is in TT dollars, 35 per cent is in US dollars, ten per cent in Barbados dollars and about two per cent in Jamaican dollars. Much of the $1.7 billion in debt was taken on to finance the expansion of production and upgrading of the plant at TCL's Jamaican subsidiary, Caribbean Cement Company. The company assumes that its lenders will agree to re-profile its debt-which means that TCL's lenders will agree to stretch out the length of time that the company has to repay its loans. In an interview with the Business Guardian last month, Banking Association president, Dennis Evans, seemed to indicate that the banks were amenable to TCL's debt proposals. "We are waiting on them to come with the plan and we expect them to do so in the not-too-distant future. I think all of those who bankroll TCL know the nature of their business and know that it is cyclical. In a sense it is no different from the methanol business with its ups and downs. So we understand these things and we will be sympathetic to the company."
Here's what TCL said in its recent financial report: "The group has forwarded to lenders its debt re-profiling proposals which propose a moratorium of up to three years on debt payments but with triggers that will repay a substantial portion of the current debt over the ensuing five years consistent with the projected net cash flows of the group. "The group is committed to settling in full all of its debt obligations and the re-profiling, which is expected to be completed in the third quarter, is primarily intended to facilitate the achievement of this objective whilst stabilizing liquidity in the group." A big part of increasing its sales across the Caribbean is in aggressively going after new export markets as it only managed to sell 1.74 million tonnes of cement last year, which is about 50 per cent of its nameplate production capacity of 3.5 million tonnes. Bertrand said TCL is targeting the French West Indies, which it can export to without tariffs as a result of the Economic Partnership Agreement signed by Cariforum nations and the European Union in 2008.
TCL is also looking to establish a warehouse in Haiti and hopes to eventually establish a terminal in the north Caribbean country, similar to the one in Guyana. Bertrand described the Dominican Republic as a market with "tremendous opportunities, a very large high-margin market," although TCL is facing some barriers to entry by Dominican cement producers. He also sees opportunities for TCL in the north of Brazil, which is gearing up to host the Olympic Games and the World Cup. There is also a huge opportunity for the export of cement to Venezuela, but the TCL officials declined to give details of that venture given the sensitivity of the ongoing negotiations. "With our production capacity at 3.5 million tonnes, ideally we would want to be in a position to produce and sell 80 per cent of our capacity, which is about 2.8 million tonnes," said Bertrand. "If all the opportunities we are pursuing pan out as we expect, we may be into shortages of cement."