In T&T: TCL’s $375M loss troubles McLeod

18 April 2012


“Offer of a 6.5 percent wage increase remains on the table,” as TCL reports substantial losses for 2011.

LABOUR MINISTER Errol McLeod yesterday expressed concern that the ongoing industrial impasse at Trinidad Cement Limited’s (TCL) plant in Claxton Bay is impacting negatively on the overall performance of the TCL Group of Companies.

McLeod expressed his concern as the TCL Group’s consolidated audited financial report for the year ended December 31, 2011 showed the group had recorded net losses of $375 million.

McLeod told Newsday the audited financial statements for TCL do not paint a very good picture for the group. In light of ongoing industrial action at the plant which began on February 27, McLeod said it was necessary to analyse how this action will impact on the TCL’s operations and its overall financial performance. Noting that TCL and the Oilfields Workers Trade Union (OWTU) are holding fast to their positions and there seems to be little headway in resolving the 51-day-old strike, McLeod said he will be summoning TCL’s management to meet with him this week to go through the group’s audited financial statements to get a sense as to what it means relative to the impasse.

TCL general manager Satnarine Bachew said while the TCL Group sustained losses, the plant at Claxton Bay remains profitable.

Noting the audited statement shows that the TCL Group’s subsidiaries must find ways to improve their performance, Bachew said it was important that the right decision be made in terms of finding a settlement to the industrial impasse at the plant.

Confirming TCL management will be meeting with McLeod this week, Bachew said the offer of a 6.5 percent wage increase remains on the table. He added that if there is no resolution in the next 49 days (by June 5) the matter will be referred to the Industrial Court and TCL will be able to resume full operations at Claxton Bay. TCL shares traded consistently at $1.65 on the TT Stock Exchange over the last two days.

In the directors’ statement which was incorporated into the report, TCL said, “Two minor subsidiaries of Readymix (West Indies) Limited were disposed of in St Maarten effective June 30 2011, generating a gain of $9.4 million for the year. However as a consequence of the one- time additional changes and the reduced tax credit combined with combined negative impact of $228.9 million, the Group is reporting net losses of $375 million compared to $80.5 million in 2010.”

The directors statement, which was signed by TCL Group chairman Andy Bhajan and Group CEO Dr Rollin Bertrand on March 28, said, “Notwithstanding the strike action, TCL continues to supply the domestic market from its subsidiary operations in the Caribbean and its strategic allies.”

The statement noted the Group’s revenue of $1.56 billion last year was materially unchanged from 2010. The domestic sales volume was one percent more in 2011 than in 2010 while the export volume was nine percent higher. The statement said, “There was a significant cost escalation of 21 percent for kiln fuel and electricity ($73 million) and 14 percent for materials ($21 million) largely due to unit price increases as production of clinker and cement was only higher than the prior year by 1.5 percent and four percent respectively.” As a consequence the statement added: “Ebitda (Earnings Before Interest, Taxes, Depreciation and Amortisation) declined from the $169 million of the prior year to $84 million.”

With respect to outlook, the directors’ statement said, “The Group has increased prices by up to nine percent across most markets to compensate for the increase in input prices and costs.” Saying the pursuit of new markets and additional volumes into existing ones continues with “notable success,” the directors’ statement said contracts have been agreed for additional supply into Haiti and Brazil.

The statement said shipments into the French West Indies started last December and “will increase in the second half of 2012 when the full certification process is completed.” In its report on TCL’s consolidated audited financial report, auditing firm Ernst and Young said, “In 2011, management recorded impairment losses pertaining to certain plant and machinery and deferred tax assets amounting to $61.3 million and $46 million respectively.”

Ernst and Young stated these impairment losses were determined based on TCL management’s projections “which assume that the Group will generate significant revenue from exports to a certain market under a proposed agreement currently under active negotiation for which the terms and conditions have not been agreed at the date of this audit report.”

Source

Comments are closed.