‘TCL can’t keep raising prices’

(Trinidad Express) Trinidad Cement Ltd (TCL) cannot just keep raising prices every year, ANSA McAL’s chief operating officer Gerry Brooks has said.

Brooks told reporters on Friday at the ANSA Coatings Award ceremony, Hyatt Regency (Trinidad) hotel, Port of Spain that what the company needs is a restructuring plan with a clear business plan.

Brooks said the company needs to tackle two of its most pressing problems: debt and material cost.

“TCL’s problem is more than just annualised increases in prices. A profound look has to be taken to re-engineering,” Brooks said.

Increasing cement costs, he said, would lead to rising raw material cost for the constructions sector, for example, at ANSA McAL’s brick making subsidiaries Abel/Bestcrete.

But importing cement is not necessarily the next best option; what TCL needs, Brooks said, is to be more competitive.

“No firm is going to survive if they are not competitive globally. TCL has a responsibility to re-engineer its business process to ensure its output is competitive regionally and locally. My own view is if you were to open the market at that stage you would put the company at risk. I would give it a period of time to allow TCL to re-engineer its process with a clear mandate, because there are several problems with TCL: debt and shareholder value because there are many companies holding TCL shares in their pension funds and portfolios. At this stage it’s really an issue having a clear plan to go to shareholders and ensuring you get stakeholder support. What we cannot do is continue to raise prices,” he said.

From ANSA McAL’s perspective, investing in clay blocks will be how the company stems rising cement costs.

“We’ve made a substantial investment in clay so input in cement is significantly reduced. Clay offers the opportunity to export regionally, and we believe it is a superior product (to concrete blocks),” he said.

For 2013, Brooks said he believed the construction sector will be an important catalyst for the growth of the economy.

He said while the government has announced several projects, more local content needs to be used, and there must be a comprehensive policy governing the process.

On January 8, TCL announced it would be raising prices by 9.5 per cent.

The price of a 42.5 kg bag of Premium Plus Cement rose from between TT$50 and TT$54 a bag to between TT$54 and TT$59.

The company said it was unable to further absorb escalating prices in operating costs, specifically in the areas of energy, packaging and spares, in spite of improved operational efficiencies.

The company had previously raised prices in August 2012.

 

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