Waste paper imports, energy costs squeeze CCI – half-year report

Chief Executive Officer of Caribbean Container Inc (CCI) Patricia Bacchus has attributed the indifferent performance of the company during the first six months of 2014 to a range of factors some of which she said were outside of the company’s control.

At the weekend CCI published its unaudited report which Bacchus, who is also acting Board Chairman, said reflected an “unprecedented decline in sales of marine packaging on local and regional markets” which resulted in a “significant sales shortfall.” She said that this was indicative of the local fishing sector’s decline, which was recorded at 25.5% below the same period last year.

According to the CEO, CCI’s sluggish performance was compounded by a decline in the “order trend” for packaging for the local food, beverage and alcohol sectors, a development which she said had signaled a decline in the production and local sales of these consumables during the first half of 2014 as against the same period last year.

Processing cardboard into boxes at CCI’s Farm Plant
Processing cardboard into boxes at CCI’s Farm Plant

CCI’s January to June 2014 report pegs turnover for the period at $471,680,514 and gross profit $89,964,217. Meanwhile, Bacchus also noted what she said was a 24.6% contraction in gold export earnings stemming from a 10.1% decline in export volume and a 16.1% decline in average export prices during the first half of 2014.

She told Stabroek Business that CCI’s performance for the first six months of this year was also affected by “increased competition from both regional and extra regional sources.” She said CCI competitors benefited “from significantly lower energy input cost.” She said CCI’s higher energy costs had forced the company to lower its selling prices “in an effort to secure its market share.”

Bacchus also cited “the impact of increased taxation” which she said had arisen out of “recent changes to the Property Tax Act.”

And according to Bacchus, the company continued to face its customary problem of inadequate local supply of recyclable material.

According to Bacchus, CCI’s immediate focus will be on meeting what she says are “the growing needs of existing and emerging industries.” She added that CCI will also be seeking to improve its ability to promote value-added activities “through the ready supply of customized packaging.”

Acknowledging that the company was in a strategically advantageous position, Bacchus said it would be seeking to significantly increase the volume of its old corrugated cartons and paper waste supplies from local sources. According to Bacchus the company’s high production cost is due in large measure to the fact that 70% of its paper material is imported.

“When the high cost of freight is added, the import of cardboard waste is very uneconomic and drives the company’s cost of production up, thereby affecting its ability to sell at more competitive prices,” Bacchus said.

She said that while the company has private suppliers of cardboard, there has been no significant increase in the quantum of supplies despite a recent price increase given by the company.

“Certain conditions make it very difficult to see increased levels of local supplies, including the lack of regulations for solid waste separation, the lack of

conducive waste storage facilities at smaller retail and commercial operations, congested streets which make it difficult to embark on strategic collections and CCI’s location on the East Bank which makes it difficult for smaller businesses and households to deliver the material,” she said.

Bacchus said the steps taken by the company to improve its collection process include the setting up of old corrugated carton collection bins at market places in Georgetown. Stabroek Business has also been told that arrangements are in place with landfill operators for the retrieval and supply of the material to CCI.

Bacchus said CCI had also put arrangements in place with private waste disposal companies and undertaken direct sensitisation of small and medium size businesses through the Georgetown Chamber of Commerce and Industry (GCCI) to enhance its waste collection.

CCI, meanwhile, has submitted a proposal to the Ministry of Local Government for the lease of land in Georgetown for the setting up of a recycling collection depot. Bacchus said that despite the constraints CCI recognises the sustainable nature of its recycling operations, its contribution to best environmental practices and its positioning as an environmentally viable alternative to solid waste disposal.