2006 - Eastern Caribbean Securities Exchange

Group Chief Executive Officer’s Report and Management DiscussionCement Production (‘000 MT)4.2 Concrete Sector Operations1000 -800 -600 -400 -691884 845761341338All concrete plants within the Readymix Groupmaintained high levels of availability during the year,with RML achieving a 99% average. Despite thesehigh availabilities, aggregate supply issues seriouslyimpacted concrete production at both RML in Trinidad200 -and Tobago and Island Concrete in St. Maarten.-2005 2006 2005 2006 2005 2006TCL CCCL ACCLproduction of 883,728 tonnes of cement, which was28% above the prior year volume of 690,521 tonnes.However, production fell at Arawak Cement and CaribCement by 1% and 10% respectively, with CaribCement being required to import 119,302 tonnes tomeet domestic market demand.During the year, TCL successfully produced a blendedcement (TCL Premium) using 15% pozzolan additive(ASTM C-595 standard).At Carib Cement, however, the quality problemsthat occurred during the first quarter resulted in thewithdrawal of product from the market, as well asthe temporary cessation of all production activities sothat measures could immediately be taken to tightenquality systems and alleviate customer concerns. Tothis end, prior to sale, each batch of cement is nowtested and specifically approved for dispatch. Alldispatched cement following the restart has beenconfirmed to have met the required standards.During the fourth quarter of 2006, the Group’s firstcement terminal was successfully commissioned inGuyana, the Group’s largest export market. The planthas a combined silo/warehouse storage capacity of8,000 tonnes and a rated packing capacity of 60tonnes per hour. Its first shipment of 5,110 tonnesof bulk cement was received on December 15, 2006.By year end, TGI packed 2,238 tonnes (equivalent to1,492 slings) of cement.RML purchased approximately 86,000 tonnes of20mm imported aggregate for the year at twice thecost of local material, while a further 18,000 tonneswere purchased on the local market. An estimated37% of RML’s total concrete was produced usingpurchased aggregates. However, during the secondhalf of the year, Government granted additionallands, from which 16% more pit run was produced.In total, the company produced 327,450 m 3 ofaggregate in 2006, exceeding the previous year’sproduction by 3%.Island Concrete was also adversely impacted duringthe year by the unavailability of aggregate, resulting inthe need to continuously switch the source of supply.This, in turn, led to instances of stock out at the plant.Ensuring a consistent supply of high quality aggregateremains a challenge for both RML and Island Concretein the coming year. The company has, however,identified other potential quarry resources and is innegotiation with the relevant parties with a view toexploiting these resources in the near future.4.3 Packaging Sector OperationsTPL’s production performance for 2006 was belowexpectations, with the plant being affected by severalmaintenance issues, a global paper shortage andshipping delays. In total, TPL produced 39.5 millionsacks, 3% less than produced in 2005.TPM produced 484,455 slings, which was 23% abovethe previous year’s production and the highest volume28