Cemex has increased its royalty fee charged on Caribbean Cement Company and Trinidad Cement Limited.
CEMEX BOOSTS ROYALTY FEES
Carib Cement minority shareholders hit again as parent company takes more from revenues
Four years after pushing through a royalty fee on Caribbean Cement Company Limited (CCC) and Trinidad Cement Limited (TCL), Cemex S.A.B. de C.V. has increased the royalty fee charged on its Caribbean businesses.
This was revealed in both companies’ first quarter (January to March) reports that show royalty fees have been increased from two per cent to three per cent of the consolidated net sales for each company effective January 1, 2025. The royalty fee drew significant criticism from minority shareholders at 2021 annual general meetings, but Cemex used the poll voting option to steamroll any opposition with its majority ownership and push through its planned royalty fee. As a result, CCC & TCL were each charged two per cent of their consolidated sales as a fee payable to Cemex subsidiaries between 2022-2024 which totalled $1.46 billion for CCC and TT$119.11 million (J$2.75 billion) for TCL.
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CCC paid $209.32 million in royalties and service fees to Cemex subsidiaries during Q1, a 56 per cent increase over the $133.94 million paid in Q1 2024. TCL’s royalty and management fee weren’t explicitly stated, but it was noted that this expense was carried under other expenses which totalled TT$17.63 million ($409.09 million) for Q1. The note went onto to further explain that the royalty fee applicable to other TCL Group companies was reduced from 1.0 per cent to 0.60 per cent effective January 1.
This royalty and service fee is related to three agreements denoted as master services and intellectual property agreement, sub-agreement-services and sub-agreement-intellectual property. These agreements establish the framework and relevant payments to Cemex S.A.B. de C.V. and two other Cemex subsidiaries. The agreements came into effect on January 1, 2022, and have a five-year term with an automatic five-year renewal clause. The management fee shouldn’t exceed 4.0 per cent of CCC and TCL’s consolidated net sales.
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Cemex Operations México S.A. de C.V., a Cemex subsidiary, directly owns 4.96 per cent of CCC while TCL and TCL (Nevis) Limited own a combined 74.08 per cent of CCC which brings Cemex’s control in CCC to 79.04 per cent. Sierra Trading (Cemex S.A. de C.V) owns a direct 69.83 per cent equity stake in TCL.
The increased profitability of CCC and TCL has resulted in significant benefits to Cemex which have not just benefited from the royalty fees, but restoration of dividends to both businesses. CCC has paid out $5.3663 per share in dividends between 2022 to 2024 totalling $4.57 billion while TCL paid out a TT$0.08 dividend totalling TT$29.97 million in September 2024. That translated to Cemex Operations México S.A. de C.V. receiving $226.39 million while Sierra Trading received TT$20.93 million in the respective periods.
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CCC’s consolidated revenue improving during 2024 from $27.72 billion to $27.91 billion with consolidated net profit rising seven per cent to $5.95 billion. However, CCC’s domestic sales volume declined 5.2 per cent in 2024 with bagged cement sales declining 3.9 per cent and bulk cement sales down 8.6 per cent. Exports grew 40 per cent to $170.54 million during 2024, but this segment is less than 0.60 per cent of CCC’s consolidated net sales.
CCC’s first quarter saw revenue rising eight per cent to $8.20 billion, but a 68 per cent increase in operating expenses and higher taxes resulted in consolidated net profit increasing by three per cent from $1.93 billion to $1.99 billion.
CCC generated an extra $1.21 billion in cash during the first quarter after the company invested $1.09 billion in its capacity expansion by its Rockfort location. CCC began the US$40 million project in August 2022 which was set to increase production capacity by 30 per cent. TCL noted that the kiln debottlekneck project should be finished in the second quarter (April to June) which should reduce the need for cement imports and provide a surplus to be exported to other Caribbean markets.
CCC’s total asset base improved seven per cent during Q1 from $40.86 billion to $43.71 billion with property, plant and equipment valued at $28.34 billion. Although CCC’s balance sheet shows $9.70 billion in cash and cash equivalents, $9.1 billion (US$57.6 million) is kept in a deposit investment account with CEMEX Innovation Holding Limited. Total liabilities and shareholder’s equity was $13.30 billion and $30.41 billion, respectively.
TCL’s consolidated revenue dipped to TT$2.21 billion with Jamaica representing 52 per cent of this figure. Operational profit improved to TT$304.89 million with Jamaica representing 85 per cent of this figure with the remainder coming from Trinidad, Barbados and Guyana. Consolidated net profit grew 27 per cent to TT$216.42 million, with TT$149.91 million attributable to shareholders.
TCL’s grew its consolidated revenue by nine per cent in Q1 to TT$626.48 million which was supported by higher sales volume in Guyana, increased export sales from Trinidad and the effective implementation of its pricing strategy in Jamaica. Consolidated net profit grew ten per cent to TT$85.90 million with TT$63.81 million attributable to shareholders.
Although CCC’s stock price is up 26 per cent over the last year to $81.75, the stock still trends far from its peak closing price of $119.89 in October 2021 with its peak price being $146.12. Sagicor Pooled Equity Fund is currently the largest Jamaican affiliated shareholder with a 1.23 per cent stake as CCC’s fourth largest owner. Mayberry Jamaican Equities Limited, formerly CCC’s fourth-largest shareholder, fell out of the CCC top 10 shareholder list within the last two years.
TCL’s stock price is down 14 per cent in 2025 at TT$2.15 with a market capitalisation of TT$805.49 million.
Cemex reshapes global business
After gaining its long-desired investment credit ratings in 2024, Cemex is continuing to review its global strategy while returning more capital to shareholders. Cemex’s longstanding CEO Fernando A. González retired on April 1 after spending over a decade at the helm and more than 35 years with the construction giant. Jaime Muguiro was promoted from his role as President of Cemex USA to Group CEO on April 1. Jesus Gonzalez, Sergio Menendez, Jose Antonio Cabrera, Alejandro Ramirez and Ricardo Naya were all moved to new roles on Muguiro’s promotion.
Cemex recorded consolidated revenue of US$16.2 billion during 2024 and reported consolidated net income of US$960 million, with US$939 million attributable to shareholders. Cemex benefited from the sale of its Guatemalan business for US$212 million which resulted in a gain on sale of US$163 million. However, the sale of its Philippines operations resulted in a loss on sale of US$119 million despite receiving US$798 million.
Cemex’s first quarter saw the construction group record US$3.65 billion in consolidated revenue and consolidated net profit rising from US$258.49 million to US$741.70 million, with US$733.96 million attributable to shareholders. This improved net profit was largely related to the sale of the Dominican Republic business for US$928 million which generated a US$593 million gain on sale.
Cemex expects to deliver US$500 million in free cash flow from operations during 2025. At the company’s March 26 AGM, Cemex approved another US$130-million dividend payment to be paid over the next four quarters, and set aside US$500 million which can be used for the acquisition of Cemex shares.
