Shane Ingram, Contributor
THE EARNING season got off to a favourable start as mostly healthy results for the September quarter entered the market this week. Kingston Wharves was the most impressive with a 74 per cent upturn in profits for the nine months to September 2005. RBTT bounced back with 34.2 per cent growth in profits during the six months to September having suffered significant losses to its investment portfolio last year due to the negative impact of Hurricane Ivan on the performance of Grenada bonds. Capital and Credit enjoyed 27.7 per cent expansion in profits during the nine months to September while GraceKennedy reported only 3.5 per cent at the same interval. Jamaica Pegasus also recorded 36.7 per cent more profits for the same period on the back of higher finance income and the removal of one-off expenses.
Despite these healthy results, and expectations of similar results in coming weeks, equity prices remained depressed as economic uncertainty continued to dominate the investor psyche. Persistent pressure on the local dollar, news of an economic downgrade from international investment bank, Morgan Stanley, and further slippages in government fiscal balances are currently the main culprits behind this uncertainty.
COMPANY SPOTLIGHT: KINGSTON WHARVES
Analysts' positive expectations about Kingston Wharves (KW) were vindicated by the healthy results recently reported by the company at the end of the June quarter. Robust revenues combined with restrained cost structure produced net profits of $71.1 for the third quarter ended June 2005, an increase of 74 per cent.
Operating revenues remained upbeat at $439.1 million for the quarter, up 14.5 per cent on the comparable period last year, driven primarily by inflows from terminal operation, stevedoring activities started in the third quarter, stripping, stuffing containers, and receivals and deliveries.
Despite local cost-push pressures, gross margins remained relatively stable at 46.7 per cent, which allowed gross profits to rise 12.6 per cent to $205.2 million. However, operating profits almost doubled, from $53.6 million to $101.9 million, as administrative expenses dropped 19.8 per cent. Finance income of $6.7 million, albeit down from $11.0 million in the prior year, also contributed to the group's outcome.
The quarter's performance brought the year-to-date outturn to $222.6 million or 20.75 cents per share matched against $127.8 million or 11.91 cents per share a year earlier - an increase of 74 per cent.
Kingston Wharves is a multi-purpose terminal operator and the leading provider of maritime security as well as cold storage facilities in the island.
This market position is reinforced by a strong level of cost consciousness as highlighted in the $301 million spent since the start of the year to acquire new equipment geared to improving operating efficiency. As such, KW now boasts improved operating efficiency and cargo handling capacity following investments in a range of modern terminal handling equipment and yard management software.
KW also acquired additional warehousing space to accommodate the growing container volumes and further plans to consolidate these operations under one roof in order to garner additional synergies. Similarly, its subsidiary, Harbour Cold Stores, intends to export its services to hoteliers on the western section of the island. KW's recent certification of compliance for its port facilities should serve as an additional competitive edge as it allows the firm to continue serving as a conduit to the United States market.
RECOMMENDATIONS
The Winner's Edge recommends that investors add LOJ, CRTS, RJR, NCBJ, KW, Seprod, D&G, PJAM, and Goodyear to their investment portfolios. CWJA and Carreras are also good long-term option. Please contact DB&G's Stockbrokerage department at 1-888-CALL DBG for further information on these and other stocks or visit for detailed analyses.
Disclaimer: All information contained in this article has been obtained from sources that DB&G believes to be accurate and reliable. All opinions and estimates constitute the author's judgement as of the date of the article. No warranty as to the accuracy, timeliness or completeness of this article and as to the opinions based thereon is given or made by DB&G. DB&G and/or its employees or directors and/or any associated person may have an interest in, or interest in the acquisition or disposal of, the securities or class of securities mentioned herein. Call 1-888-CALL DBG if in doubt about the content of this article. Decisions based on information contained in this article are your sole responsibility.
