ANSA McAL sees increase in shareholder profit, Lever gross profit dips

ANSA McAL Limited - Results for the six months ended June 30, 2003

ANSA McAl’s profit attributable to shareholders for the six months ended June 30, 2003 was $91.099 million, an increase of 10.94% over the corresponding figure in 2002 of $82.112 million.  Third party turnover increased marginally by 1.23% from $1.114 billion in 2002 to $1.128 billion in 2003. Operating income increased by 3.38% moving from $191.964 million in 2002 to $198.455 million in 2003. Finance cost grew marginally from $50.291 million in 2002 to $50.613 million in 2003.  Profit before tax increased by 6.15% moving from $141.897 million in 2002 to $150.628 million in 2003.  The effective tax rate declined from 31.28% in 2002 to 26.15% in 2003. The Chairman attributed the slow growth in third party revenue to the sluggish economy, the closing of The Wire newspaper and the lower sales at Carib Glass because of the furnace fire.  However on the positive side all other sectors performed creditably.  Smirnoff Ice has had a very successful launch.  The new car models are also performing very well.

Looking to the future the Group has placed greater emphasis on increasing efficiencies and this is already bearing fruit with operating margins increasing in the half despite the significant losses at Carib Glass.  Burmac has won the contract to supply air-conditioning for the West Mall expansion.  The Group is also entering the roll on roll off market through its Carmax franchise.  Alstons Marketing is launching new products including the world famous Marlboro cigarette brand.  The new glass furnace has a larger capacity and would be more efficient.  It would produce light weight glass which is stronger than the old glass. The second half is always the better half for the Group, this would be even evident this year because the new furnace at Carib Glass would be up and running in September. The Group is also confident that the balance of the year will bring in record levels of profit.  We have adjusted our forecast to $1.35 a share which at the current price gives a PE of 13.33. Thus we recommend a hold on this share. The Board of Directors has approved the payment of an interim dividend of 25 cents per share, the same as last year.  The dividend would be paid on September 12, 2003 to shareholders on the register as at September 2, 2003.

Lever Brothers (West Indies) Limited - Results for the six months ended June 30, 2003

Turnover declined slightly for Lever Brothers (LBWI) in the six months ended June 30, 2003.  In 2003 turnover reached $179.0 million compared with the $186.4 million posted in the similar period in 2002. Gross profit also declined, by 4.9 per cent to $75.3 million in 2003 in comparison to the $79.2 million made in 2002. Operating expenses rose 11.5 per cent to $54.2 million in 2003 from the $48.7 million spent in 2002.  In explaining the increase of $5.8 million, the Chairman stated that an increased focus on marketing, together with one-time costs associated with computer system upgrades were the main causes. Operating profit was down 31.0 per cent to $21.1 million in the first half of 2003, while in the corresponding 2002 period this figure was $30.5 million.  Profit after taxation was 28.3 per cent lower in 2003 at $14.1 million from the $19.7 million made in 2002. An interim dividend of 35 cents per share has been declared payable on September 5, 2003, to registered shareholders as at August 26, 2003.  A better performance is expected in the second half of 2003 and we forecast an EPS of $1.55, and a total dividend of $1.55.  At the current trading price of 29.75 this gives a PE ratio of 19.2, making the share fully valued at this level.  We thus rate the share as a HOLD.  

Readymix Limited - Results for the six months ended June 30, 2003

Readymix Limited (RML) posted some good results for the first half ended June 30, 2003.  Revenue increased by 24.2 per cent in 2003 to $61.9 million compared to the 2002 amount of $49.9 million.  Operating profit rose 47.3 per cent to $4.6 million in 2003 from the $3.1 million made in 2002. Profit before taxation was 60.5 per cent higher at $3.6 million in 2003, up from the 2002 figure of $2.2 million. Net profit increased 6.6 per cent in 2003 to $2.2 million when compared to the same period in 2002 when this amount was $1.3 million. The Chairman stated that the local premixed concrete market grew by about 33 per cent in the first half of 2003 in comparison with the same period in 2002.  The competition locally has increased with the entry of two new players, bringing the total number of sector players to nine. Significantly, RML has become the first Caribbean company in its industry to achieve the ISO 9002 Certification. Also, the Barbados subsidiary is performing well.  RML only began to supply concrete to the ALNG Train IV project in June of this year, and the contract shall continue until the end of 2003 at the very least.  In light of this we are projecting an EPS for 2003 in the order of 40 cents per share, together with a total dividend payout of 13 cents per share.  An interim dividend of six cents per share will be paid on September 29, 2003 to registered shareholders as at September 15, 2003.  Our recommendation on RML is HOLD.

Grace Kennedy and Company Limited - Results for the six months ended June 30, 2003 All amounts in J’can $.

Grace Kennedy and Company (GKC) posted a 17.6 per cent increase in revenue for the six months ended June 30, 2003.  Revenue rose to J$10.645 billion in 2003 from the 2002 figure of J$9.048 billion. Expenses rose 16.9 per cent in the first half of 2003 to J$9.963 billion, up from the J$8.523 billion incurred in 2002. Operating profit increased by 29.8 per cent to J$681.2 million form the previous amount of J$524.9 million. Profit before taxes were up by 13.4 per cent to J$998.9 million in 2003 from the corresponding 2002 amount of J$881.2 million. Profit attributable to shareholders increased 14.2 per cent in 2003 to J$694.4 million from J$608.3 million made in the corresponding 2002 period. First-half EPS totalled J$2.15 in 2003 for GKC, compared to J$1.89 recorded in the similar period in 2002.  We remain guarded on the second half as the stability of the Jamaican dollar and the level of interest rates can impact on the overall results of the Group. Nevertheless, we are estimating a full-year EPS in the region of TT50 cents per share, with the current exchange rate in Jamaica being J$59.00 to US$1.00.  We are maintaining a HOLD rating on this share. 

Analysis by West Indies Stockbrokers Limited. Member of the Trinidad and Tobago Stock Exchange Ltd.