CCN posts strong profit, Witco sales up

Caribbean Communications Network
Results for the Six Months Ended June 30, 2003
Recommendation : BUY  

Caribbean Communications Net-work released very impressive results for the six months ended June 30, 2003.  Sales increased by 13.85% moving from $66.080 million for 2002 to $75.230 million for 2003.  The increase in cost of sales was a smaller 10.62% moving from $52.002 million in 2002 to $57.523 million in 2003. As a result the increase in gross profit was a more substantial 25.78%.  Operating profit increased by 52.06% moving from $7.497 million in 2002 to $11.400 million in 2003.  Finance cost declined by 78.56% moving from $2.188 million in 2002 to $0.469 million in 2003.  The currency swap which was a loss of $3.975 million for the six months ended June 30, 2002 reversed in 2003 resulting in a credit of $1.465 million.
This is a positive turn of $5.440 million. Overall, the Company’s profit before tax increased by an impressive 339.85% moving from $3.365 million in 2002 to $14.801 million in 2003.  Profit attributable to shareholders increased from $0.809 million in 2002 to $10.545 million in 2003.

At an analyst meeting, the Chairman attributed the performance to a general all round improvement.  He was optimistic that the second half of the financial year would also bring further improvements.  We concur with his assessment.  There were also hints that the Company would be making further investments which could have a positive effect on the bottom line. The Company’s two main revenue streams the television station and newspaper continued to dominate their respective markets. We now revise our 2003 earnings forecast to 50 cents per share which at the current price of $4.20 is a PE ratio of 8.40. The Chairman has indicated that the interim dividend will be nine cents per share as compared to six cents per  share in 2002, an increase of 50%.

West Indian Tobacco Limited
Results for the Six Months ended June 30, 2003
Recommendation : HOLD

West Indian Tobacco (WITCO) posted a marginal decline in net turnover in the six months ended June 30, 2003 over the comparable period in 2002.  In 2003 net turnover amounted to $143.3 million, while in 2002, this figure was $143.9 million. Cost of sales was down 7.6 per cent in 2003 to $47.2 million, from the 2002 level of $51.1 million.  Gross profit was 3.5 higher in 2003 at $96.1 million, up from the $92.8 million recorded during the same period in 2002. Operating profit improved by 8.3 per cent to $61.5 million in 2003, from the 2002 amount of $56.8 million.  The effective tax rate declined from 34.9 per cent in 2002 to 28.4 per cent in 2003.  WITCO posted an after tax profit of $44.7 million for the first six months of 2003.  This represented an 18.6 per cent increase over the $37.7 million made in the similar period in 2002. There were two main factors behind WITCO’s improved first-half performance in 2003.  In the first instance, the benefit of the reduction in the corporate tax rate was felt during this period.  Secondly, WITCO continues to derive cost savings due to infrastructural investments made previously.  Cost of sales, as well as total operating expenses declined in 2003 from those incurred in the corresponding period in 2002. Per share earnings in the first half of 2003 reached 53.0 cents, compared to 44.7 cents made in 2002.  We are estimating a full-year EPS of $1.10, with a total dividend payment of $1.00.  At the current price of $19.80 this is a dividend yield of 5.1 per cent, thus we rate WITCO a HOLD.  A second interim dividend of 17 cents per share is to be paid on August 15, 2003 to registered shareholders as at August 6, 2003. Analysis by West Indies Stockbrokers Limited Member of the Trinidad and Tobago Stock Exchange Ltd.