Feb 2016 Financial News

Energy decline hits NEL profits

Feb 16, 2016

Government’s investment holding company National Enterprises Ltd (NEL) suffered a $142.9 million drop in profits for the nine months ended December 31 which chairman Jerry Hospedales said was due in part to the underperformance of its investee companies in the energy sector.

NEL’s latest financial results show a profit of $262.9 million—35.2 percent less than the $405.9 million profit for the corresponding period in 2014. Earnings per share were $0.41 compared with $0.66 in 2014.

“Our investee companies have felt the full impact of low commodity prices including energy which has been on the decline since the middle of 2014, as well as the effects of the ongoing gas curtailment programme on the Point Lisas estate,” Hospedales said in a statement accompanying the results.

“As an oil and gas exporter the ending of the longer-than-envisaged commodity super-cycle has initiated a decline in our economic activity, the timeframe and eventual economic recovery of which are now subject to considerable uncertainty, with implications for the profitability of Trinidad Nitrogen Co. Ltd (Tringen), NGC NGL Company Ltd (NGC NGL), NGC T&T LNG Ltd (NGC NLG), Pan West Engineers and Constructors LLC (Panwest).”

However, it was not all bad news for NEL. Hospedales said Telecommunications Services of Trinidad and Tobago (TSTT) improved its profitability after lowering operating costs through more focused managerial control. There was also an improved financial performance from National Flour Mills (NFM) as a result of “significant management focus and operational improvements, with employee and union support”, the chairman said.

He said new investments in Panwest and the Power Generation Company of T&T (Powergen) have added a degree of stability in the dividends paid to NEL, offsetting the decline in dividends from energy sector investee companies.

“In 2015 the total dividend income from Panwest and PowerGen amounted to $24.5 million,” Hospedales said, adding that the company will continue to seek out good medium and long-term investments to enhance shareholder value and earnings.

NEL’s participation in the initial public offering (IPO) by T&TNGL Ltd (TTNGL), with the allocation of 1,525,673 shares, has already generated dividends. In addition, the company invested $50 million in the new Calypso Index Fund launched by the Unit Trust Corporation and Hospedales said he expects “solid and stable dividends from both of these investments.”

“NEL is committed, in consultation with its investee companies, to taking strategic action to mitigate the fallout on profitability from lower energy sector earnings and looks forward to taking advantage of any attractive investment opportunity which might become available in future and is considered to be appropriate and viable,” he said.

Source:
Trinidad Guardian
Tuesday February 16, 2016

http://www.guardian.co.tt/business/2016-02-15/energy-decline-hits-nel-profits