May 2008 Financial News

TCL Releases Year End Results

May 02, 2008

Trinidad Cement Limited
Results for the Year Ended December 31, 2007

Earnings Per Share
For the Year Ended December 31, 2007, Trinidad Cement Limited (TCL) reported Earnings Per Share (EPS) of 77 cents. This represented an increase of 28.3 per cent or 17 cents on the comparable EPS of 60 cents in FY06. Q407 on Q406, the Group’s EPS was up 13.6 per cent or 3 cents from 22 cents (Q406) to 25 cents (Q407). The Directors have attributed this improved performance to increased revenue and operational efficiencies.

In addition, the Group’s Jamaican subsidiary, Caribbean Cement Company Limited (CCCL) recorded a significant increase in profitability compared to the prior year, which included the provision for cement claims of $30.3 million related to the cement quality issue in 2006.

Financial Highlights:
• Revenue, up 11.9 per cent or $204.0 million to $1.9 billion
• Operating Profit (after cement claims), up 31.9 per cent or $84.5 million to $349.4 million
• Net Finance Costs, down 0.7 per cent or $0.7 million to $103.7 million
• Profit Before Taxation, up 53.1 per cent or $85.2 million to $245.7 million

Dividends
The Board of Directors has approved a final dividend payment of 7 cents per share (2006: 6 cents), to be paid on June 20, 2008 to shareholders on record at the close of business on June 6, 2008.

Outlook
In October, ACCL commissioned its new Petcoke fuel system, which will impact positively on ACCL’s increased fuel costs. The Directors stated that once the debugging phase has been completed by mid-2008, the Group will reap the full benefits of this investment. Also, with the current boom in the construction sector, demand is expected to remain stable in both the Caribbean domestic and export markets. The commissioning of the new kiln at CCCL which is now expected in the second quarter of 2008 will assist the Group in meeting this demand. We believe that TCL is well positioned for continued growth in fiscal 2008.

Recommendation
TCL last closed at a price of $9.51 on the local market. Based on the current results, we are forecasting an EPS of $0.95 for fiscal 2008. At this forecasted EPS and the current price, TCL is trading at a price to earnings multiple of 10 times. Additionally using a multiple of 11 times and the forecasted EPS of $0.95, we are estimating a return of approximately 10 per cent on the current price or a Target Price of $10.45. We continue to recommend a BUY on this share.


Nancy Chen
WISE Equity Research Team