Aug 2006 Financial News

TCL Releases Half Year Results

Aug 02, 2006

For the Half Year ended June 30, 2006 Trinidad Cement Limited (TCL) reported a diluted EPS of 20 cents. This was 37.5 % or 12 cents lower than the comparable EPS in 2005. The Chairman has attributed this fall in EPS to its subsidiary, Caribbean Cement Company Limited, which encountered quality problems in the first quarter followed by increased energy costs in the second.

Revenue for the half year amounted to $837.81 million, an increase of $110.25 million or 15.15% on the comparable half year in 2005. Comparing Q2 2006 on Q2 2005, this was an increase of $50.65 million or 13.15%. However, due to the higher costs previously mentioned, the Company’s Operating Profit was down by $53.05 million or 36.5%.

Net Finance Costs also increased by a significant 23.72% to $59.44 million, thus Profit before Tax was negatively affected, decreasing by 66.24% to $32.85 million. Quarter on Quarter, this was a decrease of $26.97 million or 50.01%.

While the Effective Tax Rate was 12.67% for the comparable Half Year in 2005, the current period benefited from a Tax Credit of $8.82 million which contributed 21.16% to Profit after Tax. Thus, the Profit after Tax figure stood at $41.66 million, which despite the tax credit was lower than the prior year period by $43.30 million or 50.96%.

The Board of Directors has decided not to pay an interim Dividend for the 2006 Half Year, in order to consolidate the Group’s cash position, due to its intensive capital programme.

The shares of TCL are currently trading at a price of $7.02 and at our lower forecasted EPS of $0.52, it is trading at a multiple of 13.5 times. Historically, this Company trades in a band of 11 to 15 times, and with the current results there may be some downward pressure on the share price. Thus, in light of these current fundamentals we will recommend a SELL on this share.


Gia Singh
WISE Research Team