Aug 2006 Financial News

Agostini’s Releases Third Quarter Results

Aug 07, 2006

For the nine months ended June 30, 2006 Agostini’s Limited and its Subsidiary Companies (AGL) reported an Earnings per Share of $0.47, an increase of 11.9% or $0.05 on the prior comparable period. However, for the three months ended June 30, 2006 the EPS was down by 29.41 % when compared to Q3 2005, moving from $0.17 to $0.12.

Turnover for the nine month period amounted to $272.95 million, an increase of 20.03% or $45.54 million on the comparable prior year period. AGL’s Distribution Segment was the major contributor to Turnover, adding 59.31% or $161.87 million to the total figure. While this segment performed reasonably well, it was still below the expectations of the Group. The Construction Segment followed with a contribution of $74.96 million or 27.46% while Manufacturing made up the balance with $36.11 million or 13.23%.

Nine months on nine months, Profit before Taxation (PBT) increased by 8.30% or $1.33 million to $17.37 million. However, three months (2006) on three months (2005), PBT decreased by $2.26 million or 33.88%, from $6.67 million to $4.41 million. The Chairman has attributed part of these hampered results to problems of late steel deliveries and labour absenteeism at Agos Lighting. Additionally, weather and materials shortages have negatively affected the pace of housing construction and as such, the Housing Division has also continued to be a challenge to the Company.

The Effective Tax rate for the period was 27.12% compared to 29.25% in the prior corresponding period. Nine months on nine months, Profit after Taxation was up by 11.57% or $1.31 million to $12.67 million. After deducting Minority Interests of $0.13 million, the Profit Attributable to Shareholders amounted to $12.53 million, an increase of $1.25 million or 11.08% on the prior comparable period.

While the Distribution Divisions, including the Oilfield Services unit, are benefiting from the robust economy in Trinidad and Tobago, all business segments are challenged by high employee turnover and the tight labour market. The Company is addressing the controllable issues at Agos Lighting and the Housing Division. However, the Chairman does not expect improved results in the current year.

The shares of Agostini’s Limited are currently trading at a price of $11.25 and usually trades at a P/E multiple in the band of 10 to 12 times. Given the current results and forward looking statements of the Chairman, we have revised our Forecasted EPS to $0.70. At this forecasted EPS and the current price, these shares are trading at a high multiple of 16.07 times, which is out of its traditional P/E range. As such, we have revised our recommendation of a HOLD to a SELL.


Gia Singh
WISE Research Team