Nov 2006 Financial News

RML Releases Nine Months Results

Nov 08, 2006

For the Nine Months ended September 30, 2006 ReadyMix (West Indies) Limited (RML) reported Earnings Per Share (EPS) of $0.68, up by an outstanding 230.77 per cent or 120 cents on the comparable EPS in 2005 (-$0.52). Q3 2006 on Q3 2005, the EPS increased by 158.97 per cent or 124 cents to end the three months at $0.46.

Revenue for the period under review amounted to $187.63 million, which represents an increase of 33.69 per cent or $47.28 million on the corresponding period in 2005. The Chairman attributes this increase to improved performances in all territories, and in particular- the Trinidad and Tobago market. In Barbados, operations recorded significant Sales and Revenue growth during the quarter contributing $2.1 million to the Group’s Operating Profit. In St. Maarten, Revenue grew in excess of 50 per cent from that recorded for the first half of the year, resulting in a contribution of $0.34 million to Profit Before Tax for the quarter. Total Revenue for the quarter was $69.39 million with Trinidad Cement Limited (TCL) contributing $55.2 million.

In addition to significant growth in Revenue, the Company also benefited from decreased costs derived from the consumption of a mix of local and imported aggregates during the quarter ended September 30, 2006. Thus, Operating Profit stood at $16.50 million at the end of the nine months, up by 308.07 per cent on the comparable loss in the same period last year.

Net Finance Costs for the Nine Months stood at $4.39 million, up 44.88 per cent from the corresponding period last year. Q3 2006 on Q3 2005, this figure was up by 23.52 per cent or $0.27 million to end at $1.42 million. The Chairman has pointed out that the higher Net Finance Costs for the period under review are the primary result of increasing interest rates over the year.

Profit Before Tax stood at $12.12 million, representing an increase of 210.56 per cent or $23.08 million on the comparable loss of $10.96 million in 2005. The Effective Tax rate for the period under review was 29.50 per cent, while the Company benefited from a Tax Credit of $4.10 million or 37.45 per cent for the Nine Months ended September 30, 2005. Profit After Tax figure increased to $8.54 million compared to a $6.86 million loss in 2005.

The Chairman also pointed out in his statement that the Group’s overall improvement in performance has been reflected in the drastic reduction in the working capital deficit from December 2005 by $19.0 million and the cash generated by Operating Activities of $34 million for the nine months under review. He is optimistic about the last quarter and anticipates the high level of demand to continue across all markets, thus resulting in continued profitability for the Group to the end of 2006.

The shares of RML are currently trading at a price of $3.83. In light of the current results and the forward looking statements of the Chairman, we have revised our forecasted EPS upwards to $1.00.Given the current price and our revised forecasted EPS, the shares of RML are trading at an extremely attractive multiple of 3.83 times. Based on this fundamental analysis, RML is currently trading at a bargain price and as such we recommend a BUY on this share.


Gia Singh
WISE Research Team