Feb 2007 Financial News

WITCO Releases Year End Results

Feb 22, 2007

Results for the Year Ended December 31, 2006.

West Indian Tobacco Company Limited (WITCO) reported Earnings Per Share (EPS) of $1.71 for the year ended December 31, 2006. This EPS was in line with expectations and was driven by increased sales performance in both the domestic and contract manufacturing markets. The Company also benefited from improved productivity in Operations.

Gross Profit rose 18.20 per cent to $316.605 million. This was as a result of a 14.89 per cent increase in Net Turnover while the Cost of Sales rose by a smaller margin of 7.53 per cent to $129.427 million.

Distribution, Administrative and Other Operating expenses rose by 18.63 per cent, 10.85 per cent and 10.66 per cent respectively. Operating Profit was ultimately up 22.97 per cent to $195.230 million while the Company’s Operating Profit Margin rose from 40.90 per cent to 43.77 per cent. To a lesser significance were increases in Interest Income (up 332.88 per cent to $1.909 million) and Finance Costs (up 125.22 per cent to $2.777 million).

Profit Before Tax rose 23.04 per cent to $194.362 million while the Effective Tax Rate fell marginally from 26.73 per cent to 26.05 per cent. Profit After Tax increased 24.18 per cent to $143.733 million.

The Directors will recommend a final dividend of 85 cents per share at its Annual Meeting on Thursday March 29, 2007. If approved, this will bring the total dividends paid for the year to $1.68 per share and would mean that WITCO’s Dividend Payout Ratio stands at 98.25 per cent.

Given these commendable results, WISE is forecasting an EPS of $2.00 for the year ended December 31, 2007. At this forecast and the current price of $24.56, WITCO is trading at a price/earnings ratio of 12.28 times. Given that this share trades as high as 15 times earnings, we recommend a BUY on this share.

Sreshtha Tewari
WISE Research Team
Thursday, February 22, 2007.