Apr 2007 Financial News

AMCL Releases Year End Results

Apr 04, 2007

Results for the Year Ended December 31, 2006

For the Year Ended December 31, 2006, ANSA McAL Group of Companies Limited (AMCL) reported Earnings Per Share (EPS) of $2.76, which was up on the comparable EPS of 2005 ($2.61) by 5.75 per cent.

For the period under review the Group’s Third Party Turnover amounted to $4.13 billion and represented an increase of 18.42 per cent or $642.33 million on the corresponding period of FY2005. Operating Income stood at $811.94 million, up by 9.57 per cent on the comparable figure for FY2005. The Group saw a marginal decrease in Finance Costs, which moved from $120.01 million to $118.86 million- a fall of 0.95 per cent.

Share of Profits from Associated Companies and Joint Ventures fell by a significant 32.10 per cent from $24.72 million in FY 2005 to $16.78 million in the period under review. Thus, Profit Before Taxation for FY 2006 stood at $709.86 million, an increase of 9.93 per cent or $64.10 million on the corresponding figure for FY2005. However, it is important to note, that the results for FY2005 included a one-off gain of $85.31 million for the sale of property in Pigeon Point, Tobago. Thus, if we adjust for this one-off gain and compare the operational results for FY2006 on FY2005- we would see that the Group’s Profit Before Taxation actually increased by a considerable 26.66 per cent or $149.41 million ($709.86 million -$560.45million).

The Effective Tax Rate for the period under review was 18.40 per cent compared to a Tax Rate of 17.46 per cent in FY2005. As a result, the Group’s Profit After Tax amounted to $579.23 million compared to $533.04 million in the comparable period (an increase of 8.67 per cent- year on year).

The Chairman and Chief Executive has attributed the improved results to the continued buoyancy in the economies in which the Group operates, coupled with the returns on the investments in the new plant and equipment over the last few years. He added that all sectors in the Group contributed to the improved results and this was primarily from organic growth as there were no acquisitions during the period.

The Directors are confident in the trend of the Group’s operating results and as such have increased the final dividend payment to $0.50 ($0.40 in 2005)- which when added to the interim dividend of $0.25 will bring the total dividend payable to shareholders for the year to $0.75 ($0.65 in 2005).

AMCL is currently trading at a price of $49.00 on the local market. In light of the current results, we are forecasting an EPS of $3.00 for FY2007. At the current price and WISE’s forecasted EPS this share is trading a price to earnings multiple of 16.33 times. This share usually trades in the band of 15 to 18 times and as such, given the current fundamental analysis we would recommend a HOLD at this time.

Gia Singh
WISE Equity Research Team