May 2007 Financial News

RML Releases First Quarter Results

May 09, 2007

Results for the First Quarter Ended March 31, 2007

For the First Quarter Ended March 31, 2007, Readymix (West Indies) Limited (RML) reported a Net Profit of $9.230 million compared to $0.420 million in the corresponding period of fiscal 2006. This represents an impressive increase of $8.810 million. As such, the Group reported for the First Quarter of 2007, Earnings Per Share (EPS) of 77 cents compared to 3 cents for the same period last year.

For the quarter under review, Revenue increased a significant 38.55 per cent or $19.832 million to $71.280 million. According to the Director, this increase is due to the strong demand for concrete in all territories as positive economic growth prevails, giving rise to major new construction projects. In addition, the residential housing sector has shown appreciable growth in Barbados, while in St. Maarten construction in the hospitality sector continues to grow.

Operating Profit also rose substantially from $2.286 million in Q1 2006 to $13.569 million in Q1 2007, an increase of $11.283 million. Additionally, Finance Costs were reduced by a considerable 30.76 percent or $0.422 million to close the quarter at $0.950 million. As a result, Profit Before Tax increased an outstanding $11.705 million from $0.914 million in the first quarter of 2006 to $12.619 million in 2007.

Ultimately, Profit After Tax, as previously mentioned, amounted to $9.230 million, up by $8.810 million. This increase was also due to a decline in the Group’s Effective Tax Rate from 54.05 per cent in Q1 2006 to 26.86 per cent in Q1 2007.

The Directors are confident that the Group is well poised to sustain this performance. Going forward, the management of RML will continue to focus on maximizing sales volume from the strong market demand, whilst improving cost efficiencies.

Based on these results, WISE is revising the forecasted EPS upwards to $2.25 for fiscal 2007. At the current price of $6.10 and this forecasted EPS, RML is trading at a very attractive price/earnings ratio of 2.71 times. While we recommend a BUY on this share, we remind clients that approximately 80 per cent of the issued share capital of this company is held by substantial interests. As such, acquiring this share will most likely by difficult.

Nancy Chen
WISE Equity Research Team