Aug 2007 Financial News

WITCO Releases Half Year Results

Aug 14, 2007

Results for the Half Year Ended June 30, 2007

For the Half Year Ended June 30, 2007, West Indian Tobacco Company Limited (WITCO) reported Earnings Per Share (EPS) of 94 cents, up 10.07 per cent or 9 cents on the corresponding EPS for HY06. Q207 on Q206, the Company’s EPS was up 11.22 per cent or 5 cents from 43 cents to 48 cents.

Turnover for the Half Year under review was $343.29 million, an increase of 13.04 per cent or $39.60 million on the comparable figure in FY06. Q207 on Q206, Turnover was up 16.45 per cent or $28.03 million. However, Excise for HY07 was $104.76 million, up 20.32 per cent or $17.69 million from $87.07 million in HY06. Thus, Net Turnover ended the period at $238.53 million, an increase of 10.11 per cent or $21.91 million on the corresponding period in FY06. Q207 on Q206, this figure was up 12.50 per cent or $13.44 million from $107.48 million to $120.92 million.

Cost of Sales totaled $68.88 million, up 6.57 per cent or $4.25 million on HY06, while Q207 on Q206 this figure rose 5.87 per cent from $32.06 million to $33.95 million. Thus for HY07, WITCO’s Gross Profit was $169.65 million, up 11.62 per cent or $17.66 million on the corresponding period in FY06.

Other Operating Expenses was the largest expense for the half year period and totaled $31.34 million, up a considerable 17.98 per cent on the comparable half year period in FY06. Administrative Expenses was the second largest and amounted to $27.48 million an increase of 10.88 per cent on the corresponding period in the last financial year, while Distribution Costs stood at $4.05 million, up 11.02 per cent on the same figure for HY06. Q207 on Q206, these figures rose by 14.78 per cent, 38.24 per cent and 15.99 per cent, respectively. Operating Profit for the period under review was $106.78 million, up 10.09 per cent or $9.78 million on HY06’s Operating Profit of $96.99 million.

Interest Income for HY07 was $0.82 million, up 30.16 per cent on HY06, while Interest Expense stood at $1.61 million, up 21.29 per cent or $0.28 million on the same period in the last financial year. Thus, Profit Before Taxation ended the period at $105.99 million compared to $96.29 million for HY06, an increase of 10.07 per cent.

The Effective Tax Rate for the period under review was 25.64 per cent compared to a similar Tax Rate of 25.65 per cent. As a result, Profit After Taxation stood at $78.81 million for HY07, up 10.07 per cent or $7.21 million on the same period in the last financial year.

The Chairman has stated that the growth was driven primarily by improved sales performance in the domestic market. The Board of Directors has approved a second interim dividend of 34 cents per share payable on August 22, 2007 to shareholders of record at the close of business on August 15, 2007.

WITCO last closed at a price of $26.61 on the local exchange. At our forecasted EPS of $2.00 and the current price this share is trading at a price to earnings multiple of 13.31 times. Given that this share usually trades between 14 to 15 times, we recommend a HOLD at this time.

Gia Singh
WISE Equity Research Team