Home' Trinidad and Tobago Guardian : February 23rd 2017 Contents FEBRUARY 23 • 2017 guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG15
Massy looks outside
T&T for growth
Despite a challenging year,
Massy Holdings Ltd (Massy)
maintained its dividend and
invested relatively greater re-
sources in external markets,
from which it expects to reap
higher future benefits. Let us now review
Massy's results for the year ended Septem-
ber 30, 2016.
Changes in financial position
Total assets rose by almost six per cent to
$11.04 billion from $10.42 billion.
Property, plant and equipment increased
from $2.18 billion to $2.37 billion or by 8.7 per
cent. Additions of $495.2 million were con-
centrated under plant and equipment ($229.3
million) and rental assets of $122.2 million.
Positive translation adjustments increased
the brought forward balance by $64.3 million.
The closing figure was reduced by depreci-
ation charges of $300.6 million and disposals
and other adjustments of $68.8 million.
Investments in associates and joint ven-
tures declined to $245 million from $310.6
million. The principal driver was the $44.9
million provision for its 20 per cent stake in an
IT services company in Costa Rica. In addition,
$5.1 million related to the transfer of Best Auto
Ltd (Volkswagen dealership) from associate to
Financial assets climbed by 17.7 per cent to
$737.7 million from $626.5 million. The loans
and receivables component declined margin-
ally to $351.1 million from $358.4 million. Held
to maturity assets rose to $173.9 million from
Meanwhile, available-for-sale assets
climbed by almost 45 per cent to $212.7 mil-
lion from $147 million; notably, the sums de-
nominated in US dollars now comprised $163.6
million (2015: $100.8 million).
Trade and other receivables declined mar-
ginally to $2.13 billion from $2.23 billion.
Here, the currency mix exhibited significant
swings; balances denominated in T&T curren-
cy climbed to $1.45 billion from $922 million
while sums denominated in either Barbados
or East Caribbean dollars contracted to $509
million from $1.05 billion.
Cash and cash equivalents climbed to $2.03
billion from $1.68 billion. The major change
was shown under cash used in financing activ-
ities, which declined by $300 million to $197.2
million from $497.4 million. This reduction
mainly reflected borrowing adjustments.
Total liabilities increased by 2.8 per cent to
$5.99 billion from $5.83 billion.
Total borrowings rose by $48.1 million to
$2.22 billion from $2.17 billion. The long-
term component increased to $1.87 billion
from $1.86 billion while the current portion
closed at $347.2 million from $304.8 million.
Of the total debt, 80.3 per cent or $1.78 billion
is denominated in T&T dollars while 15.5 per
cent ($344.2 million) is due in Barbados dollars.
Trade and other payables declined to $1.8
billion from $1.84 billion. The trade creditors
portion fell to $864.2 million from $913.8 mil-
lion while other payables rose marginally to
$931 million from $926.4 million.
Liabilities on insurance contracts rose to
$757.3 million from $690.7 million. The un-
earned premiums component fell to $366.7
million from $377.3 million; this could sug-
gest aggressive premium pricing. In contrast,
the outstanding claims component climbed to
$390.6 million from $313.4 million.
Total equity improved from $4.59 billion to
$5.05 billion. Excluding non-controlling in-
terests of $258.4 million shareholders' equity
closed at $4.79 billion from $4.35 billion.
Retained earnings ended at $4.17 billion from
$3.87 billion. Profit attributable to owners of
$498.6 million enhanced the brought forward
figure, while dividends of $205.3 million re-
duced the closing balance.
Other reserves improved from negative $266
million to negative $134 million; this was large-
ly attributed to the positive currency transla-
tion difference of $133.7 million.
Having 97,742,793 shares outstanding, each
share had a book value of $49.01 (2015: $44.55).
Revenues and profit
Revenues fell by $411 million or 3.4 per cent
to $11.53 billion from $11.94 billion. This de-
cline was concentrated under the energy and
industrial gas and automotive and industrial
Operating profit fell to $879.4 million from
$960.2 million. The core gross profit was lit-
tle changed at $3.19 billion for both periods.
However, selling general and administrative
expenses increased to $2.48 billion from $2.40
billion. In addition, other income fell to $167
million from $169.3 million.
The group is now reaping the benefits of its
2015 refinancing efforts as net finance costs
contracted to $57.5 million from $81.3 million.
Interest expense fell to $94 million from $118.5
million while interest income closed at $36.6
million from $37.2 million. This figure was
helped by net foreign exchange gains of $19
million (2015: loss of $3.0 million.)
The share of results from associates and
joint ventures moved from a positive $40.2
million to a loss of $21.5 million. This result
largely reflected the effects of the impairment
of $44.9 million on its Costa Rican investment.
These changes resulted in a pre-tax profit of
$800.5 million (2105: $919.1 million).
The effective tax rate increased to 33 per
cent from 27.3 per cent. This change reflect-
ed the adverse effects of a higher T&T tax rate
($13.4 million), higher business and green fund
levy and withholding taxes ($20.2 million) and
$21.8 million in expenses not deductible for
Consequently, net profit registered at $536.2
million (2015: $668.3 million).
After allowing for minority interests of $37.6
million, the profit attributable to shareholders
came in at $498.6 million; this reflected a 21.9
per cent decline over 2015's $638.4 million.
These results translated to EPS of $5.10
At the automotive and industrial equipment
segment, sales declined by 7.4 per cent while
pre-tax profit fell by 19.4 per cent. While lo-
cal car dealerships experienced some decline,
those in Columbia experienced growth. The
car rental businesses in several locations also
enjoyed profitable expansion.
The integrated retail segment registered
2.7 per cent revenue growth but experienced
a 6.4 per cent profit decline. This profit decline
mainly reflected the sale, in 2015, of Massy
Shipping. The newest retail outlet was opened
in Guyana and plans are in train to open a sec-
ond outlet there.
The financial services division registered a
17 per cent revenue improvement accompa-
nied by a 40 per cent profit uplift. The newly
created division combines under one umbrel-
la companies involved in general insurance,
consumer finance, remittances and credit card
Price competition was a feature of the insur-
ance operations in both Barbados and locally.
Insurance results were better in the Northern
Caribbean. Also, the insurance operation part-
nered with CIBC First Caribbean in a Bancas-
surance initiative in selected markets. Mean-
while, the money services division recovered
from setbacks earlier in the year.
The energy and industrial gases division
experienced a 33 per cent fall in revenues but
only a 13 per cent decline in pre-tax profit.
This was a reflection of the state of that sector,
particularly in Columbia and T&T. However,
operations in both Guyana and Jamaica de-
livered better results.
At the ITC division, revenues declined by
a modest 2.4 per cent while pre-tax profits
almost evaporated. The four subsidiaries out-
side T&T performed well, particularly, those
in Jamaica and Barbados. Profits were dragged
down by the provision for the Costa Rican in-
vestment and the continuing losses (about $40
million) at the Massy Internet and TV project.
In the latter's case, several cost containment
initiatives have been announced; despite this,
it seems likely they may eventually need to
partner with another company to help achieve
sustainable and profitable growth. (Sharehold-
ers will not be impressed with another dose
of red ink.)
Both Barbados and the Eastern Caribbean
and Jamaica generated notable pre-tax profit
increases; the former's contribution improved
to $287.2 million from $230.3 million while the
latter rose to $62.4 million from $50.3 million.
In 2016, capital expenditure in T&T fell to
$344.5 million from $405.5 million. Notably,
in all other jurisdictions, capital expenditure
rose by meaningful percentages.
Massy sees huge growth potential in Co-
lumbia, Jamaica and Guyana.
Share price and dividends
Massy's share price closed at $62.50 on
September 30, 2015. During 2016, the price
reached as low as $47.99 on May 20, 2016,
before closing at $54.10 on September 30,
2016. Following the recent release of its Q1
2017 results, the price closed at $53.00 last
Thursday, with zero offers to sell outstanding.
The dividend for both 2015 and 2016 was
$2.10. At the recent close of $53.00, the yield
was 3.96 per cent. That price also reflects
a P/E multiple of 10.39 and a price to book
multiple of 1.08.
For the quarter ended December 2016,
Massy's sales were marginally lower at $3.09
billion. However, EPS improved to $1.42 from
$1.38, or by nearly 3 per cent.
These results were driven by higher profit-
ability at the integrated retail division (up by
10.9 per cent), financial services (up by 12.8
per cent) and energy and industrial gases (up
by 10.9 per cent).
Notably, external sales at the automotive
and industrial equipment division declined
by 4.5 per cent to $569.5 million from $596.2
million; however, pre-tax profit at this unit
was marginally higher at almost $46 million
for both periods.
Effective February 1, 2017, Massy deepened
its Columbian footprint by paying the equiv-
alent of US$15 million (about TT$102 million)
for a group of five car dealerships located in
Medellin and Bogotá.
The automobile market in that country is
growing rapidly, as consumers continue to
benefit from road and allied infrastructure im-
provements; that location is potentially much
larger than the local market, which could be
described as being saturated.
In the next article, we will review Scotiabank
T&T Ltd 2016 results.
Links Archive February 22nd 2017 February 24th 2017 Navigation Previous Page Next Page