Cable & Wireless reported a loss for the 12 months to March of $3.5 billion from $18.4 billion in revenues, down from revenues of $19 billion in 2013 but the most important news hidden in the figures is a 14 percent increase in revenues in the March quarter compared with the 2013 same quarter. This is the first major increase since the June 2012 quarter versus the 2011 period when revenues hit $4.8 billion. This year’s quarterly increase is only the third such, since calendar year 2010 and is critical when assessing the companies immediate future prospects. The loss reported by the company includes a staff separation cost of $1.5 billion, without this the loss for the year would be $1.9 billion, still large but with the growth in revenues as reflected in the March quarter losses from ongoing operations looks to be headed for oblivion sooner than later. In all likelihood Cable & Wireless should enjoy a profit from ongoing operations in the current year that should flow form cost savings and increased revenues.
The reduction in revenue for the full year flowed from a change in the manner directory income is accounted for with the company moving from the booking of revenues and cost associated with its publication to one in which it only books a franchise income. In addition, the reduction in interconnection rates resulted in lower income charged to customers for termination on other networks resulting in less gross income being booked per minute particularly on landlines calls.
C&W increased the rates for monthly rental charge and business internet services effective at the beginning of April with increases ranging from 12.5 percent for the business flat rate voice plan to 2.44 percent for business internet premier extreme, the simple average increase being 5.85 percent. The growth in revenue experienced for the March quarter which should carry over into succeeding quarters and the increase rates effected in April coupled with the likely cut in cost to flow from the staff restructuring should see the company enjoying improving bottom line numbers going forward. The gains in revenues should see revenues in the $20 billion per annum mark again during the current fiscal year and it should get even better as they now move aggressively to continue to grow the mobile base from the 705,000 as of the end of March to a much higher level, with that, revenues should continue to climb moving net results from the red to black in the not too distant future.
On the negatice side interest cost should rise as local interest rates increase over that of 2014 fiscal year with most of the funding incurring interest at government of Jamaica Treasury bill rates which has risen in recent months over that of last year.
IC Insider still holds the stock as BUY RATED.

Jamaica Producers Group (JP) continues to struggle in its fight of the economic elements buffeting the markets in which it operates as the group generated just 5 percent more revenues in the first quarter this year of $1.96 billion over the same period in 2013. Net profit attributable to JP’s shareholders was $34 million, a reduction from $85 million in the same period last year.
JP Europe division earned revenues of $1.29 billion in the March quarter, representing a 7 percent reduction from the prior year. The division earned first quarter pre-tax profits of $21 million compared to $60 million in the 2013 first quarter. JP Tropical Division significantly improved its performance relative to the prior year as the first quarter loss for the division of $55 million in 2013 was reduced to a loss of just $6 million for the 2014 quarter. The Corporate segment recorded a profit of $31 million for the 2014 quarter down from a profit of $125 million for the 2013 period.
Gross profit rose to $428 million from $389 million in 2013 but increased marketing, selling and distribution costs rose to $135 million from $126 million and administrative and other operating expenses of $313 million versus $276 million in 2013 helped to worsen operating results. Lower profit from share of associated companies and joint ventures of $68.6 million compared to $99.6 million in 2013 and an $81 million drop from gain on disposal of property, plant and equipment and investments which fell to only $17 million helped to pressure net results for the quarter lower. The performance was helped somewhat by absence of restructuring cost during the recent period, in 2013 such cost amounting to $36 million was incurred in the 2014 quarter.
The stock sells for $18.26 each and the book value is $31 each but it is difficult to see earnings for the current year reaching a level to justify the stock price at current levels.
The JP Tropical division benefitted from a 45 percent increase in revenues driven in part by the restoration of the banana and pineapple farms after Hurricane Sandy and increased sales of JP tropical snacks in Jamaica and internationally. Management expect to support the recovery of JP Tropical Foods business with a recent board decision to significantly increase the acreage under cultivation of both pineapples and cassava. These projects will be concentrated in St. Mary and will be executed over the course of 18 months. The commitment to expand agricultural activity in St. Mary will also result in increased output from the St. Mary-based snack factory and bammy production unit as well from fresh produce depots that the group is in the process of establishing in Kingston, Annotto Bay, Mandeville and Montego Bay.
Tortuga International Holdings experienced improved results relative to the prior year as a result of strong cruise ship arrivals in various Caribbean markets and the introduction of a series of new products that build on its heritage and connection to rum-based confectionary. The business was bolstered by cost-cutting initiatives in our bakery in Barbados and the strengthening of the overall sales team with new personnel.