Consistency is key for investors
At FOCOL Holdings Limited (FCL), consistency is the name of the game.
The BISX-listed company, from a market standpoint, has continued to drive demand from investors and reward them with dividends. This long history has helped investors get a reliable feel of what they can expect year-on-year.
Thus far, the 2012 fiscal year has proven no different.
For the third quarter ending April 30, FCL saw net earnings of $12.7 million, which represents a slight increase of 1.80 percent from the previous year. Guardian Business understands that the fourth quarter is also performing in line with 2011. FCL is therefore looking at approximately $17 million in net earnings by the end of the fiscal year.
FCL’s business model, built upon a product and service essential to everyday life, places the firm in a commanding, consistent position.
“One of the significant things is they have no debt,” said Jamaal Stubbs, senior analyst at CFAL. “When you have a company of that scale with no debt, there is a benefit to shareholders. Some might argue you should take on debt to finance growth, however. But you need growth opportunities first.”
In his last statement for the company, Chairman Sir Albert Miller said FCL continues to seek other avenues for growth in the Bahamian market. He said the results thus far are very much in line with expectations considering the “sluggish economy”.
Guardian Business understands that FCL had considered a move to purchase Texaco’s assets here in The Bahamas. That acquisition ultimately went to RUBIS, the French multinational, which snapped up a number of oil and gas assets in the region.
However, the lack of debt at FCL should place it in a strong position for expansion when the next opportunity arises.
In December 2011, the BISX-listed firm opened the Airport Service Station in Nassau near Lynden Pindling International Airport (LPIA). It also purchased the aviation rights at the LPIA for $500,000, previously owned by Shell, through its subsidiary Sun Oil Aviation.
“This purchase also included the purchase of one-third interest in the joint operating agreement at the airport. This agreement is with Esso Standard Oil S.A. Limited and Texaco Bahamas Limited. We continue to seek new opportunities in all segments of our business,” the chairman added.
For the first three quarters, FCL’s total revenues expanded by 26.47 percent, although increasing fuel costs mostly contributed to this movement.
“The margins are low,” Stubbs explained. “That is a reality of the business.”
Gross profit margins contracted over this period from 14.81 percent to 13.89 percent as of April 30, in part due to the volatility in the energy markets.
Total assets came in at $178.69 million through an injection of cash and additions of inventories, property, plant and equipment.