Louis Public Co. Ltd. (LUI) has reiterated that its forecasted 2005 profits will hover around CYP 9.5 mln, unchanged from last year on the back of a strong rebound in hotel earnings, especially from Greece.
The profit forecast was made by Stelios Kiliaris, Group Executive Director during an investor presentation held at the CSE, outlining future strategy.
Kiliaris essentially repeated a previous comment made by Louis Group Chairman Costakis Loizou, who during the presentation of the 2004 preliminary results, had made the bullish forecast regarding this year’s earnings.
“Based on our CYP 9-10 mln profit forecast, our share price is currently trading on a forward p/e ratio of 9.5 times,” said Kiliaris, adding that the price to book value was hovering around 0.60x.
He also revealed that the Louis Group currently boasts 26.000 shareholders with a 32% free float and is the fourth most traded title on the CSE.
When presenting the future prospects of the growth, Kiliaris said the target is to earn 75% of profits from overseas operations. The strategic plan focuses on growth, diversification and the strengthening of the long-term relationship with major Tour Operators.
He also noted that Louis is probably the fourth or fifth largest cruise company in the world.
CRUISES
The performance outlook for 2005 remains strong due to the commencement of new cruises from Piraeus with the sail of 3 vessels, and Genoa/Marseilles with the sail of 2 vessels, further contributing to the positive performance of cruise line operations.
Last year, the cruise division was responsible for the spectacular rebound in earnings, which jumped from CYP 2.07 mln in 2003 to CYP 9.38 mln in 2004, of which CYP 7.4 mln were generated by the cruise division.
Efforts towards the continuous renewal of ship management and chartering agreements with major Tour Operators to ensure the stability of future revenue streams, the expected positive performance of the tourism sector in both Cyprus and Greece, translating into higher occupancy rates of hotels in both countries, and lower corporate tax rates in Greece are some of the factors helping the bottom line.
Despite the above, LUI’s management anticipates bottom line profitability to remain at 2004 levels (CYP 9 –10 mln), primarily due to the reduced number of cruise vessels in operation.
Kiliaris said the Destiny, which has been fully chartered to Thomson is still undergoing a major refurbishment and will contribute only 6 months in earnings as opposed to 9 months in 2004.
Kiliaris acknowledged in response to broker questions that the group debt to equity ratio remains high, but he was quick to add that the Group plans to manage its debt by selling surplus land in both Greece and Cyprus, sell small hotel units (similar to Louis Apostolata Hotel in Kefalonia), and enter into sale and leaseback agreements (Cretan Princess) to boost cash flow and at the same time reduce debt.
LOCK ON MARKET
The fact that Louis is among the top five cruise companies in the world and has a near-lock on the local Cyprus cruise market however, does not mean that the Louis Group is following developments and not taking dynamic action to expand its activities.
Kiliaris said the Louis Group may well be described as one of the most aggressive organisations in Cyprus which faced with extreme negative developments, such as the unstable situation in Israel affecting short-haul cruises, the downturn in tourism arrivals and income as well as a general slump in Greece last year has managed to overturn the situation.
“Even now, we are contemplating to expand and diversify our presence into the very popular and newly emerging destinations such as Egypt and Bulgaria, which together with Turkey appear to be the prime destinations for UK tourists,” said Kiliaris.
He also reiterated a previous comment made by Group Chairman Costakis Loizou that the company intends to return to a dividend payment policy in the near future. The decision is expected to be taken when the final audited accounts are presented to the Board for approval, sometime in April 2005.
