The sharp increase in the value of the dollar and oil took its toll on the results of Louis Public Co. (LUI) with first half losses surging to CYP 5.44 mln from CYP 1.4 mln first half losses a year ago.
While turnover during the first half of 2005 increased 16.4% year-on-year to CYP 58.77 mln, most of the advance was attributed by the company to the operation of new cruise ships and hotels.
LUI reported that the sharp increase in the value of the dollar, in which most of the loans are priced, contributed CYP 1.9 mln in unrealised foreign exchange related losses compared to CYP 0.4 mln in unrealised forex profits a year ago in the same period. The group also was forced to book realised forex losses of CYP 0.2 mln in the first half of 2005 compared to realised forex profits of CYP 0.5 mln a year ago.
Total expenses also surged 27.1% y/y to CYP 50.51 mln from CYP 39.75 mln a year ago, with the company blaming its aggressive expansion drive, mostly in Greece as well as higher fuel costs. Higher losses also resulted from the fact that the group increased its stake in Louis Hotels to 88% from 55%, which resulted in higher losses, as hotels mostly lose huge amounts in the first half, but recoup the losses in the second half when the tourism season reaches its climax.
On the positive side, the group continued to reap benefits from a reduction in the corporation tax rate in Greece, but this factor alone is not expected to help the group increase its results compared to 2004 when it reported net profits of CYP 10.8 mln.
LUI announced that while it expects to report about the same in operating profits for the whole of 2005 compared to 2004, yet its net results will not be able to exceed the reported profits of 2004.
The fact that the company has not been able to hedge its fuel needs adequately means it will have to bear the full brunt of the increase in fuel costs. It remains to be seen if it will manage to win higher prices in 2006.
LUI reported net revenue of CYP 8.26 mln for the first half of 2005 compared to CYP 10.7 mln a year ago. After deducting hotel rent amounting to CYP 3.77 mln and depreciation charge of CYP 6.5 mln and CYP 4.4 mln in net finance costs, operating losses surged to CYP 6.48 mln from CYP 2.2 mln a year ago.
LUI also accounted for the CYP 1.8 mln in unrealised fx losses plus the CYP 180k in realised fx losses, forcing net losses to surge to CYP 5.44 mln from CYP 1.42 mln losses a year ago. Loss per share jumped to 1.29 cent from 0.34 cent a year ago.
On a quarterly basis, LUI reported net loss of CYP 228.000 in the second quarter compared to CYP 3.8 mln gains in Q2 a year ago.
The group also booked additional CYP 9.1 mln in forex losses as it converted its loans priced in foreign currency into Cyprus pound, which after accounting for CYP 3.3 mln in the write-off of negative goodwill and the reported loss of CYP 5.44 mln in the P&L account, meant shareholders funds’ deteriorated by CYP 11.7 mln in the first half compared to CYP 2.2 mln deterioration a year ago in the same period.
Total shareholders funds after accounting for minority interest thus declined to CYP 155.51 mln from CYP 167.31 mln end of last year, with book value per share declining to 37 cent per share, according to Financial Mirror calculations.
In the stock market, LUI’s shares fell 3.2% by mid-day Thursday to 17.7 cent.
