Dolphin Cove expects to benefit from currency decline
Marine park operator Dolphin Cove Limited, which makes most of its revenue in foreign currency, expects the downward swing in the value of the Jamaican dollar to be beneficial to the company's stock.
Chairman and CEO Stafford Burrowes, who also announced that the company's marine park in St Lucia should become operational by December, indicated that DCOVE would likely be of interest to investors seeking to safeguard the value of their holdings.
"I hate to say it, but we benefit from the devaluation of the dollar because more than 90 per cent of our earnings are in US dollars," said Burrowes at the company's at the annual general meeting in Kingston on Monday.
The Financial Gleaner asked Burrowes about the flat performance of the stock since January and whether it was of any concern, to which he responded that the currency depreciation would improve its attractiveness.
The JMD depreciated by 2.5 per cent during the month of June alone. It started the month at $128 to US$1 then depreciated to $131.28 as of Monday.
"You probably will see people wanting to hedge against devaluation buying our stock," the chairman said at the AGM.
DCOVE shares closed at $16 on Monday, having started the year at the same price. Also the stock lost 6.9 per cent of its value in the quarter and 7.4 per cent in the month of June.
The company has a positive outlook for 2018, saying expected overall growth in tourist visits should result in more traffic to its parks.
"The island is on track to welcome 4.6 million visitors for 2018 which is yet another record. We suffered slightly from the State of Emergency this year but we are pulling out of it," he said. "I do not think it will affect us at the park tremendously."
The first quarter results suffered a setback which Dolphin Cove attributed to the State of Emergency in St James, the home parish of Jamaica's tourism capital Montego Bay. Specifically, the company made US$10 million profit after tax on US$3.85 million in revenues for its March 2018 quarter, down from US$1.3 million net profit and US$4.3 million in revenues a year earlier. During the quarter the volume of visitors from its two main source market segments, hotels and cruise ships, decreased by 20 per cent and 5 per cent, respectively, which led to declines in revenue and profits.
Burrowes said the marine attraction has already spent most of its capital expenditure budget for this financial year. The funds were spent on expansion of the pool in Ocho Rios, upgrading the dining facilities at Lucea, and developing its planned attraction at the renovated Puerto Seco Beach in Discovery Bay, Ann.
"This year, I do not see much more expenditure. Next year we want to look at maybe expanding by opening more parks. So we have a plan going forward," he said without divulging details.
In financial year 2017, the company invested US$2 million across the region, most of which was spent in Jamaica.
Dolphin Cove, which is nearly 80 per cent owned by the Dolphin Discovery Group of Mexico, operates various
marine parks and adventure programmes across the region, including Turks & Caicos, St Lucia and the Cayman Islands.
"St Lucia is a good destination for us because there hotel business is expanding rapidly. The hotels have a higher level income. It is a struggle down there to get everything organised but it is going to work," said Burrowes, adding that the new park there should be operational by December.