Thu | Jan 21, 2021

Wigton cautious despite gains

Published:Wednesday | July 15, 2020 | 12:18 AMNeville Graham/Business Reporter
Above: The wind turbines are seen in the background from the solar-panelled rooftop of the Wigton Windfarms complex in St Elizabeth.
Above: The wind turbines are seen in the background from the solar-panelled rooftop of the Wigton Windfarms complex in St Elizabeth.

Despite end-of-year gains at the Caribbean’s largest wind energy company, Managing Director Earl Barrett is cautious about the future under the weight of the COVID-19 pandemic.

The company is fairly certain of what its revenues will be, as it has fixed-price contracts to supply electricity to the national grid. And, its stock, at 82 cents per share, is performing better than when Jamaica first detected the coronavirus inside its borders.

To the extent that Wigton has concerns, it relates to its maintenance schedule, saying in a market filing that there would be “delays in the arrival of spare parts as a result of the closure of supplies’ facilities and ports in certain regions of the world”.

Wigton’s profits improved by 34 per cent to $662.7 million at year ending March, even as revenue remained flat at $2.4 billion.

The energy company’s cost of doing business was also relatively flat at just above three-quarters of a billion dollars, an outcome that Barrett said would have been different had Wigton executed the projects it has in the pipeline.

“We’re constrained by the fact that any expansion that we do has to be mandated by government’s regulatory framework. Given that inability to readily expand, we have to manage expenses to remain attractive. Those expenses include R&D,” he said.

The company spent more, however, on general administration; and that, in addition to a reduction in non-core income, ate into Wigton’s operating profit.

Finance Manager Shaun Treasure says a shift in the management of the company’s foreign exchange commitments assisted its bottom line.

Wigton ended up saving $500 million on finance expenses, which fell from $1.05 billion to $527 million – more than enough to offset the near $400-million decline in operating profit.

“That has to do with the US-dollar loan used to finance various projects. We refinanced at the end of September 2018 and so we’re seeing the full effects of the savings there,” she said.

Barrett is issuing a cautionary note one quarter into Wigton’s new financial year, saying that while Jamaica has been steady in its containment of COVID-19, and appears to have the virus under control, the same can’t be said for all overseas markets where Wigton will be looking for growth.

“Whereas Jamaica has done very well, the setbacks and caution that we’re seeing in places like the United States, Barbados and Guyana give us pause, since we were targeting the Caricom region for our growth,” he said.

“This is a very trying time and I would not pretend to know enough to give a prediction, as we speak today. It’s difficult,” he added.

In its early-July market filing, Wigton said it could not yet quantify the cost that could arise from the delays in the shipment of spares, and that its normal maintenance schedules were dependent on when supplier countries open up for business.

Barrett said border closures around the globe had put Wigton about six months behind on its plans and programmes, but that the wind energy company’s relationship with energy buyer JPS would see a steady stream of revenue flowing in as Wigton restrategies for growth.