Published On:Thursday, June 30, 2011

By NEIL HARTNELL

Tribune Business Editor

Bahamas Waste yesterday said its net income was "50 per cent better than anticipated" for the 2011 first quarter, with the BISX-listed waste collection services provider hoping it will enjoy a "better" second-half if Baha Mar's $2.6 billion Cable Beach project and other major investments kick into full swing.

Despite a 34.6 per year-over-year net profit decline, from $192,517 to $125,986, Disa Harper, Bahamas Waste's chief financial officer, told Tribune Business that the company beat internal first quarter projections, aided by stronger-than-expected business levels from projects such as the Lynden Pindling International Airport (LPIA) construction and the downtown Straw Market.

Cleaning up the damage from the Valentine's Day fire that destroyed the Betty K dock also generated work for Bahamas Waste, and Ms Harper said: "Our first quarter was about 5 per cent better than anticipated in terms of net revenue. Historically, our first quarter is always the strongest.

"In terms of net income, we went into the year with guarded optimism, because there are still so many uncertainties. We have a lot of growth areas that are potentially non-revenue generating, until we get them to the level we want to be at."

That refers to Bahamas Waste's fledgling cardboard recycling and biodiesel facilities, which will take some time to become profit centres for the BISX-listed company. As a result, net income forecasts for the 2011 first quarter were relatively conservative.

Sales/services revenues grew by 10.9 per cent year-over-year during the three months to end-March 2011, rising from $1.85 million to $2.052 million.

However, cost of sales/direct expenses rose at an even faster rate, growing by 19.3 per cent from $1.195 million to $1.426 million. This squeezed gross profits, which dropped 8.2 per cent year-over-year to $601,825 from $655,937. A major factor behind the expenses increase was global oil prices, Ms Harper telling Tribune Business: "Year-over-year, they were up 34 per cent in the first quarter. Fuel has a significant effect on our bottom line."

Francisco de Cardenas, Bahamas Waste's managing director, said fuel prices had been the main factor continuing to impact the company's business through the first two months of its second quarter.

"Everything is tied into fuel, in particular tyres, steel and lubricants," he explained.

Turning to Bahamas Waste's ongoing initiatives designed to generate both new revenue streams and benefit the environment, Mr de Cardenas told Tribune Business the company now had "over a dozen" of its 50-strong vehicle fleet, around 15-16 trucks, running on the biodiesel it was producing.

He added that the company was producing between 500-1,000 gallons of biodiesel per week, Mr de Cardenas: "We really are just trying to do the best we can.

"Cardboard recycling is going ahead slowly but surely. Our biggest challenge is securing cardboard. It's so cheap to dispose of, people do not make the effort to collect it, and those people that are want to get paid for it.

"They don't understand it's a lot of time and money to collect, bail and export. Not only are we trying to be environmentally responsible, we're trying to make it a profit centre."

Mr de Cardenas said Bahamas Waste had exported some "600 tonnes plus" of recycled cardboard to China and India to date.

As for its medical waste treatment facility, Mr de Cardenas said business was "pretty flat", and suggested the Government now enforce a law requiring medical practitioners to properly dispose of their waste.

"We're trying to get the clinics on board and the Family Islands on board," he added. "There are still quite a number of private practitioners that haven't signed up.

"My understanding is that there's a law in place requiring all medical practitioners and physicians to dispose of their waste properly. The law was not able to be enforced in the past because there was no facility to do it, but now there is, there shouldn't be any excuse."

Mr de Cardenas said Bahamas Waste was hoping to see a third quarter boost when the $2.6 billion Baha Mar project moved into high gear, as it was providing a small amount of equipment and services to it currently. He was also cautiously optimistic about the chances of Kerzner International moving ahead with its Hurricane Hole redevelopment by year-end.

"I think there is a little bit of a rebound going on," Mr de Cardenas said of the Bahamian economy, "but it's still pretty stagnant. It's still a challenge. In some cases it's got better, and in some cases it's gotten worse.

"Once these larger scale projects start to kick-in, hopefully things will be a lot better for us in the last half of the year. We're hoping that by the end of the third quarter, these larger projects will be in full swing and see some revenue growth. This is what we thrive on, these big projects."

Ms Harper added: "We're optimistic about the last two quarters of this year. The last two quarters of last year were particularly difficult."