Melissa Blows KEX Off Route and Leaves Express Catering with Slimmer Servings in Q3

  • The blowback from Hurricane Melissa continues, knocking Knutsford Express Limited’s (KEX’s) performance off route and leaving Express Catering Limited (ECL) with slimmer servings. For their third quarter ending February 28, 2026 (Q3 2026), their earnings fell 68.4% and 63.3%, respectively, relative to Q3 2025.
  • Unsurprisingly, the common driver of the decline in earnings was weaker revenues, given that both companies rely on tourist arrivals, particularly ECL, which operates several restaurants at Sangster’s International Airport.
  • ECL’s revenues declined by 48.5% year-over-year, driven primarily by a 39.7% drop in passengers accessing the post-security departure lounge at Sangster International Airport. This reflects the disruption caused by Hurricane Melissa, which reduced accommodation capacity across Montego Bay and surrounding resort areas after several properties sustained damage, limiting available room stock.
  • In line with the sharp decline in revenues, ECL’s cost of sales fell by 53.2%, but was insufficient to prevent a 46.9% drop in gross profit. Similarly, operating expenses declined by 31.7%, which was accompanied by $0.45Mn in finance income.
  • Meanwhile, KEX’s revenues declined by a more modest 8.2%, as the company was able to partially offset losses in affected areas through its diversified route network. Operating expenses were flat (-0.9%) and resulted in a 60.3% decline in operating profit relative to Q3 2025.
  • Notably, KEX and ECL’s weaker Q3 reflected wider year-to-date declines, with their 9-month earnings down 53.7% and 49.6%, respectively.
  • Looking ahead, ECL and KEX should see gradual improvement in earnings over the next few quarters, as the tourism sector recovers from the disruption caused by Hurricane Melissa. Tourism recovery would translate to a meaningful rebound in passenger and traffic flows through Sangster’s, which would be accretive to both companies’ performance.
  • KEX also expanded its fleet of coaches, positioning itself to capture the expected uplift in demand while enhancing operational efficiency and reducing downtime. However, it will need to share this demand with competitors, particularly the government-owned JUTC, which has launched its Rural Express offering, providing coach services at significantly lower prices on some of KEX’s key routes.
  • KEX’s stock price has decreased by 28.7% since the start of the calendar year. The stock closed Tuesday’s trading session at $8.18 and currently trades at a P/E of 28.2x, which is above the Junior Market Other Sector Average of 25.8x. Over the same period, ECL lost 1.7% of its share price to close at $2.44. At this price, it trades at a P/E of 11.4x, which is below the Junior Market Other Sector Average of 25.8x.

(Sources: JSE& NCBCM research)