Dolphin Cove’s Earnings Hit Rough Waters

• After multiple delays in publication, Dolphin Cove Limited (DCOVE) released its Audited Financial Statements for the year ended December 31, 2025 (FY2025), reporting a net loss of US$2.34Mn, a sharp reversal from the US$1.83Mn profit recorded in FY2024. The deterioration was driven by lower revenues on the back of hurricane-related disruptions, along with a substantial impairment charge against related party balances amid the ongoing bankruptcy proceedings involving its parent company.
• Hurricane Melissa, which forced the temporary closure of several tourism properties and Dolphin Cove locations, along with a decline in visitor arrivals, contributed to the decline in the company’s topline. Revenues declined by 14.5% to US$13.09Mn, reflecting contractions across both major revenue streams. Programme revenue fell by 21.3%, while ancillary services revenue decreased by 7.9%. Management noted that the storm significantly disrupted hotel occupancy, cruise passenger arrivals, and park operations, particularly in Western Jamaica.
• Although direct costs declined by 11.9% to US$2.08Mn, the reduction was insufficient to offset weaker revenues, resulting in gross profit falling by 14.9% to US$11.01Mn. Gross margins also fell modestly to 84.1% from 84.6%. Additional pressure came from losses on the disposal of property, plant and equipment and live assets, which together amounted to US$0.23Mn during the year.
• That said, operating expenses were relatively stable, decreasing by just 1.1% to US$9.79Mn. Selling expenses provided some relief, declining by 10.5%, while administrative and other operating expenses increased modestly by 0.6% and 4.7%, respectively. This, however, was not enough to offset the lower topline.
• Furthermore, a significant non-cash charge emerged during the year as the company recognised a US$2.82Mn impairment provision against related party receivables. The provision primarily relates to balances owed by affiliated entities within the Dolphin Discovery group. It followed Chapter 11 bankruptcy filings by Controladora Dolphin, S.A. de C.V., the DCOVE’s intermediate parent and the ultimate parent company, TDC Leisure Investments Holdings LLC. It also included a full provision against funds advanced for a proposed Dolphin Encounter Park in St. Lucia, where no meaningful progress was made during the year. Given the uncertainty surrounding the proceedings and the recoverability of balances owed by related parties, management elected to increase provisions against these receivables. Consequently, the company moved from an operating profit of US$2.94Mn in FY2024 to an operating loss of US$1.80Mn in FY2025.
• Looking ahead, management expects operating conditions to improve throughout 2026 as tourism activity normalises and hurricane-related operational disruptions subside. That said, a key downside risk to this outlook is the possibility of continued weakness in tourism demand if the conflict in the Middle East becomes protracted, leading to sustained elevated fuel costs and broader inflationary pressures. Higher travel costs and reduced consumer discretionary spending could dampen visitor arrivals and delay the pace of recovery in the company's operating performance. Furthermore, the company remains exposed to uncertainties regarding the Chapter 11 proceedings involving its parent group and the ultimate recovery of related-party balances.
• DCOVE’s stock price has declined by 15.2% since the start of the year to close at $10.18 on Wednesday, June 3, 2026. At this level, the stock trades at a price-to-book (P/B) ratio of 0.9x, which is below the Junior Market Others Sector average of 1.7x.

(Sources: Company Financials & NCBCM Research)