Much has been expected of Caribbean Producers (CPJ), but it disappointed investors with lower profits in the second half of the fiscal year to June, with profit of $95 million in the June quarter, versus $140 million in 2013.
The March quarter numbers had sent the signal of a lousy second half, with virtually flat profits of $124 million, in contrast to a vibrant increase of 82 percent in the December quarter of J$118 million, up from $65 million in 2012. Revenues climbed by 34 percent in the quarter compared with 2013 to reach J$2.57 billion and 24 percent in the prior quarter. Revenues in US dollars, climbed 13.37 percent to hit US$78.64 million for the 12 months to June.
Administrative and selling cost rose by 17.7 percent year over year, faster than the growth in revenue. Part of the increase management states, is due to some reorganizational restructuring, which contributed to short term increased cost during the period.
Gross profit in US dollar climbed 14.67 percent but gross profit margin improved slightly to 40.9 percent for the full year, from 40.2 percent in 2013.
Management attributes the performance to competitive pricing pressures and changes to the product mix, they also speak to new products now being distributed and the startup of their St Lucian operation, during the September quarter.
The stock has pulled back, to sit at $2.35 which is about where it should be, based on valuation in the local market at this time. While new products should add to revenues, the performance of the company in the last half of the fiscal year, suggests some amount of caution. The next set of quarterly results will be important to glean clearly, if the recent set back is over. Accordingly the stock is being considered a watch for the time being.
CPJ has managed to reduce the poor debt to equity ratio, with borrowed funds now at US$24.7 million, versus $24.5 million in 2013, and equity now at US$16.2 million, up from US$13 million at the end of June last year. By the end of this current fiscal year, they should be close to a ratio 0f 1:1 with the likelihood of continuing profitability, close to that of the past year’s figures.
Archives for September 2014
Caribbean Producers disappoints – Watch
Blue Power Q1 profit flat, upturn ahead
Sales at Blue Power, for the quarter to July, were $278 million, an increase of 13 percent over the $246 million for the same period in 2013. The Lumber division enjoyed a 5 percent increase, from $174 million to $185 million, while sales for the Blue Power division, jumped impressively, by 33 percent, from $70 million to $93 million.
The Lumber division in the 2013 quarter, benefited from significant sales to one client, which was not repeated in the recent quarter.Blue Power recorded profits of $29 million, compared to $30 million in the same period last year. The Lumber division delivered $6 million of the overall profit, compared to $18 million in 2013, while the Blue Power division made $23 million versus $12 million in 2013. Earnings per stock unit, moved down slightly from 53 cents to 51 cents. IC Insider forecast earnings of $165 million or $2.90 per share, for the year ending April 2015, and $3.40 for the following year, which will see taxes being applied at half the regular tax rate for companies.
The Lumber division’s profit was negatively affected by bad debt provisions made, for receivables which were due for over 90 days. The provision pushed administrative and other costs to $40.35 million, up $12.4 million, from the $28 million in 2013.
Gross profit margin improved with the higher sales from the Soap division, moving to 31 percent for the latest quarter versus 28.4 percent in the 2013 period, and 26.4 percent, for the twelve months to April this year.
Blue Power had no loans the end of July, but had cash and bank balances of $156 million, with the forecasted profit, the amount should increase to well over $250 million by the fiscal year end. Current assets stand at $460 million and current liabilities $65 million. The latest results has confirmed the stocks Buy Rated stamp of approval.
Profit up strongly at D&G, more expected
Desnoes & Geddes brewers of the world renowned Red Stripe Beer, reported impressive results for the year to June 2014, with pretax profit jumping 96 percent, including a gain on sale of shares, in two overseas breweries in the Caribbean. Excluding this one off gain, profit before tax would have been up by a still respectable 45 percent to $2.7 billion, instead of the $3.68 billion reported.
Profit after tax ended at $3.15 billion, but excluding the gain from the shares, it would have been $2.2 billion or 80 percent up, instead of the 160 percent increase the net result shows. Net profit benefited from a reduction in the tax rate from 30 percent in 2013 to 25 percent in 2014, in addition, other income that was negative in 2013 at $130 million, was a positive $232 million in 2014, a swing of $360 million. Profit before tax amounted $928 million for the June quarter versus just $371 million in June 2013 quarter and after tax credit, $1 billion, compared with only $161 million in 2013.
Gross profit margin improved slightly from 50.13 percent in 2013 to end at 50.38 in 2014. In 2012 gross profit margin was at 44.86 percent. The 2014 performance is still well off the 60 percent achieved in 2006. During the 2014 financial year staff cost was cut due to redundancies, from $2.25 billion in 2013 to $1.74 billion for 2014, a reduction of $500 million, in addition the company spent $311 million in making staff redundant in 2013. These two items resulted in more than $800 million cost reduction in 2014 versus 2013.
Revenue for the year climbed 10.6 percent to $14 billion and in the final quarter it grew by a stronger 17 percent, to $3.84 billion, from $3.3 billion in 2013. Foreign sales declined by 7 percent for the year to June, to end at $1.8 billion while local sales climbed 13.75 percent to $12.3 billion. The US market declined the most, falling from $566 million to $300 million. Royalties earned declined during the year to $525 million, from $556 million.
While earnings per share in the audited accounts is $1.12, earnings from ongoing operations is 77.6 cents for 2014. IC Insider forecast earnings of 90 cents per share for the current year ending June 2015, with the stock price under $5, the potential exists for investors to make a nice capital gain down the road and collect tidy dividend payments while they wait.
D&G has embarked on a brewery consolidation “project which will configure the brewery and process layout to ensure more cost effective production. By closing down the cellars and moving from horizontal to vertical processing vessels, we will reduce operating cost” management said in a report to shareholders. The company in April commissioned a combined heat and power plant which is expected to reduce energy cost.
At year end cash funds stood at $1.79 billion, current assets amounted to $4.6 billion and current liabilities at $2.6 billion, there were no loans on the books as of June.
The stock which was placed on the Buy Rated list months ago, remains there.
