Acquisitions boost Derrimon’s profit

The acquisition of Woodcats International and the assumption of distributorship of the Trinidad based SM Jaleel and Company’s beverages helped to ratchet up performance for 2019 at Derrimon Trading.
Profit before tax grew 56 percent to $102 million for the June quarter and 52 percent for the half-year to $186 million. After-tax, quarterly profit was up 35 percent to $88 million and rose 32 percent for the six months to $162 million.
Sale revenues grew 49 percent in the June quarter to $3.1 billion and by 56 percent for the six month period to $6.3 billion. Cost of sales rose 51 percent in the quarter, resulting in reduced gross profit margin of 17 percent versus 18 percent in 2018 and for the half-year margins are the same as the second quarter in both years but with gross profit rising 50 percent to $1.1 billion.
Revenues from the distribution segment amounted to $3.5 billion compared to $1.7 billion in the prior year, while revenues from the retail segment climbed to $2.3 billion from $2.1 billion. Other operations accounted for $556 million for the half-year, up from $209 million in 2018.
The group’s operating profit rose 44 percent for the half-year, to $282 million from $196 million and 39 percent for the quarter to $139 million. Selling and distribution expenses soared 158 percent to $193 million for the six months and by 146 percent for the quarter to $100 million. Administrative cost rose 22 percent for the June quarter to $310 million and by 30 percent to $631 million for the half-year.  moved 30 percent from $73 million to $96 million for the half-year and by 7 percent to $37 for the latest quarter. “The major factors for the increase were due to utilities, distribution costs inclusive of trucking cost, marketing, advertising and staff costs in addition to the full refinancing of short-term debt facilities,” management advised shareholders in their comments on the interim results.

Caribbean Flavours Derrimon’s subsidiary

The group’s gross cash flow brought in $182 million but receivables jumped a sharp $427 million and inventories climbed $95 million to wipe out the cash inflows. New loan funding accounted for $208 million and helped in filling the gap, but the company still ended with negative overall cash flows of $279 million, leaving it with cash funds of $116 million at the end of the period. At the end of June, receivables ballooned to $1.6 billion with payables of $1.17 billion. Shareholders’ equity stood at $1.4 billion but borrowings dwarfed it by climbing to $1.8 billion. Current assets stood at $3.3 billion and current liabilities $2 billion.
The group’s earnings per share for the half-year was 5.9 cents compared to 4.5 cents in the prior year. IC forecasts 15 cents per share for the full year for PE of 17 times earnings.
Derrimon Trading business includes distribution of household products, beverages, detergents and bulk foods, wholesale and trading outlets and supermarket, the manufacturing of flavours and fragrances and pallets.

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