Angostura profits grow but?

Angostura Holdings have been quietly making progress, with increased profit for yet another period. In its latest results to June this year, the company best known for its Angostura bitters posted gains in its bottom-line over the similar period in 2014 with an increase of 17 percent in the second quarter to $43 million and 7 percent for the half year to $63 million.
Profit for the full year should end around $175 million after taxation or 86 cents per share compared with $153 million in 2014 for an increase of 14 percent. The 2015 performance came from a fall in sales revenues and a rise in gross profit from $91 million in 2014 to $96 million in the second quarter this year but suffered a fall in the six months to $158 million from $169 million last year.
Selling and marketing expenses rose from $25.4 million to $27.1 million in the June quarter and declined from $58 million to $54 million for the half year while administrative expenses declined marginally in the quarter to $15 and $28 million for the six months.
The 2015 results show a picture of increasing improvement with the 2014 financial year showing growth in results from continuing operations before taxation of 10.8 percent to $217 million from revenues that were slightly up by just $9 million to $672 million, with a cut in administrative and selling and marketing expenses. In 2013 revenues grew 2 percent to $663 million and results from continuing operations before taxation of 16.5 percent to $196 million, which was helped by a $20 million fall in interest cost.
The group is engaged in the manufacture and sale of rum, ANGOSTURA® aromatic bitters and other spirits, the bottling of beverage, alcohol and other beverages on a contract basis, and the production and sale of food products.
The final quarter of the year is the one in with the largest sales volume and profits for Angostura. The stock trades at TT$14 on the Trinidad Stock Exchange.
While profits have been on the increase, its coming mainly from cost reduction rather than revenue growth which is not a great formula for highly profitable investing.