Caribbean Cream, the ice cream maker, is making headways as profits made big jump with an increase of 5,000 percent to reach $11 million in November 2013 quarter, up from only $222,000 after tax in the 2012 November quarter. Profit before tax was $3.9 million in the 2012 but as a recent Junior Stock market listing, the company is not subject to corporate tax in 2013.
The revenue improved 14 percent from $165.5 million to $188.8 million for the November quarter. However, sharp rises in electricity, depreciation, audit and accounting, security and other administrative and interest cost robbed Caribbean Cream of a better bottom line. Nevertheless, the company saw a 186 percent increase in profit before tax for the quarter, and for the 9 months, profit is up 45 percent to $28.7 million compared with $19.8 million in 2012.
Administrative cost rose sharply by 50 percent for the nine months to $80.86 million up from $54 million in 2012. This is of concern as it has risen too fast and has partially eroded the improvement generated in the revenue growth.
The company was able to squeeze more gross profit out of the operations this past year with a margin of 37 percent for the quarter, surging over the 24.7 percent of 2012 and 29.6 percent year-to-date compared to 26 percent for the same period in 2012. The latest quarter revenues reflected the lowest growth rate for the year-to-date with the February and April quarters climbing by 48 percent each and 27 percent for the July quarter.
Impressive as the growth in profit is, earnings per share was only 8 cents for the nine months, which is inadequate to drive interest in the stock even with management’s promise of continued expansion in retail outlets and growth in sales as well as the reduction in production cost due to the installation of new machinery.
Our estimate for earnings for the current fiscal year is 15 cents, and for the next year 50 cents. There is quite some room for the stock to appreciate during this year barring some bad quarterly results.
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