Caribbean Producers reported reduced profits for the March quarter and for the nine months to March. The company reported sales of US$50.148 million for the nine months versus US$49.8 million in 2012. The latest quarter revenues came in at US$19.4 million just ahead of US$19.2 garnered in 2012 even as they rolled items from their expanded portfolio of products. Profit after tax was US$1.26 million in the 2013 quarter and US$1.73 million in the same quarter of 2012. Year to date after tax profit is US$1.8 million versus US$2.56 million in 2012.
The company indicated in its quarterly report to shareholders that they were able to squeeze cost savings from the manufacturing operations resulting in a 14.6 percent improved gross profit amounting to US$14.5 million bettering 2012 by US$1.8 million. The gross margin moved from 25.5 percent to 29 percent for the nine months period. Selling and administrative expenses climbed 25 percent mainly due to the expansion and introduction of the meat processing plant which had to employ persons at the commencement phase. The factory was commissioned during the March quarter.
The company’s Lady Musgrave Road retail operations started in December last year and comprises a bar, super mart and a deli. Management states that the financial results are improving each month since opening.
Even as the company maintains the accounting and sales in US dollars, it seems clear that the devaluation of the Jamaican dollar over the past several months has had a negative effect on the results. The end result is that the devaluation cost is passed on to customers, which means that customers would switch to suppliers who price their goods in Jamaican dollars in their search for lower prices.
Stock Outlook | The company should go on to earn around 27-30 cents per share for the full year but should see a boost for the next year which starts in July as revenues from new operations start to come in and reduce the impact of overheads incurred.
The stock which is trading around $2 may remain anchored at these levels for a while, additionally, the company needs to seriously address the poor debt to equity and working capital ratio and not by extending the loans profile.
Caribbean Producers Jamaica Ltd | Importers of wines, liquors, and other products that are used primarily in the hotel sector. They also produce juices and now have a meat processing plant which is used for processing beef and pig’s meat. The company is listed on the junior market of the Jamaican Stock exchange.
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