Big drop in Sagicor Financial profit

Sagicor Financial Company, the parent company of the Jamaica-based Sagicor Group, had a torrid 2020 first quarter, with revenues and profit collapsing. The second quarter ending June could be better as capital markets are enjoying some rebound that could reverse some of the investment losses in the first quarter.
Premium income dropped from US438 million in 2019 to $342 million and net premium Income declined to $318 million from $265 million. Profit for the quarter was impacted, mostly by the performance of the banking and investment operations, with credit impairment losses rising, from just $48,000 to $16 million and fair value changes and interest income falling from a positive contribution of $36 million to a loss of $94 million. The net effect of the above resulted in total revenues plummeted from $516 million to $343 million in 2020. Thankfully, a sharp drop in Policy benefits and change in actuarial liabilities contributed $232 million to a reduction in expenses bringing net benefits to policyholders down to $203 million versus $348 million in the 2019 March quarter. Administrative and other expenses rose, from $131 to $153 million and resulted in a loss after taxes and results of the associated company to $25 million from a profit of $32 million in 2019.
The company ended the quarter with total assets of $8.5 billion and shareholders’ equity of $1.05 billion, down from $1.15 billion in March 2019.
The company’s shares trade on the Toronto Stock Exchange.

Limners & Bards LAB Q2 profit jumps 54%

Profit rose 26 percent before tax in the second quarter for Limners and Bards (the LAB) 20 percent for the six months to year-over-year to April this year. With no corporation taxes payable since listing in 2019, profit after tax increased 52 percent for the six months to April and 54 percent for the second quarter.
Net profit soared from $25 million in 2019 to $38 million for the quarter and the six-month net profit was up 52 percent, at $87 million from $57 million. The Lab incurred Corporation taxes of $15 million for the half-year for 2019 and $5.4 million for the 2019 April quarter. Profit for the half-year was 81 percent of pretax profit for all of 2019 when the company reported $107 million in profit before taxation, while revenues are 75 percent of the 2019 outturn. The principal activities of the company are production, media and advertising services.
Growth in profit in 2020 to date is disappointing considering the blistering pace that revenue grew by, with an increase of 44 percent for the quarter, to hit $208 million from $145 million in 2019 and 41 percent for the six months, to $471 million from $334 million in 2019. Growth over the six months for revenues “was driven by growth in media by 72.5 percent increase and agency, up 78 percent,” Steven Gooden, Chairman and Kimala Bennett, CEO, reported to shareholders in their joint commentary accompanying the quarterly. The sharp rise in revenues follows a 31 percent increase in the 2019 fiscal year over 2018.
Direct costs increased at a faster pace than revenues at 51 percent for the quarter, to $133 million and 46 percent for the six-months with expenses of $306 million. The result is a slight decline in the gross profit margin down three percentage points at 36 percent for the quarter from 39 percent in 2019 and down two percentage points, at 35 percent for the six months.
Gross profit increased by 32 percent for the quarter and 33 percent for the month at $75 million and $166 million, respectively.
Administrative and selling costs increased 44 percent to $37 million for the quarter and 55 percent year-over-year for the six-months to $79 million.
Gross cash inflows pulled in $92 million for the half-year, but after payment of dividend, loans and working capital increase $61 million remained, when added to funds on hand before cash funds ended at $352 million. Net current assets ended the period at $490 million inclusive of receivables of $119 million, down from$133 million at the end of April 2019 but up from the year-end of $84 million and cash and bank balances of $352 million. Current liabilities stand at $111 million for a healthy current ratio of 4.4. At the end of April, shareholders’ equity stood at $424 million with long-term loans and lease payable amounted to $64 million.
Earnings per share came out at 4 cents for the quarter and 9 cents for the six months. IC Insider.com is forecasting 18 cents per share for PE of 14.5 times 2020 earnings and 25 cents for 2021.
The stock traded at $2.46 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 14 times 2020 earnings.

Indies profit doubles for Q2 – but

Net profit at Indies Pharma, increased a stunning 110 percent for the second quarter to March this year, from $33 million in 2019 to $69 million. With a mere seven percent rise in the quarter, sales hit $207 million over the $193 million for the same period in 2019, but there seems to be more to this profit upsurge than meets the eye.
Sale revenues rose 11 percent for the six-month, to $401 million from $361 million in 2019 and net profit increased 36 percent to $108 million from $79 million in the prior year.
Gross profit margin improved by four percentage points for the quarter as cost of sales slipped 5 percent to $57 million from $60 million, It rose 12 percent in the half-year, just ahead of the increased revenue of $122 million, from $110 million in 2019.
Gross profit ended at $150 million for the March quarter up 13 percent from $133 million for the corresponding 2019 period and ended the half-year at $279 million up 11 percent from $251 million in 2019. Meanwhile, other income jumped 330 percent for the quarter to $150,628 and 490 percent for the six months to $848,999.
Administrative expenses declined 18 percent for the quarter, moving from $100 million to $82 million in 2020, but rose marginally, for the six months to $173 million, compared with $172 million in 2019.  Profit before exchange rate adjustments and finance cost rose 107 percent in the quarter to $69 million from $33 million and 33 percent for the six months to $106 million from $79 million in 2019.
Cash flow from operating activities brought in $138 million for the six months, but increased receivables of $74 million and purchase of fixed assets, amounting to $411 million, left the company with cash of $153 million at the end of March after loan inflows of $399 million. Shareholders’ equity stood at $875 billion, compared to $647 million at the end of March last year. Net current assets at the end of March stood at $731 million, including receivables of $367 million, cash and bank balances of $153 million and $64 million due from a director. A loan of $399 million to finance to the acquisition of a three-acre property in Ironshore, Montego Bay, for its headquarters and warehousing. Current liabilities came in at $467 million for the six months. The loan to a director represents an increase over the prior periods and is not a good signal, being sent to investors.
As impressive as the results appear, investors should be cautious. The improvement in the margin in the second quarter is out of line the year to date, with the first quarter coming at 66 percent, suggesting that some profit shifted to the second quarter from the first, most likely due to an error. There are no indications that management has come to grips dealing effectively with the expiry of drugs and the appropriate manner in booking the write-offs. While the interim figures showed the gross profit margin at the 70 percent range in the past two years, by the end of the fiscal year, it fell to 61 percent in 2018 and 63 percent in 2019 and spoiled what was looking like promising earnings, until the final numbers were in for the years. Based on the 2018 and 2019 final numbers, there is likely to be a big adjustment to inventories in the last quarter that will pull down the profit levels.
Earnings per share came out at 5 cents for the quarter and 8 cents for the six months. IC Insider.com is forecasting 15 cents per share for a PE of 19 times 2020-21 earnings.
Following the release of the recent results, the stock traded at $2.85 on the Junior Market of the Jamaica Stock Exchange and is priced well ahead of most Junior Market stocks.

Virus hits SOS in 2020 Q1

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The 2019 financial year was an excellent one for Stationery and Office Supplies, with record revenues of just over $1.2 billion, resulting in net profit rising 47 percent to $135 million over the previous year.
On the heels of the robust 2019 performance, SOS started the 2020 fiscal year on a much more somber note as the Coronavirus intervened and changed what started as a promising quarter and ended with lost sales in the final month. The Deputy Managing Director, Allan McDaniels and Marjorie McDaniels,  Chief Operating Officer in their joint report accompanying the interim results, reported that the ”revenues dropped 17 percent year over year for March, after a strong showing for the first two months of the quarter.” The directors also stated that the company “was only able to deliver on one of three planned shipments of goods for the first four months of the year to Grenada.” as a result of the disruption caused by the Coronavirus.”
SOS closed out its first quarter with sales of $337 million, a 2 percent decline versus the $343.5 million in comparative period for 2019, net profit dropped a more aggressive 24 percent, from $57.4 million in 2019 to $43.8 million in 2020.
Direct expenses were down 2 percent to $172 million, but the Gross profit margin for the quarter was constant at 49 percent in the 2020 quarter, similar to the 2019 first quarter. Gross profit closed out the quarter at $165 million down slightly from $168 million in the March 2019 quarter.
Net profit margin before finance cost declined for the March quarter to 14 percent with $45.54 million generated compared to $60 million for a 17 percent margin, in 2019.
Administrative expenses grew by 11 percent to $86 million, but selling and promotional expenses were effectively flat at $23 million. SOS realized $3.3 million profit from the disposal of property and equipment, helping to offset some of the reduced operating profit for the period.
Earnings per share
came out at 18 cents for the quarter, down from 23 cents for the 2019 first quarter. IC Insider.com is forecasting $1 per share for PE of six times earnings, but that depends on how quickly the company can recover from the dislocation to sales.
The operations generated $50 million in cash inflows and the company paid out a net amount of $22 million in increased working capital, capital expenditure and loan repayment.
Cash and equivalents rose 66 percent between March 2019 and 2020 to end at $90.4 million. Current assets increased by 8 percent to $521 million with trade and other receivables accounting for $173 million, down from $182 million from a year ago. Inventories ended at $226 million from $223 million at the end of March 2019. Current liabilities stood at $120 million down 23 percent year over year from $156 million.  Current liabilities include borrowings of $30 million and payables of $91 million. Overall total loans payable amounted to $91 million. Shareholder’s equity climbed to $640 million up from $540 million at the end of March 2019 and $597 million at the end of December last year.
The stock traded at $6 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 6 times 2020 earnings.

36% sales surge at Fontana

Sales surged 36 percent at Fontana for the March 2020 quarter, to $1.1 billion, from $885 million in 2019 and rose 25 percent for the nine months, to $3.5 billion from $2.8 billion in 2019, with the company’s new Kingston store adding to revenues for the first time.

Fontana Waterloo Square Branch just after it was opened in October 2019.

Gross profit jumped similarly to sales, with a 36 percent increase in the third quarter to $404 million from $297 million in 2019. For the nine months, gross profit was up 25 percent at $1.3 million from $1 million for the comparative 2019 period.  The surge in gross profit is mainly due to revenues generated by the new flagship location at Waterloo Square in Kingston.
The store opened in October 2019 and helped in pushing revenues up by 21 percent year-over-year for the six months to December, with gross profit increasing 20 percent. Revenues to September before the Waterloo store opening were up 9 percent. In the December quarter, revenues climbed 30.5 percent and 33 percent for the March quarter. The numbers suggest that the new store contributed approximately $235 million in the December quarter to revenues and $220 million in the March quarter. Information gleaned, indicates that this may be understating the actual numbers generated by tat store. The odds suggest that there is some cannibalizing of sales at the Barbican store by the new store.
Profit before other income and finance cost rose a healthy 67 percent for the March quarter to $57 million and grew 13 percent for the nine months to $281 million. The operating profit numbers provide a great indication of the impact of the new store is having on profit.
While gross profit advanced for the third quarter, net profit dropped 27 percent from $29.7 million in 2019 to $21.6 million in 2020. Still, it was up 15 percent for the nine months to $235 million, with the 2019 results incurring taxation of $40 million the 2020 profit is down 4 percent from the pretax profit of $244 million.

Fontana patrons lined up at the cashiers In October 2019.

The decline in profit for the quarter was mainly due to a $10.6 million unrealized loss in the value of a Unit Trust investment and a near doubling of finance cost to $25 million from $13 million in 2019. Without, the loss on the investment profit would have increased in the third quarter over the 2019 amount.
Overall, operating expenses rose 32 percent to $369 million in the quarter with “the Waterloo Square location accounting for $79.7 million of the increase”, the directors advised in a report accompanying the results. Selling and promotion cost increased by 31 percent for the third quarter, up $5.3 million, from the $17 million recorded over the comparative period in 2019. Depreciation went up by a staggering 374 percent from $21 million to $100 million for the nine months, while operating expenses increased by 29 percent coming in at $1 billion from $794 million from the prior year.
Fontana generated a gross cash flow of $335 million for the nine months, pushing cash and equivalents to $533 million. As of March 2020, current assets stood at $1.4 billion with trade and other receivables landing at $66 million; inventories ended at $751 million, an increase of $130 million over March 2019. Current liabilities ended at $846 million, including the current portion of bank loans at $52 million and trade and other payables of $655 million. The company has loans payable amounting to $221 million of which, $52 million is due during the next twelve months. Shareholders’ equity closed the period $1.45 billion, up from $1.16 billion, year over year.
Earnings per share came out at 2 cents for the quarter and 19 cents for the nine months and should end the fiscal year ending June under 30 cents. IC Insider.com is forecasting 55 cents per share for PE of 10.7 times earnings.

Profit dips at Lasco Manufacturing

The booking of the cost of stock options amounting to $185 million resulted in profit at Lasco Manufacturing falling in the December quarter, from $289 million to $203 million and the full-year results to March slipping from $1 billion in 2019 to $982 million.

Lasco Manufacturing products

Revenues in the March quarter rose 4.5 percent to $2 billion. For the full year to March, revenues grew 4.2 percent to $7.9 billion.
Gross profit margin ended at 38 percent for the fourth quarter, down slightly from 38.1 percent in 2019 but better than the 37 percent for the fiscal year and 35.4 percent in 2019.
Other income for the fiscal year climbed to $30 million, from $1.8 million in 2019, but was nearly flat at $130 million for the year to March.
Administrative expenses increased by 20 percent to $1.36 billion, while selling and promotion expenses rose 1.8 percent to $291 million for the year. The expensing of the value of stock options granted to staff amounting to $185 million, resulted in the big increase in Administrative expenses for the year.
Earnings per share ended at 23.67 cents. IC Insider.com projects earnings of 30 cents per share for the 2021 fiscal year, with the stock now trading at a PE ratio at 13 at the last traded price of $3.96.
Cash flow from operations generated $1.7 billion before working capital changes. Loans consumed $350 million in net repayment, while the company spent $196 million on the acquisition of fixed assets. Current assets stood at $4.6 billion, including cash and equivalents of $1.35 billion at the end of March and investments totaled $268 million. Current liabilities closed the year at $1.8 billion. Shareholders’ equity ended the year at $6.75 billion, with borrowed funds being just $1.05 million, of which $496 million is due for repayment during the current year and will help to cut interest costs in half.
The company paid $250 million in dividends during the fiscal year.

Profit up 21% at Lasco Distributors

Lasco Distributors reported full-year results to March, with revenues rising 7.5 percent to $19.5 billion and profit increasing 21.4 percent to $726 million. The year’s performance reflects a big recovery after profit fell 30 percent in the first quarter to June last year, and 10 percent to the end of the third quarter.
The company enjoyed an 8.24 percent rise in revenues for the March quarter to $5.2 billion, with profit after tax for the quarter at $183 million, up 961 percent from just $17 million in 2019. The quarter suffered from a fall in gross profit margin to 18.4 percent versus 19.2 percent in 2019. Gross profit was 19.4 percent for the fiscal year versus 19.6 percent in 2019.
Other income in the fourth quarter climbed to $60 million, a turnaround from a loss of $37 million in the March quarter in 2019, but was nearly flat at $130 million for the year to March.
The increase in cost for the year was kept close to the growth in revenues, with Administrative expenses rising 8 percent to $2.37 billion while selling and promotion expenses fell 9 percent to $703 million for the year.
Segment results show revenues rising 3.6 percent for the Consumer division for the fiscal year to $15.7 billion while the Pharmaceutical division jumped 27.7 percent to $3.8 billion. Segment profit jumped 36.5 percent for the Consumer division to $557 million but the Pharmaceutical division dropped by 18.6 percent to $154 million even as revenues rose strongly.
Earnings per share ended at 21.27 cents and IC Insider.com projects 38 cents per share for the 2021 fiscal year, with the stock trading at a PE ratio at 7.7 at the last traded price of $2.91, well below its sister company, Lasco Manufacturing.
Cash flows from operating resulted in the generation of $1 billion before working capital changes. Current assets stood at $6.9 billion, including Cash and cash equivalents of $1.47 billion at the end of March with current liabilities closing the year at $3.38 billion. Shareholders’ equity ended the year at $5.7 billion, with borrowed funds being just $116 million.
The company paid a dividend amounting to $151 million last year, with profit rising, a large pool of cash and virtually no borrowed debt, there is room for a big increase in future dividend payments that could make the stock an attractive dividend payer.

138 Student Living huge gains

Revenue at 138 Student Living, jumped 31 percent for the March quarter, to $289 million from $221 million in 2019. For the six months to March, the revenue jumped 69 percent to $753 million from $445 million in 2019.
138 Student Living boasted an eye-popping turnaround in its profit before interest and taxes of 262 percent for the quarter and 588 percent for the six months to March 2020. The company recorded a profit before tax and finance cost of $137 million for the March quarter and $396 million for the six months. Profit after tax ended at $87 million for the March 2020 quarter versus a loss of $45 million in the prior year’s second quarter, for the half-year, profit after tax climbed to $270 million compared to a loss of $44 million in the 2019 period.
Since reporting profit before tax for the 2017 fiscal year, the current period is the first that the company is reporting profit that suggests a full-year profit. The company noted four consecutive quarters of recording an operating profit, peaking in December 2019. Contributing factors included the decrease in operations costs, particularly utilities, increased occupancies, and variation claims relating to Irvine Hall.
There is much more than meets the eyes of the glowing 2020 performance. “Three main items positively impacted this result: (i) effective management of operating costs (primarily utilities) (ii) increased occupancies for long-term and short-term rentals and (iii) variation claims relating to Irvine Hall. The last item includes a variation claim for the full 2019 year as well as a first and second quarter claim for the year 2020. Adjusting for the variation claims, the group recorded year-to-date profit amounting to $71 million,” Chairman Ian Parsard informed shareholders by way of directors’ report accompanying the quarterly.
138SL is yet another company that fails to provide shareholders with relevant information by bundling direct and administrative expenses into just one line item on the financial report. Administrative costs fell by 17 percent for the quarter and 8 percent for the six months to March, posting figures of $153 million and $358 million, respectively. Finance cost amounted to $67 million for the quarter down slightly from the 2019 period, with $68 million and for the half-year $134 million down from $138 million.
Earnings per share came out at 21 cents for the quarter and 65 cents for the six months and should end the fiscal year higher, but profits from the continuing business will be far less than the half-year numbers indicate.
At the end of the 2020 first quarter, 138SL generated gross cash inflows of $267 million but saw receivables rising by $181 million and had a net repayment of loans amounting to $106 million leaving cash equivalents at $270 million. Current assets stood at $712 million, with receivables of $418 million. Current liabilities were $1.15 billion, including payables of $602 million. Shareholders’ equity stood at $5.8 billion, with borrowings of $4.6 billion.
138SL adjusted its operations as a result of COVID-19, which has resulted in an occupancy reduction of 25 percent in April. The Chairman noted that while they expect to see the continued impact on their revenue, the company has made necessary changes and the Concession Agreement of a 90 percent occupancy guarantee provides a meaningful buffer.
The stock traded at $6.69 on the Main Market of the Jamaica Stock Exchange, with a PE ratio of 13.5 times 2020 earnings from ongoing revenues.

Sweet sales but Bun’s profit drops

Revenues climbed 12 percent at Honey Bun for the March quarter to $454 million, but rising direct and administrative cost drove profit down 39 percent to $43 million from $71 million for the second quarter last year. 
The deterioration started with a 5 percent decline in gross profit margin for the quarter, from 50 percent to 47 percent. The six months margin remained at 49 percent, year over year, with direct expenses coming in at $239 million for the quarter and $449 million for the half-year.
The half year’s performance, although negatively impacted by the March quarter results had a 13 percent rise in revenues to $876 million from $775 million in 2019, but profit suffered a 15 percent fall, to $92 million, from $109 million for the March 2019 half year. Administrative expenses surged 26 percent, by $38 million to $184 million, well ahead of growth in revenues, negatively affecting the half-year’s profit performance, at the same time administrative expenses rose 29 percent, to $94 million in the quarter.
Selling and distribution expenses rose just 5 percent over both periods, ending at $63 million for the quarter and $129 million for the first six months. Finance costs rose to $3.2 million from $1.7 million for the second quarter in 2019 and rose 15 percent from $4 million to $4.6 million for the six months to March.
Profit before net finance cost and taxation dropped 26 percent from$73 million from the comparative period in 2019 to $54 million for the 2020 quarter and fell 4 percent from $115 million to $111 million for the half-year.

One Honey Bun’s Products.

Earnings per share for the quarter amounted to 9 cents and 20 cents for the six months, with IC Insider.com forecasting 50 cents per share for the full year computing to a PE ratio of 11 times earnings based on the last traded price of the stock on the Junior Market of $5.45.
Over the six months ended in March 2020, there was a 55 percent increase in inventories, to $94 million receivables increased by 92 percent to $119 million and cash and cash equivalents ended the period at $258 million. Current assets stood at $474 million as of March 2020 and Current liabilities stood at $200 million, including $179 million for trade payables. Borrowed funds were relatively low at $30 million and Shareholders’ equity ended at $809 million.
The company paid a dividend of 5 cents per share or $24 million versus 3 cents in 2019.

Profit soars 103% at Seprod

Seprod expected their entry into sugar production in 2009 was going to be a lucrative endeavour with their business acumen, strong capital base and vision they would succeed where others failed for decades. According to a Gleaner report in 2010, “the company not only acquired some 820 hectares of lands last year to add to its Golden Grove Sugar Company operations but also upgraded its factory. The strategy of an upgraded factory and “economies of scale” is expected to reap increased revenues for the group, according to Group Chairman Paul Scott.” Shortly after they acquired the business, the directors were told they were undertaking a huge gamble and would have been better off if they had left it alone. Ten years later, with billion-dollar losses, Seprod finally stopped the costly experiment.
Having disposed of the sugar manufacturing operation, the company slashed its sugar losses by 89 percent from $139 million for the first quarter in 2019, to just under $15 million for the quarter just ended. The reduction in the sugar operating losses helped the net profit to soar 103 percent to $633 million, up from $312 million from the first quarter of 2019 that includes net loss from discontinued operations of $139 million. So strong are the first-quarter numbers that the profit amounts to 65 percent of the full year’s profit in 2019. Earnings per share came out at 86 cents for the quarter.
First-quarter revenues increased six percent to $9.14 billion over the $8.6 billion for the comparative period last year. Manufacturing segment revenue was up 17 percent to $5.2 billion compared to March 2019, while distribution revenues increased 14 percent to $6.9 billion. Segment profit for the Manufacturing segment grew from $682 million to $1.14 million and that for the distribution segment increased from $156 million to $418 million. Export sales rose 13 percent over last year’s first quarter, accounting for $405 million in revenue or 4 percent of the total revenue.

Some of Seprod’s products.

The net profit increase for the quarter comes on the heels of an 8 percent decline in profit for the year ended 2019, dropping from $1.1 billion in 2018 to $973 million, although revenue increased for the year by 45 percent to $32.7 billion, resulting from acquisition and mergers mostly from businesses within the Musson Group.
For the quarter, direct expenses rose a modest one percent coming in at $6.4 billion and other operating expenses increased two percent to $1.78 billion year over year and finance costs fell three percent, from $287 million at the end of March 2019 to $280 million at the close of 2020 first quarter.
Seprod raked in $1.1 billion in operating profit for the quarter, a 32 percent increase over the $835 million in the corresponding period to March 2019. Operating profit margin rose 20 percent from 10 percent to 12 percent, year-over-year.
The group generated gross Cash inflows of $1 billion and ended with cash and equivalents of $1.1 billion, down from $1.48 billion at the start of the year. There was a sharp reduction in payables but a big increase in receivables since December 2019 and there was a near billion-dollar drop in inventories. Net current assets ended the period at $7.8 billion, after accounting for current liabilities of $6 billion. At the end of March, shareholders’ equity stood at $15.6 billion, but borrowings totaled $13.5 billion. Seprod paid $366 million in dividends compared to $330 million in the previous year’s first quarter.
The company executives note that COVID-19 had a “minor negative impact” on its first-quarter results and it is expected that the full effect of the pandemic on company operations will be realized in subsequent quarters. Notwithstanding, it is important to note that the Seprod group includes several companies that manufacture or distribute what many consumers deem as essential foods and pharmaceutical items, which should also factor into the company’s ability to withstand this economic shock during this period.
IC Insider.com is forecasting $4 per share for 2020, with the stock trading at $51 on the Jamaica Stock Exchange with a PE ratio of 12.8 times 2020 earnings.