Q3 profit jumps 43% for the Lab

Profit jumps 43 percent before tax at Limners and Bard trading as the Lab, with revenues up 41 percent for the third quarter. Aftertax, profit climbed 66 percent from $12.7 million to $21 million for the July quarter.
Nine months profit, rose 41 percent to $68.6 million, from $486 million, while profit rose 17 percent from $88.6 million before tax in 2019, to $107.8 million. In 2019, the Company incurred a tax charge of $19 million for the nine months. Profit for the nine months equals the 2019 full year pretax profit of $107.5 million.
The cost incurred in generating operating revenue grew faster than incomes with an increase of 46 percent for the nine months to $459 million and 48 percent for the quarter to $154 million.
Administration expenses and other costs rose 47 percent to $119 million for the nine months and by 31 percent for the quarter to $40 million. In a report accompanying the results, the chairman, Steven Gooden and Kimala Bennett, Chief Executive Officer, stated, “these included a systemization initiative and training to assist inefficiencies linked to our growth drivers and a pay-out of 50 percent of our 2019 employee profit share.

Kimala Bennett, Chief Executive Officer of The Lab.

The Company earned 2 cents per share in the quarter and 11 cents for the nine months. IC Insider.com projects the full-year earnings ta 16 cents per share, with expenses traditionally lower in the final quarter. The Company generated cash flows from operating of $116 million, up from $77 million in 2019.
Shareholders’ equity climbed to $45 million from $332 million at the end of July 2019. Current assets stand at $529 million including Cash and cash equivalents of $384 million, up from $213 million in July 2019. Current liabilities amounted to $134 million leaving strong net current assets at the end of the period. Borrowings stood at just $66 million.
The stock last traded at $2.80 on the Junior Market of the Jamaica Stock Exchange on Monday for a PE ratio of 17.5. With the current year ending a little over a month from now and IC Insider.com projecting 28 cents earnings per share for fiscal 2021, the stock can be considered appropriately priced.

Scotia jacks up credit loss by 344%

In the July quarter, Scotia Group jacked-up expected credit loss provision by 344 percent from $582 million in the 2019 period to $2.6 billion due to the impact of the 2020 COVID 19 virus has on several businesses in Jamaica and, notably, the banking sector, resulting from lower business activity since March.  

Scotia Group increased loan loss provision by 344% in the July quarter.

The big July quarter, the increase comes after the banking group hiked the provision by a hefty 264 percent to $1.77 billion in the April quarter, from $487 million in the April 2019 quarter and $895 million in the January 2020 period.
The Group’s total expected credit loss provision for loans in July 2020 amounts to $8.1 billion, while nonperforming loans amount to $4.9 billion compared to $3.8 billion last year and $5 billion at the end of April.
Loans advanced to customers stood at $221 billion at the end of July, a growth of 12 percent year over year, but declined modestly from $223 billion at the end of April, the result of the increased credit loss provisioning and no new net loans granted.
While the bank increased the provision for expected credit loss sharply in the quarter, the stabilization of nonperforming loans at the April levels may be an indication that there may be no need for heavy provisioning in the next few quarters. If the nonperforming loans hold around current levels, it could help in returning profit to more normal levels, compared to a profit after tax that declined sharply by 63 percent for the July quarter to $1.55 billion, from $4.2 billion in 2019.
At the close of trading on the Jamaica Stock Exchange, Main Market to stock gained 50 cents in ending at $50.50.

Profit up at Jamaica Broilers

Revenues dipped 5 percent at Jamaica Broilers in the July quarter to $12.6 billion from $13.26 billion in the prior year. At the same time, operating profit rose 25 percent to $851 million from $679 million in the preceding year, with profit after taxes rising moderately by 6 percent from $361 million to $383 million.

Jamaica Broilers announced a new acquisition last week

Distribution costs rose to $467 million from $445 million in the 2019 first quarter. A significant fall in administration and other expenses was the main contributor to the improved profit performance by adding $375 million to the results with a decline in cost from $2.28 billion to $1.9 billion while other income added nearly $200 million to the increase as well after gross profit had declined by $377 million to hit $2.95 billion. The fall in gross profit resulted in a gross profit margin slipping to 23.43 percent from 25.07 percent in 2019.
Provision made for corporate taxes doubled from $55 million to $112 million. Other comprehensive income net of taxes rose from $112 million to $246 million resulting from exchange differences in translating foreign operations and resulted in total Comprehensive Income Attributable to Stockholders of the company amounting to $629 million versus $473 million in 2019.
In commenting on the results, Robert Levy, Chairman and Christopher Levy, Group President & CEO, informed shareholders, “We are seeing improved corporate results due to early decision-making, aggressive cost reductions and improved FX positions. There has been a refocussing on the absolute basics to keep the company running profitably due to the challenges brought on by COVID-19. This has translated to a better and deeper foundation for the company.”

Christopher Levy – Jamaica Broilers President and Chief Executive.

Segment results show the Jamaican operation losing $1.38 billion in revenues to end at $7 billion in the July quarter, with segment result of $730 million compared to $764 million in 2019. The US segment kept up well with revenues of $5 billion, an increase of $660 million and segment results of $316 million, down slightly from $334 million in 2019. Haiti delivered $483 million in revenues, moderately down on the $530 million produced in 2019, with segment results of $11.5 million versus $19 million in 2019, while other Caribbean Operations brought in a profit of only $27 million, down sharply from $536 million in 2019.
Cash flow from operating activities netted $860 million, but it fell with a significant reduction in payables of $1.74 billion and the purchase of fixed assets amounting to $840 million. At the close of the quarter, the company utilized $480 million of the funds held at the end of April. There was a major increase in inventories and biological assets to reach $17.7 billion from $13.3 billion in 2019. The company seems to have worked off some of its excess inventory in the quarter, built up resulting from lower demand, following the outbreak of the Coronavirus that stood at $18.6 billion at the end of April. Shareholders’ equity stood at $16.6 billion, with total borrowings at $18.5 billion comprising current portions at $9.5 billion and the long-term amount at $9 million. Current assets ended the period at $27.7 billion inclusive of trade and other receivables of $4.2 billion, cash and bank balances of $5.7 billion. In comparison, current liabilities stood at $17.5 billion, resulting in net current assets of $10 billion.
Earnings per share rose to 41 cents for the quarter. The stock traded at $24 on the Main Market of the Jamaica Stock Exchange. IC Insider.com forecasts earnings of $2.80 per share for the full year to April 2021, putting the PE at 8.6 times 2021 earnings, providing the basis for the stock price to rally higher in the periods ahead.

 

Profit up 21% for Lasco Manufacturing

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Profit after taxation rose 21 percent from $282 million in the first quarter of 2019 to $342 million in 2020 at Lasco Manufacturing as revenue rose 4 percent from $1.78 billion to $1.84 billion.

Lasco Manufacturing products.

Other income fell 114 percent, from $17 million to a loss of $2 million and administrative and other operating expenses came in 6 percent lower than the comparative period in 2019 at $311 million.
Gross profit increased 8 percent from $668 million to $720 million as direct costs moved from $1.1 billion in 2019 to $1.2 billion in 2020 and gross profit margin improved by 2 percentage points to 39 percent from 37 percent.
Operating profit before finance charges rose 15 percent in the quarter to $407 million from $355 million. Finance cost declined in the quarter, to $16 million from $32 million in 2018 as the company continues to pay down loans that used in financing a major expansion to the plant.
Cash flow from operating activities netted $78 million, down 84 percent from the first quarter in June 2019, reflecting a major increase in inventories and payables.

Lasco Manufacturing checkered annual profit performance, but the 2021 fiscal year could be a record.

At the end of June 2020, shareholders’ equity stood at $7 billion with the current portion of long-term loans at $496 million and long-term loans at $506 million. Current assets ended the period at $4.8 billion inclusive of trade and other receivables of $2 billion, cash and bank balances of $1.2 billion, while current liabilities stood at $1.6 billion.
The stock traded at $3.90 on the Junior Market of the Jamaica Stock Exchange. Earnings per share came out at 8 cents for the quarter. IC Insider.com is forecasting EPS of 35 cents per share for the full year that puts the PE at 11.4 times 2021 earnings.
The company paid a dividend of 6 cents per share totaling $250 million on July 24.

Profit jumps 69% at Lasco Distributors

Profit at Lasco Distributors before tax soared by 69 percent to $317 million from a combination of higher revenues and lower administrative and other costs, but with a lower profit margin.
The company reported $187 million in profit before tax for the 2019 quarter. After-tax profit increased 57 percent from $164 million in 2019 to $258, from sales revenues that rose 8.44 percent to $4.7 billion.
Direct costs moved 10 percent from $3.5 billion to $3.8 billion and gross profit rose only 4 percent from $865 million to $896 million.
Other income jumped to $73 million from $53 million, while operating expenses fell 10 percent to $651 million from $725 million.
“During the period, there was an increase in our canned food products flagship – Lasco food, drink and pharmaceutical products. However, there has been a significant reduction in sales of beverage products due to closures of schools, hotels and social gatherings,” the Chairman, Lascelles Chin, noted in his report to shareholders.
Cash from operating activities was up to $1.2 billion from $26 million in 2019, contributing to the sharp improvement was a reduction in inventories, receivables and increased payables. At the end of June 2020,

Lasco’s ICool drinks.

shareholders’ equity stood at $5.8 billion compared to $5.4 billion in June 2019 and $5.7 billion at the end of the fiscal year ending March 2020. Total current assets stand at $7.5 billion inclusive of cash funds of $2.5 billion, receivables of $2.5 billion and inventories of $2.4 billion, while Current liabilities stood at $3.96 billion. The company has long-term borrowings of $9 million, with short term debt being a mere $76 million.
The company’s shares were listed on the Junior Market in October 2010, resulting in a tax concession of 10 years, which expires during the current fiscal year.
Earnings per share came out at 7 cents for the quarter and IC Insider.com is forecasting 40 cents per share for PE of 7.6 times earnings with the stock trading on the Junior Market of the Jamaica Stock Exchange at $3.05.

NCB releases Q3 results next week

NCB Financial Group advises that its board meeting to consider and approve the release of the nine-month unaudited financial statements at a board meeting scheduled for August 4, 2020.

NCB Financial Head Office

The company stated that further releases issued in April and May this year, they are confirming that a dividend is not likely to be declared at the meeting.
The group enjoyed a 41 percent increase in profit in its first quarter, but that fell in the second quarter, with a net profit of $13.4 billion for the first six months of the 2020 financial year. Net profit attributable to our stockholders was $9.6 billion, a 23 percent or $2.9 billion decline from the prior year. The preceding year’s results included a one off-gain of $3.3 billion from the disposal of our interest in an associate company. Excluding this gain, net profit would have increased by $408 million or 4 percent over the prior year.

34% surge in Derrimon Q1 profit

Profit jumped 34 percent at Derrimon Trading in the first quarter of the current financial year, to reach $99 million up from $74 million in 2019, following a 5.5 percent increase in revenue to $3.3 billion from $3.15 billion in the March 2019 quarter.

The significant improvement in the bottom-line compared to the slimmer revenue growth is driven by an increase that was more than twice the growth in revenues in the gross profit margin of 11 percent from 2019, resulting in gross profit rising to $613 million up. Direct expenses rose 4 percent, from $2.6 billion in March 2019 to $2.7 billion in March 2020.
The Group also recorded other income of $22.6 million compared to $5 million in 2019 that helped in driving profit for the quarter. Excluding the increase in other income net profit would have climbed by only 10 percent and much closer to the increase in sales. Other income includes gains from the disposal of plant, property rental and other inflows. Administrative expenses rose a strong 16 percent to $373 million, from $321 million in 2019, while selling and distribution expenses grew by a much more moderate 7 percent to $100 million and resulted in total operating costs of $473 million, a 13 percent increase over March 2019 of $414 million. The group provision for taxation on profit amounts to $7.6 million versus $5.5 million in 2019.

Caribbean Flavours a Derrimon’s subsidiary

The group generated cash inflows from operating activities of $153 million, working capital needs plunged the group into a negative cash position of $208 million. At the same time, loan repayment pushed the cash burn, down to $271 million, leaving cash funds at $239 million, down from $510 million at the end of December 2019. The group, however, has $246 million in investments as well.  Net current assets ended the period at $2.2 billion. Current assets increased sharply by 17 percent from $3.39 billion to $3.9 billion, with inventories rising stunning 70 percent from $1.16 billion at the end of March 2019, but down slightly from the December 2019 position, to end the 2020 first quarter at $2 billion. Receivables were down 15 percent to $1.4 billion compared to March 2019. Current liabilities were down by 20 percent to $1.7 Billion, with Payables the largest component, down 18 percent to $1.1 billion. At the end of March, shareholders’ equity stood at $1.4 billion, an 11 percent increase over March 2019, but the group continues to use a high degree of leveraging in funding its operations. Loans amounted to $2.3 billion at the end of March, with lease financing standing at $1 billion.
Earnings per share came out at 3.4 cents for the quarter and IC Insider.com forecast is for 22 cents per share for PE of 10.2 times 2020 earnings at the closing stock of $2.25 on the Junior Market of the Jamaica Stock Exchange.

Profits down as Dolphin Cove closed

Dolphin Cove listed on the Junior Market nearly ten years ago and became the darling of many investors attracted by the lure to a company that earned nearly all their income in foreign currency. For the past five and a half years, things have been tougher, with profit falling each year, but for a rise in 2017.

Dolphin Cove suffered a decline in business for sometime

Nothing has been as devastating as the impact of Coronavirus on the tourism industry that the company is highly dependent on. Jamaica closed its borders to international traffic in March and effectively shuttered the tourism sector and by extension, the various parks within the Dolphin Cove. The company also suffered over the past two and a half years from a sharp fall in the number of cruise ships docking in Jamaica.
After starting 2020 on a promising note, profit for the first quarter declined 16 percent to US$708,914 from US$842,802 in 2019. Administrative and Other Operating expenses were up marginally to US$1.5 million, from US$1.49 million while selling costs dropped 37 percent to US$643,192 from US$1 million.
Revenues declined 15 percent to US$3.3 million from US$3.9 million in 2019 with the main income from attractions, falling 19 percent from US$2.2 million to US$1.79 million while ancillary services generated US$1.5 million, 11 percent less than the US$1.7 million, in the comparative quarter in 2019.
Cost of sales declined 12 percent from US$458,000 to US$405,000 for the 2020 quarter, resulting in gross profit of US$2.89 million, down from US$3.4 million in 2019 and leading to a 16 percent decline in gross profit from US$3.43 million in 2019 to US$2.9 million.

Dolphin Cove profit sliding from 2014 onwards

“In the first two months of 2020, the company had an increase in revenue, 4.5 percent for the programmatic revenue and 11 percent for their ancillary – and a decrease in operating expenses,” the Company’s Directors reported to shareholders by way of the directors’ statement that accompanied the financials.
For the first quarter of 2020, cash generated from operating activities brought in US$1.44 million before working capital needs and capital expenditure and dividend payment and closed the quarter with cash on hands of US$802,000. The company paid a dividend of 30 cents Jamaican, to shareholders in the first quarter of 2020, costing US$803,000.  Current assets stood at US$4.4 million, with accounts receivable of US$1.8 million, inventories of US$288,940, and amounts due from related companies of US$1.25 million. Current liabilities totaled US$1.86 million with accounts payable of US$1.7 million and a current ratio of 2.4. At the end of December, shareholders’ equity equaled US$28.5 million.
Earnings per share came out at 18 cents for the quarter and IC Insider.com is forecasting 25 US cents per share earnings for 2020, with PE of 33 times based on the last traded price of J$7 on the Junior Market of the Jamaica Stock Exchange.

Carib Cement Q2 profit jumps 41%

Profit at Jamaica’s sole cement producer, Caribbean Cement rose 41 percent in the June quarter, to $521 million from $368 million for the comparable quarter in 2019 and thus reverses the poor first-quarter performance, with results that fell 57 percent.
For the six months to June, profit fell 33 percent from $1.5 billion in 2019 to $1 million for the 2020 half-year. First-quarter profit fell sharply from that in 2019 to just $483 million, with the major repairs and maintenance of the plant carried out in the first quarter compared with the second quarter in 2019. Foreign exchange losses also contributed to the fall in the profit for the March quarter.
Sale revenues rose two percent for the June quarter to $4.78 billion from $4.68 billion and for the year to date, to $9.33 billion, from $9.13 billion in 2019.
Gross profit was flat for the first half of the year at $4.1 billion but grew 13 percent in the June quarter by from $2 billion in 2019, to $2.25 billion.
Administrative and Other expenses rose three percent to $604 million in the quarter and increased nine percent in the six months to $1.25 billion. Finance cost declined 28 percent in the quarter, from $231 million in 2019 to $167 million and dropped by 29 percent from $468 million to $330 million for the six months. The company repaid $231 billion in loans for the year to June, and This will help in reducing interest expenses going forward, including the second half of the current year. Losses incurred primarily on loans denominated in foreign currency resulted in foreign currency losses of $167 million, 18 percent lower than a loss of $231 million for the second quarter of 2019 but increased 69 percent for the year to date, to $658 million from $390 million in 2019.

Caribbean Cement silos

Depreciation charge was flat at $401 million for the June quarter and was slightly down to $765 million for the half-year. Provision for corporate profit taxation, jumped 70 percent in the June quarter to $526 million and is up 34 percent for the half-year to $739 million.
Gross cash flow amounted to $2.7 billion, after repaying loans and spending $342 million on new fixed assets and working capital needs, the company ended the half with $527 in cash funds. At the end of June, current assets stood at $3.2 billion, down from $3.47 billion at the end of 2019 and current liabilities ended the period at $4.75 billion.  At the end of December, shareholders’ equity stood at $9.3 billion and borrowings at $10.35 billion compared to $13.8 billion at the end of June 2019.
Earnings per share came in at 61 cents for the quarter and $1.18 for the half-year, with a net asset value of $11 per share. IC Insider.com is forecasting a profit of $3.50 per share for 2020 and places the value of the stock at a PE of 13 times earnings and four times net asset value, based on the last price of $46 the stock traded on the Jamaica Stock Exchange.

GWest results a plea for better IPO standards

Investors in GWest public share offer were supposed to be swimming in a pile of profit by now, according to the forecast of revenues and profit included in the company’s prospectus back in 2017.
Nearly three years after the public issue, they only have a depressed stock to look at, with no sign of relief anytime soon.
That is the story of the terrible side of the stock market, with investors being lulled in by tantalizing prospects of making a killing, but fed with poor information and thinking that there are people in higher places looking out for their interest.
According to projections, the company included in the prospectus and vetted by regulators, the company should have produced revenues of $158 million for the year to March 2018 and a loss of $111 million but could only muster revenues of $66 million with a loss of $88 million. For the 2019 fiscal year, forecasted revenues were to surge to $803 million, with a profit of $166 million, with revenues projected to reach $1.19 billion in the year March 2020 and profit of fiscal year to reach $389 million. So abysmal was the forecast, the company produced revenues of just $130 million in the fiscal year 2019 and $129 million in 2020 with loss of $48 million after-tax in 2020 and $136 million in 2019.
The forecast was much more wishful thinking than one based on professional rigor. How did those projections get into the prospectus, is the question that needs an answer, more importantly, what are the lessons learned if any for preparation of future prospectuses?
Medical services were the area that should deliver the sharp rise in revenues and increased profit, instead of growing, income from this area are stuck at $75 million from $77 million in 2019 after being up from $17 million in 2017. Importantly, the revenues are far below projections and some way off from a breakeven position, which would require revenues to double to the region of $260 Million.
Importantly, the 2020 result includes $58 million in gains from the net increased value of investment property, an element of income that was not included in the forecast. Excluding that income, the loss for the company would be closer to $100 million than the amount shown above.
During the year, the company made progress in cost containment, with Repairs, maintenance and waste disposal cost falling to $19 million from $70 million in 2019. Staff cost dropped from $57 million to $46 million, while bad debts fell from $16 million to recovery of $1 million. The cost for laboratory and medical supplies fell to $13 million from $23 million. Depreciation charges jumped from $6 million to $49 million and finance cost climbed to $45 from $31 million.
The results for 2020, consumed $74 million in cash funds. Property and equipment fell from $390 million to $231 million, with a transfer to investment property that rose to $947 million after the sale of $171 million. Current assets grew from $224 million to $367 million with cash of $39 million and $148 million from, sale of investment properties and $75 million owing by the Strata Corporation. Payables rose from $183 million to $231 million.
The company’s borrowings rose to $847 million from $690 million and now exceeds shareholders’ equity of $688 million. The net asset value at March was 86 cents per share, with the stock selling at 89 cents on Friday gone.