A tax credit of $7 million saved the Jamaica Stock Exchange (JSE) from reporting a loss in 2014 as the exchange reported lower interest income of $42.4 million versus $56.5 million and an 11.6 percent higher operating income.
The JSE encountered higher operating cost that rose 11.7 percent for the year to $384 million which is higher than the operating income of $337 million. Property expenses grew 33 percent to $83 million, wages was up by 13.5 percent to $171.7 million and professional fees by 48 percent to $35.6 million.
JSE ended up with a profit after tax of only $3 million versus $5.7 million in 2013. Earnings per share was only 2 cents but net asset value per share ended at $4. The stock last traded at $2 on the Jamaica Stock Exchange.
For the year to September the JSE reported only $8 million in profit or a mere 6 cents per share, but bad debt recovered amounted to $10 million before tax. For the year to September revenues jumped $41 million to hit $242 million. Expenses climbed for the nine months, from $247 million to $273 million or just over 10 percent, a slower pace than the income growth of 20 percent for the same period.
The JSE needs a pick-up in market activity to deliver strong top line growth while keeping cost under control to satisfy investors, that could well come in 2015.
Tax credit saves JSE
Arawak $153m impairment hits TCL
An impairment charge on its investments in the Barbados’ Arawak Cement Company, hits Trinidad Cement with a $153 million charge.
The impairment was not the only hit to profits for the year, write down of deferred tax assets hit results with $86 million, plunging the group for the full year to December, into a loss of $211 million compared with profit of $67.3 million in the prior year. The company in its report to shareholders just released states, “as a result of deteriorating market conditions the Group has impaired its investment in Arawak”.
Excluding the impairment and tax asset adjustments, the group would have reported a loss of $19 million before taxation compared with a loss of $9.7 million in 2013 December quarter and a profit of $58 million before tax compare to $39 million in 2013 for the full year.
Group revenues reached $2.1 billion, an increase of $172.5 million or 9.0 percent compared to the year 2013. Management reported that “this improvement was driven by growth in the domestic cement markets in Trinidad and Jamaica, improved concrete sales volume of 14.6 percent, and by price increases which were implemented in Trinidad, Jamaica and Guyana. Additionally, in Jamaica, CCCL was able to supply 155.4k tonnes of clinker (36.6k tonnes in 2013) to Venezuela.”
“The Company has commenced negotiations with the lenders and at the date of approval of the financial statements by the Board of Directors of the Company, the TCL Group and the majority of the lenders had reached agreement in principle on features of the loan restructuring and its key terms. In addition the Board has embarked upon a comprehensive financial and operational review of the TCL Group, which is in progress, and an overall restructuring plan for the TCL Group which seeks to secure the long-term viability of the Company is being implemented. This Plan includes the completion of the loan restructuring with the lenders, settlement of all back-pay payments to employees in Trinidad and Tobago and the injection of equity capital from the shareholders. This overall restructuring is expected to be completed by the second quarter of 2015,” the management in their reported stated.
The company rights issue which is to be priced at TT$2.90 per share is to commence on March 5 for shareholders on record as of the March 3. The stock traded at $2.50 on Monday quite some way off the $2.90 rights price.
Carib economies pressure T&T companies
Trinidadian companies are facing challenging times, the recent fall in the price of oil and gas on the world market has not made things any easier, in fact it is likely to make it worse.
Even before the collapse of energy prices profits of Trinidadian companies were pressured with little or just moderate growth. The challenges are not only in energy. Inflation in the twin island state has been running at high levels for some time with the latest figures showing 8 percent at the same time the country’s currency remained stable during the period of high price gains. While a lot of the increase was in the food category, it nevertheless would feed somewhat into general prices. While efficiencies could compensate for the higher prices, it seems unlikely with employment reaching very low levels placing pressure on labour cost as some businesses find it difficult to get persons to employ.
Against this back ground, it is not surprising that of 4 companies reporting for the December quarter, all show virtually profits.
First Citizens Bank could only turn a 2.8 percent growth in assets since December 2013 and 3.5 percent increase in loans into a 2 percent increase in profit after tax of TT$178 million from net revenues that were up to $430 from $428 million in 2013. Assets grew by 6.2 percent over September last year and loans are up 5.2 percent for the same period.
Expenses were flat at $210 million for the quarter. Earnings per share ended at 71 cents. For 2013 fiscal year, the bank earned $2.49. The stock price is now at $35.75 for a PE ratio of 14.
Massy Holdings reported a 20.6 percent jump in revenue but profit after tax rose only 6.5 percent to TT$144, that is well down on the 23 percent in the final fiscal quarter, to September last year.
Jamaica contributed less profits than in 2013 and so did Guyana but Barbados and Eastern Caribbean reported higher profits while T&T was flat and Columbia recorded profit. The business was acquired after the December quarter in 2013.
Segment profit before saw growth in Automotive and Industrial Equipment increasing by 30 percent, Integrated Retail gaining 8.8 percent, Insurance up by 14.8 percent, Energy and Industrial Gases fell 6 percent, Information, Technology and Communications declined 37.6 percent and Other Investments down 14 percent. The largest contributors to revenues and profits are Automotive and Industrial Equipment, Integrated Retail, Energy and Industrial Gases and other investments.
Earnings per share for the quarter amounts to $1.47 versus $1.39 in 2013, for the full year to September 2014, the company reported $5.69. Earnings should end around $6 for 2015. The stock price closed on Friday at $63.64, having peaked at $69.60 last year. The PE of the stock is around 11.
Republic Bank could not turn its 3.7 percent growth in assets into more than a 2 percent increase in after tax profit for the December quarter last year over the prior year even as loans grew by 9 percent over the same period. Net income grew by 4.5 percent to TT$899 million but operating expenses climbed a large 12 percent thus negating the increase in net revenues. The banking group saw a sharp reduction in the tax payable from$118 million to $97 million leaving $297 million for shareholders versus $291 million in 2013. The lower tax rate is partially due to a reduction in pretax profit from $423 million down to $408 million.
Earnings per share for the quarter ended at $1.84 versus $1.80 in the prior year and for the full year to September Republic reported $7.39 per share. The stock peaked at $122.05 last year, and has since retreated to close at $118.59 and looks set to decline some more. The stock carries a PE of 16.
Agostini’s reported profit of TT$27 million for the first quarter to December 2014 from revenues of TT$408 million compared with profit of $27 million from revenues of $378 million in the 2013 period. For the year to September 2014 revenues came in at $1.36 billion resulting on full year’s profit of $80.5 million. Earnings per share for the quart was 46 cents and $1.36 for the full year. The stock last traded at $17.60 at a PE of 13. Agostini’s is involved in pharmaceutical, personal care, food and construction product distribution.
25% jump in Berger Jamaica profit
Berger Paints Jamaica enjoyed a 25 percent jump in after tax profit, for the December quarter and 12 percent for the nine months to December, thanks to lower tax rate as profit before tax was up 16 percent and only 4.5 percent respectively.
Sales revenues were up 9 percent in the quarter, to $679 million and 6 percent for the nine months to reach $1.496 billion. Profit before tax, amounted to $84 million for the quarter, up from $72.5 million and $95.3 million versus $91 million.
After providing $21 million for tax, net profit for the quarter ended at $63 million or 30 cents per share, and for the nine months, earnings ended at $71.5 million or 33 cents per share.
At year end, cash ended at $48 million compared $41 million at the end of March, but current assets climbed to $891 million from $674 million at March and $792 million at the end of 2013. Current liabilities rose as well, to $422 million from $390 million at the end of 2013 and $290 at March last year.
Going forward, Berger should benefit from the lower price for oil on the world market as a major input into producing paints is oil based products. Profits for the year to March, should end around 34 cents. Investors should be seeing a large portion of the profit being paid out as dividend, with the stock price now at $1.56, the yield could exceed 10 percent. IC Insider forecast 54 cents per share for the 2016 fiscal year.
Berger Paints Jamaica is listed on the Jamaica Stock Exchange.
Eppley’s Profit up 31%, Q4 flat
Eppley is reporting a miniscule increase in profit after tax to reach $11.4 million for the December quarter and a 31 percent increase, to $51 million for 2014.
The company that mainly does insurance premium financing, generated a 62 percent increase in revenues for the quarter to reach $43.8 million and a 68 percent increase for the year, landed revenues at $150.7 million.
Expenses were climbing much faster than income, with interest cost climbing 196 percent in the quarter, hitting $16.9 million and 194 percent increase for the year to end at $48.7 million. The increase in interest cost squeezed margins on lending sharply as new funding received in the last quarter was only partially used to generate high yields. Administrative cost climbed 51 percent in the quarter and 50 percent for the year.
At year end, cash funds not fully deployed amounted to $519 million up from $161 million at the end of 2013. Borrowing stood at $1.08 billion and equity at $343 million. A significant part of borrowings is quasi equity, in the form of preference shares, moving borrowings from $395 million at the end of September to what it ended at, in December. Amounts lent out totalled $843 million, up from $595 million in 2013 and $689 million at the end of September.
With the increased funding, Eppley should be able to increase business in 2015 and with that profits, as such earnings could be in the range of $100 per share for 2015. Earnings per share for 2014 ended at $64.19.
The stock is thinly traded and listed on the Jamaica Stock Exchange junior market and last traded at $380.
Odeon closure to boost Palace’s profit
Carib cinema, the largest money generator for Palace
The improved profit out turn comes from flat revenues in the quarter but down from 7 percent for the six months. But profit should get a big boost with the close of the Odeon Cinema in Mandeville. The Mandeville cinema had revenues of nearly $23 million in the six months to December 2013 and $10.7 million in the first quarter of 2014, there was no income in the December quarter. Odeon also contributed over $4.6 million to losses in the half year versus $5.7 million in the 2013 period. In 2013 fiscal year the company lost $17 million or nearly $12 per share in the Mandeville operation. Some assets at that cinema was sold off, resulting in gain on sale of fixed assets of $2.3 million reflected in other income.
The segment results suggest that box office, the main revenue generator is a loss leader, as profit is coming only as result of advertising income of $23 million and other income of $5 million for the half year. This situation is unlikely to change even with higher gate receipts in the second half of the year. The segment numbers also indicate that the revenues from this area is contributing more in 2014 as percentage of box office sales than in 2013 and 2012. In 2014 the two Kingston cinemas raked in 43 percent from confectionary sales, up from 41 and 42 percent respectfully, while Montego Bay moved from 37 percent to 38 percent. For the financial year ending June 2012, the ratios were 40 percent, 43 percent and 39 percent respectively.
Going forward Palace is likely to benefit from increase in ticket prices implemented at the end of 2014 and lower utilities cost, with a fall in the price of oil and by extension electricity cost. In 2013 fiscal year utilities cost $65 million, but that would include water light and telephones, regardless there should be a few million dollars shaved off cost.Gross profit margin jumped by 35 percent in the December quarter, from 17 percent to 23 percent, partially helped by the closure of the Mandeville cinema, and improved by 12 percent, for the year to December, as the margin moved to 23 percent, from 24 percent in 2013. Administrative expenses were flat for the last quarter and up slightly for the year to date.
Interest bearing debt is down to $27 million, cash is at $70 million but working capital is only $12 million.
Profits up 28% at Jamaican Teas
The Orchid property being developed that should add to Jamaican Teas’ profits in 2015 & 2016.
Sales were helped by 91 percent jump in exports, moving from $55 million to $103 million. The increase in exports, relate mainly to supplies to the US market and is partially due to the appointment of a new Distributor for the North East USA and expect that this will result in further improvement in sales. Revenues for the group, in the prior year, included $21.75 million in Real Estate sales. Excluding these sales, revenues would be up 26 percent for the quarter. Group sales also benefited from the launch of four new products during the period. Sales for Supermarkets are up 9 percent compared to the comparative quarter, in 2013, however, profits are flat. The jointly owned Supermarket in Montego Bay showed a reduction in losses which was helped by certain actions taken to reduce cost in 2014.
Gross profit margin increased to 24.3 percent from 24 percent in 2013, while gross profit increased 16 percent to $62 million but cost rose in other areas, with marketing climbing 24 percent to $7.3 million, administration by only 4 percent to $25.5 million and finance used to generate revenues in the period, is up 14 percent to $6.2 Million.
Property Development| The group has completed construction of more than 50 percent of units in phase 1 of the development in Yallahs, St Thomas. Approximately a half of the units in the first phase have been sold, delivery to the purchasers should start in April. The group should enjoy increased profits from this development which should start reflecting in the June quarter.Borrowed funds stand at $320 million including long term debt of $228 million and equity capital at $660 million.
Barring any unforeseen developments, 2015 could produce the best financial performance far. The stock which is now at $2.55 seems to have much room for growth.
Profit up 137% for RJR in Q3
TVJ one of RJR’s subsidaries
The major improvement should be great news to shareholders who have seen the price of the stock tumble to a low of $1 per share last year, as profit melted away with sluggish revenues growth. The final quarter based on history, is likely to be a small profit at best, hence investors should not be looking at too much more in profits when the financial year ends. Earnings per share ended at 29 cents for the quarter and 32 cents for the nine months.
Gross profit margin improved in both the quarter and year to date, versus the prior year as sales grew 16 percent to $590 million in the quarter and 10 percent in the nine months, to reach $1.4 billion. Other revenue jumped sharply in the quarter due to foreign exchange gains, management states. Gross profit also increased at a faster pace than sales revenues. Cost increases were kept to 8 percent in the December quarter and 11 percent for the nine months.RJR is in a healthy financial state with cash funds amounting to $130 million, loans of $2036 million, working capital of $565 million and equity capital of $1.3 billion.
The stock last traded at $1.10 on the Jamaica Stock Exchange on Friday.
Is Carreras set for price rise?
A price increase cannot be far away for cigarettes sold by Carreras, with margins under pressure flowing mainly from slippage in the value of the Jamaican dollar taking a toll on the margins, since the last price increase in 2013.
With the squeeze in margin, sales also fell in the December quarter by 11 percent, bringing the year to date sales increase to only 5 percent. Cost slipped 1 percent in the December quarter, with a sharp reduction of 57 percent in sales and marketing cost for the quarter and 24 percent for the year to December. Administrative cost jumped 22 percent for the quarter and 16 percent for the nine months. The decline in sales may just be a normalisation in sales. In the past, there was speculation around the end of each year that the company will increase the price of cigarettes which encouraged the trade to stockpile ahead of such price movements and profit from it.
Carreras has entered into an agreement to sell the factory location that it operates from in Spanish Town to Kingston. Cost is expected to decline as a result and should ease some of the pressure on the bottom line. Those savings will be inadequate to cover the fall in gross profit suffered in the December quarter of more than $220 million.
At the end of the year the cigarette marketers, reported profit of $763 million for the quarter and $1.97 billion for the nine months to December earnings per share for the quarter amounted to $1.57 and $4.05 for the nine months and is on target to hey close to $6 per share from continuing operations. During 2013 the company booked a large gain for interest due on debt owed to them by the tax authorities. Investors should expect high dividend payment and periodic spurt in profits after the company adjust prices higher. Price has been on the move since bottoming at $32 last year and is now at $44 but seems headed higher in the months ahead as interest rates continue to fall.
59% jump in Medical Disposables’ profit
Kurk Boothe – Medical Disposables Managing Director. the company stock fell a new low on Monday, in spite of healthy profit gains.
For quarter revenues jumped to $308 million compared to $236 million for the quarter to December 2013 and in gross profit climbing 42 percent to $81 million for the December 2014 quarter. Gross profit for the nine months to December amounted to $216 million, an increase of 32 percent. Sales revenue for the nine months ended at $848 million, an increase of $183 million or 27 percent.
Expenses rose sharply for the quarter and the year to date. Sales and distribution rose 45 percent in the quarter and 20 percent for the nine months. Administrative expenses increase by a lower 29 percent for the quarter and a robust 49 percent for the nine months. Finance and o0ther cost moved up strongly for both the quarter and year to date to hit $14 million and $27 million respectively.
“The increase in expenses was driven mainly by staff related expenses, utilities, professional fees and information technology services. Staff related expenses, in particular, increased because of the strategic decision to realign the staff complement and compensation to sustain the current growth, development and expansion of the business” Kurt Boothe, General Manager stated in his report to shareholders.Profit for the quarter came in at $18.6 million as it surged by 59.4 percent compared to $11.7 million generated in 2013. Profit after tax for the nine months hits $57 million, an increase of 60 percent. Earnings per share came in at 7 cents for the quarter and 22 cents for the nine months and should end up around 30 cents for the full year.
Medical Disposables is listed on the junior market of the Jamaica Stock Exchange and last traded at $1.80.