Trinidad’s West Indian Tobacco company profit jumped 23.5 percent in the June quarter, to hit $127 million as revenues climbed by a smaller 15 percent, to $324 million.
For the six months to June, profit is up to $224 million from $188 million, a 19 percent spurt, from revenues of $590 million versus $556 million in 2013. For the year to June, distribution, administrative and other cost were flat at $72 million, but corporate taxes was up to $73 million from $66 million. Earnings per share came in at $1.50 for the quarter and $2.65 for the half year. Earnings for the full year to December should reach $5.70 per share. The stock last traded for $118 in Trinidad putting the PE at 21. Witco will pay a dividend of $1.20 for the June quarter and $2.18 for the six months, an increase over the payments last year of $1.04 and $186 respectively.
West Indian Tobacco is listed on the Trinidad Stock Exchange and is a subsidiary of British American Tobacco, it is a fellow subsidiary of Carreras in Jamaica to whom it is the major supplier of cigarettes.
Witco has no borrowed debt but has shareholders’ equity of $284 million and cash funds of $191 million at the end of June. All currency are in T&T dollars.
WITCO Q2 profit jumps 23.5%
Paramount’s Q4 profit jumps 108%
Paramount Trading’s profit after tax jumps 108 percent in the May quarter, on a pretax basis, it was up 73 percent while revenues came in at just 5 percent higher, for the quarter.
Profit in the May quarter after tax is $43.6 million compared with $21 million for the similar 2013 period. The improved results for the company’s final fiscal quarter, came from revenues of $199 million versus $189.6 million in 2013. The final quarter numbers are a marked improvement over those for the February quarter, when only $14.6 million in profit was reported form sales of $181 million. For the full year, Revenues amounted to $720 million from $682 million in 2013. The 2013 numbers were boosted by one off income from the amalgamation of the trucking operation – Stamina Trucking and cancelation of related party debt amounting to $21 million, this also swelled the profit by a similar amount. In 2013 the Paramount incurred taxes on profit amounting to $10 million but in 2014 there was a tax credit of $425,000.
Noticeable, was a fall in administrative cost, from $35 million in the February quarter, to only $23 million in the final quarter. Gross profit margin climbed in the three months to May to 50 percent from 49 percent in the February quarter, compared to 47.7 percent for the full 12 months. The improvement in the profit margin is a welcoming development, especially as sales have not been growing at a fast pace.
Profit is projected to come in around $125 million in 2014/15 year or around 80 cents per share from current operations. At the current price of $2.70 the stock would be priced at a PE of only 3.4 making it a buy bearing in mind that that many junior listings have been valued around 8 times earnings.
Financials| The company earned an average rate of return of 29.7 percent, on the equity of $345 million at the end of May. Borrowed funds amounted to only $52 million compared to the level of equity. Cash stands at $56 million while receivables climbed to $172 million from $146 million, a much faster pace than the increase in sales. Inventory is at $203 million and increase form $172 million at May 2013, but payables moved up from $110 million to $128 million over the same period. Inventory levels may be on the high side as a protection against the devaluation of the Jamaican dollar, the same would not be true for the increased receivables.
Grace & JPS paying shareholders
Grace Kennedy approved an interim dividend of 78 cents per stock, to be paid on September 30 to stockholders on record of September 12, the EX dividend date is September 10, 2014.
An interim dividend of 70 cents per share was paid on April 30, this year. A third dividend is expected to be paid later in the year, in keeping with the company’s policy of making three payments per annum.
Jamaica Public Service approved a Class F preference share a dividend of US$1,137,653 or 0.463287757 per stock, to be paid on August 15, 2014, to stockholders registered at the close of business on August 4, out of retained earnings. The EX-dividend date is July 30, 2014.
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New expanded production phase at Lasco Manufacturing
Lasco Manufacturing is now embarking on a new and expanded phase for their operation, now that the new plant is complete and commissioning is commencing for both the machinery and for new products.
Prior to the expansion kicking in the company saw revenues jumped 28 percent in the June quarter to $1.08 billion. Profits just about kept ahead of the results for 2013, in coming in at $141 million, a 2 percent increase. Gross profit climbed by 26 percent to $315 million from $250 million in 2013, but gross profit margin slipped slightly, from 42.2 percent to 41.3 percent. Operating expenses jumped, 29 percent to $143 million and finance cost was up to $32 million versus almost none in 2013. The bulk of the increased sales, Chairman Lascelles Chin states is from increased production of powder products, with most going into exports.
“Net Profit was impacted by temporary increase in manufacturing cost due to increased staff complement, increased overheads costs associated with the new manufacturing plant as well as increased finance and marketing cost. It was expected that these increases in operating costs would affect the bottom line. We are therefore pleased to report that the Net Profit for the quarter surpassed expectations. The company made significant marketing investment during the period in preparation for the launch of new product lines. This venture involved sponsorship of the FIFA World Cup broadcast. We have completed the construction of the dry blend beverage plant and we are in the process of commissioning the machinery and equipment. Lasco Manufacturing successfully completed construction and commissioning of the equipment for the liquid beverage plant. The plant has now commenced production,” Eileen Chin, Managing Director reported to shareholders with the release of the quarterly report. Las Chin indicated that the production of the liquid plant has just started properly, as some kinks in the system had to be worked out.
Lasco is yet to face the full impact of depreciation charge against profit form the expansion of the plant and factory as the bulk of the expansion cost, remained in work in progress at June on which no depreciation is chargeable until it is transferred to fixed asset. When these amounts are transferred to fixed assets then they be subject to depreciation, which could end up around $100 million per annum as additional charge.
Lasco fixed assets climbed to $3 billion with an increase of $800 million over the position at June 2013 and borrowed funds to $1.5 billion from $1.1 billion at the end of June last year. Accounts receivable rose from to $846 million from $641 million at June 2013. Trade payables declined by $100 million to $235 million.
The first quarter numbers are positive indicator about the future growth of the company. The only question is what will be the appropriate time to buy into the stock to ride what is likely to be an inevitable ride to much higher levels later on.
Strong growth still evident at Access
The public may get the impression that the dispute at the directorship level, may be affecting Access Financial Services badly, that is not showing in the profit numbers to date. 
On the surface, it may appear that a profit increase of only 13 percent, in the June quarter could be a by-product of the dispute, considering the robust 30 percent increase in profit in the March quarter, but that would be a wrong conclusion. Revenues grew 35 percent in the second quarter, to reach $267 million. Revenues grew from of $198 million for June 2013 and from $254 million in the 2014 March quarter. For the six months to June, revenues climbed 40 percent to $521 million up from $371 million in 2013, continuing its strong growth trajectory since the shares were listed in 2010. The revenue growth, was fueled primarily from interest on loans that climbed to $473 million from $347 million in 2013.
A $50 million increased provision for bad loans to $75 million, for the June quarter versus last year June quarter, was the major reason for the slower profit increase, in the quarter.
Access is still set to deliver around $1.50 earnings per share, for the current year. With equity of $750 million, the company is likely to enjoy a very strong 50 percent return on equity for the current year. The stock last traded at $8.97 but had a bid of $9.15, to buy a small quantity of the company’s stock. The stock is tightly held and is difficult to get at times. The company just declared a dividend of 36.5 cents per share payable to shareholders on September 1st.
Loans on the books at June is at $1.1 billion, a major jump from the $776 million at June 2013. Total borrowed funds used in the financing of the business, amount to $542 million compared to $360 million in June last year, with cash at $87 million.
Cost jumps sharply dents Republic Bank’s profit
Republic Bank’s assets grew by 6 percent for the year to June fueled by loans amounting to $26.6 billion that grew by 8.5 percent to over the same period.
The growth in assets and loans did not translate to increased profit. In fact profit was only saved from falling, by a turnaround in the result of associated companies moving from a loss of $74 million to a small profit of $7 million in the quarter and from a loss of $70 million in the nine months to a profit of $34 million. Profit before associated company results is down from $489 million to $426 million for the latest quarter and for the nine months, $1.22 billion from $1.27 billion. Net profit due to the bank’s shareholders is $308 million in the June quarter, compared with $305 million in 2013 and for the nine months, $869 million compared with $858 million. The results compare favorably with Trinidad’s Scotia Bank that suffered a 17 percent decline in profits for the 3 months to April and 7.5 percent for the six months.
Expenses| Operating expenses rose 18 percent, to reach $454 million for the quarter and 24.5 percent for the nine months, well ahead of the gain in revenues which is flat in the latest quarter but up 10 percent for the nine months. Interestingly, operating cost increased by 6.6 percent in the first quarter of the financial year. In the March quarter, Republic made a provision of $185 million writing down the value of goodwill on its investments in Barbados, resulting in a 45 percent jump in in operating expenses for the quarter. Countering the write off was a gain of $210 million, from sale of Visa Shares in the March quarter. What is clear is that results for 2014 will be around the same level as in 2013 of $1.297 billion or $7.30 per share. Republic Bank’s stock last traded at $122 each at a PE of 17.8.
Hardware & Lumber falters in Q2
Hardware & Lumber could not carry over the good results in the March quarter into their second quarter with revenue of $1.72 billion for the latest quarter to June, 1.4 percent lower than the same period last year, while gross margin fell to 22.7 percent from 26.2 percent, principally as a result of product mix the company reported.
Total revenue for the six months was $3.53 billion, an increase of 7.2 percent ahead of $3.29 billion achieved in the same period last year.
Continued improvements in other income, operating expenses and finance costs resulted in $28.5 million net profit for the quarter or $0.35 per stock unit, compared to last year’s $43 million or $0.54 per stock unit. Profit after tax for the six months was $69 million, or 29.6 percent more than the $53 million for the same period in 2013. Earnings per stock unit for the six months is $0.85, up from $0.66 for the comparative period in 2013.
“Total gross profit for the six-month period was $802 million compared to $866 million for the comparative period last year. The combined effect of variations in sales mix and higher product costs resulted in average gross margins of 22.7 percent, representing a 3.6 percent decline compared to the same period in the prior year. Profit from operations increased by 8.9 percent to $108 million, supported by an increase in other income,” Management stated.
Operating cost for the quarter was down to $377 million from $398 million in 2013 and for the six months, cost fell to $753 million from $398 million in 2013.
Borrowings fell from $453 million in June 2013 to $279 million, helping to reduce finance cost from $25 million down to $16 million for the six months. For the latest quarter finance cost was slashed from $12 million down to $7 million.
The results for the June quarter places a cloud over the prospects for the balance of the year with what could be tight economic conditions. It is quite possible that the robust performance in the March quarter may have taken sales from the second quarter.
Jamaica Stock Exchange reports small loss
Marlene Street Forrest – Manager of The JSE
The improved position was aided by a write back of bad debt provision of $3.9 million in the latest quarter. After providing for taxation, a loss of $3.2 million was incurred for 2014 year to date versus $4 million in 2013. The bottom line performance, emanated from a $10.5 million revenue increase for the quarter and $23 million for the six months.
Income from cess, fell in both quarters but fee income was up by $11 million in the latest quarter and $20 million for the half year. Of the year to date increase, staff compensation ate up $10 million, pushing this item to $87 million for the six months. Overall expenses rose by $21 million to $182 million of 13 percent for the year to date.
The stock exchange has no borrowed funds with has equity of $558 million. $380 million of its assets are in cash or other forms of investment instruments.
The virtue of this stock is not to be found in the present results. Investors should be quietly acquiring the stock ahead of what is going to be much brighter days for the exchange when trading picks up. No one knows for sure when trading will pick up, but when it does it may be too late to acquire volume at prices under $2 where the stock last traded at.
Lasco Financial profit up 20%
Lasco Financial Services is reporting improved profit of 20 percent for the June quarter this year, compared with the year ago period. The improvements emanate primarily from a 23 percent growth in revenues.
Profit for the latest quarter ended at $47.3 million up from $39.3 million in 2013, with revenues coming out at $177.57 versus $145 million. Expenses grew by 23.6 percent, due mainly to a 32.6 percent increase in selling and promotional expenses that ended at $76.4 million, in the quarter. For the last fiscal year to April, Lasco reported $176.7 million in profit, from revenues of $629 million. Profit for the current year should end up around $250 million or 20 cents per share, with increased revenues and reduced marketing cost.
Last fiscal year the company increased its marketing spend considerably over the previous year, the added cost contained the level of profits that would normally have been made. “Advertising cost this year is expected to decline from the high of last year, since we will not require as significant an investment to drive growth for this period” Jacinth Hall-Tracey, Managing Director stated in a release with the result.
The company has assets of $880 million, up from $690 million at the end of June last year and $812 million at the end of April this year.
The stock remains Buy Rated. With the present price around a $1 per share and the earnings above should put a potential price of $1.60 within reach.
Cool increased profits at Caribbean Cream
As far back as 2013, IC insider rated Caribbean Cream stock Buy Rated, but it was far too cool for the market who was not buying, they may well change the tune sooner than later as the company is reporting blowout first quarter numbers with profit up 79 percent for the quarter that ends in May.
That is only the start, as IC insider is forecasting earnings to climb to 40 cents for the fiscal year and to rise to 70 cents in 2016. For the year to February this year earnings came out at 11 cents per shares, which was up from 5 cents before. The stock last traded at 70 cents each. As the name suggest the company is in the business of production and sale of ice cream and is listed on the junior stock exchange market.
The improved profit comes against the background of at 19.5 percent revenue increase that was pushed to $252 million, from $211 million in 2013. But it was the performance in gross profit margin that made the huge difference, with a jump of 61 percent to $69 million and was more than adequate to overcome a 58.6 percent jump in administrative, selling and marketing expense that climbed to $47 million, with selling and marketing expense more than doubled. Management indicates that cost associated with the JMA Expo and development cost for the new Kremi advertising campaign, launched at the end of June, helped push cost in this area. The new packaging for the retail products was launched in May, the company reported.
Gross profit margin jumped to 37.8 percent in the quarter from only 25.6 percent in the 2013 period. The improved margin, is a continuation of gains made in the November quarter last year when it climbed to 37 percent. In the November quarter in 2012, the margin was only 24.7 percent and 29.6 percent year to date for the nine months period in 2013. For the year ended February, gross margin was 31 percent, reflecting continued gains in the February quarter.
Growth in sales has slowed and is well down on the growth rate for the February and April quarters, of 48 percent each and 27 percent for the July quarter. Improvement in the plant and new packaging, should help in moving sales to a higher level, than the slower pace over the last three quarters. If this happens then profits should jump even more than the latest figures have.
Capital Spend| During the year to May, capital expenditure amounted to $160 million and was primarily geared to improving efficiency in the factory. The expenditure included commissioning of a new cold room to facilitate holding four times more inventory than before. The next phase will provide for new and larger factory floor and the installation of a new blast freeze equipment that is expected to cut operating cost and spoilage going forward.
