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.
Profit down at Blue Power
Blue Power reported a fall in profit for the year to April this year with profit declining to $93 million compared to $104 million in 2013 with most of the decline coming in the last quarter, with the quarterly profit falling to $22.7 million versus $37.1 million in 2013, but the April quarter’s profit was above the third quarter profit of $15.2 million. Earnings per stock unit moved down 10 percent from $1.84 to $1.65.Management indicated the overall contraction of demand in the country and the completion of projects supported by a foreign agency in the last two years, are contributing factors to the flat sales with combined sales for the twelve months at $1.05 billion roughly the same amount as in 2013. Revenues in the last quarter came in at $268 million versus $345 million in 2013. The last quarter figure is slightly below the $263 million generated in the January quarter.
Divisional profit contributions came from the Lumber Depot division with $42 million, while the Blue Power division provided $51 million with sales rising 5 percent from $303 million to $318 million for the Blue Power division while the Lumber Depot division had a small decline of 2 percent from $745 million to $728 million.
Administrative and other expenses fell to $135 million from $136.5 million. Gross profit declined to $218.3 million from $232 million in 2013.
Financial strength| The company remains financially sound with the bulk of the $95 million funds generated during the year, going to fund increased inventories and receivables but they still held on to $136 million in cash, at the end of the financial year. Equity climbed to $431 million up from $346 million last year.
The company announced that they will be considering the payment of a dividend at a meeting to be held on Monday, June 23, 2014.
Management stated that they have undertaken a number of initiatives to contain costs and improve margins. They also indicated that they completed solar installations at two of their locations which will begin to impact positively on energy expenses during the coming year and the third energy-saving project will be completed before the end of this calendar year and its impact will be felt in the fourth quarter. For the current fiscal year earnings should come in close to that earned for the 2014 year.
JIIC Profit almost drowns
Grace Kennedy’s subsidiary Jamaica International Insurance (JIIC) was almost fully drowned by sharply increased claims losses in 2013 of $1.89 billion, up from $1.34 billion in 2012 resulting in a small profit of only $17 million as gross premium income rose from $4.18 billion to $4.3 billion and investment income rose by $130 million to $542 million, mainly due to foreign exchange gains of $114 million that increased by $65 million. In 2012 the company made profit after tax of $180 million.
During the year the company reviewed its claims provisioning and increased the provision for claims in the third quarter of the year resulting in losses up to the quarter.
Profit in 2013 fell even as administrative cost was held steady at $813 million in both years.
At year end JIC boast total assets of $7.5 billion a slight increase over the $7.24 billion at the end of 2012, at the end of 2011 assets stood at $6.5. Shareholders’ equity stands at $2 billion at December 2013. The asset base put JIIC just below Guardian General with assets of $8.65 billion at the end of 2013 but almost twice the size of General Accident with assets of $4.26 billion.
Operating profits up 81% at JMMB
Jamaica Money Market Brokers (JMMB) had their best year ever in the period leading up to the end of March this year, chalking up at 80.7 percent increase in ongoing earnings. The market is not impressed as the stock has been trading down on both Trinidad and Jamaica stock exchanges recently and after the posting of the results. With profit after tax coming in at $2.8 billion including a $362 million for gains form the purchase of the shares in its fully owned subsidiary which it acquired fully in 2013, the group earned $1.74 per share for the year, placing the PE at 4 times last year’s earnings and around 2.7 times IC Insider projected 2015 earnings. In 2013 JMMB reported $3.74 billion but that was helped considerably by a $2 billion gain from the acquisition of the shares of Capital and Credit Group, without that gain earnings would be just $1.7 billion in that year.
Financial & Related Services contributed profit before tax of $2.62 billion and Banking & Related Services $443 million, these are up from $1.66 billion and just $33 million respectively reported for 2013.
Revenues grow| In a year when they took over the balance of the shares not previously owned by them in Intercommercial Bank in Trinidad, revenues climbed to $15.75 billion from $12.9 billion in 2013 or a 22 percent increase but staff and administrative cost rose from $4.6 billion to $5.67 billion in 2014 for a 12.3 percent increase, well below the growth in revenues but interest cost climbed only 6 percent.
According to the audited financial statements “In the six month period ended 31 March 2014, Intercommercial Bank contributed revenue of J$794,210,000 and net profit of J$156,445,000 to the Group’s results. If the acquisition had occurred on 1April 2013, management estimates that revenue would have been J$1,436,439,000, and net profit for the year would have been J$106,459,000”.
Assets|Total assets climbed to more than $200 billion for the first time ending at $207 billion versus $167 billion at the end of March 2013. A fair bit of the growth came as a result of the acquisition of the shares in the Trinidad bank which contributed $24 billion but with equity capital of just over $18 billion there is some amount of exposure as leveraging is at a high level with customer deposits at $36 billion and repos payable of $143 billion.
JMMB has operations mainly in Jamaica, Dominican Republic and Trinidad and Tobago. This stock stills carries IC Insider Buy Rating.
JPS profit climbs
Profit at the Jamaica Public Service Company jumped in the March 2014 quarter even as revenues fell. Profit came out at US$7 million from revenues of US$262.6 million versus only US$877,000 in the 2013 quarter from revenues of US$271.7 million in 2013. Gross profit amounted to US$69.8 million down marginally from US$70.6 million in 2013.
Expenses| Operating expenses fell 8 by percent to reach US$45.7 million and finance cost declined from $17.65 million down to $14.65 million. JPS provided $3.56 million for corporation tax on the profit of $10.7 million.
Shareholders equity stood at US$336 million at the end of March and loans at $366 million.
C&W Q4 income up 14%
Cable & Wireless reported a loss for the 12 months to March of $3.5 billion from $18.4 billion in revenues, down from revenues of $19 billion in 2013 but the most important news hidden in the figures is a 14 percent increase in revenues in the March quarter compared with the 2013 same quarter. This is the first major increase since the June 2012 quarter versus the 2011 period when revenues hit $4.8 billion. This year’s quarterly increase is only the third such, since calendar year 2010 and is critical when assessing the companies immediate future prospects. The loss reported by the company includes a staff separation cost of $1.5 billion, without this the loss for the year would be $1.9 billion, still large but with the growth in revenues as reflected in the March quarter losses from ongoing operations looks to be headed for oblivion sooner than later. In all likelihood Cable & Wireless should enjoy a profit from ongoing operations in the current year that should flow form cost savings and increased revenues.
The reduction in revenue for the full year flowed from a change in the manner directory income is accounted for with the company moving from the booking of revenues and cost associated with its publication to one in which it only books a franchise income. In addition, the reduction in interconnection rates resulted in lower income charged to customers for termination on other networks resulting in less gross income being booked per minute particularly on landlines calls.
C&W increased the rates for monthly rental charge and business internet services effective at the beginning of April with increases ranging from 12.5 percent for the business flat rate voice plan to 2.44 percent for business internet premier extreme, the simple average increase being 5.85 percent. The growth in revenue experienced for the March quarter which should carry over into succeeding quarters and the increase rates effected in April coupled with the likely cut in cost to flow from the staff restructuring should see the company enjoying improving bottom line numbers going forward. The gains in revenues should see revenues in the $20 billion per annum mark again during the current fiscal year and it should get even better as they now move aggressively to continue to grow the mobile base from the 705,000 as of the end of March to a much higher level, with that, revenues should continue to climb moving net results from the red to black in the not too distant future.
On the negatice side interest cost should rise as local interest rates increase over that of 2014 fiscal year with most of the funding incurring interest at government of Jamaica Treasury bill rates which has risen in recent months over that of last year.
IC Insider still holds the stock as BUY RATED.
Dolphin boost Profit 26% – Buy Rated
In a period when many junior market companies reported lower profits, the entertainment company Dolphin Cove enjoyed a robust 26 percent increase in profit in the first quarter of 2014 with profits after tax rising to $148 million an increase of $33 million compared to the 2013 March quarter from an 11 percent increase in revenues to $436 million over the 2013 first quarter amount of $394 million. While overall revenues climbed 11 percent it was the attractions that delivered increases with an 18 percent gain as the other main income source was flat with earnings of $149 million in both the 2013 and 2014 periods. Management indicated that their investment in sales and marketing helped to produce the favourable results. The revenue gains took place in the period that did not include the Easter holiday which fell in April this year compared with March last year.
Operating expenses for the quarter was held to 8 above the prior year although there was increased Expenses in sales and marketing and devaluation of the Jamaican dollar. There was a reduction in the direct cost of dolphin attractions due to savings in the rental costs as a result of the purchase of seven previously rented dolphins, offset by additional depreciation and interest cost.
The company would have benefited from the fall in the value of the local currency as its income is denominated in United States dollars but much of its cost is ion Jamaican dollars. But the end in not yet in sight for the fall of the local currency as the country will enter the low inflows and high demand period starting in September, Dolphin stands to further benefit from this movement with income increasing and local cost kept under control.
The company’s income is substantially reliant on developments in the tourism sector as it get the bulk of its income from overseas visitors.
IC Insider’s forecast for earnings is $1.20 per share for the current year which end in December, last year the company earned 82 cents and paid out almost 50 percent of profit as dividends.
Equity stood at $1.44 billion at the end of March with borrowed funds at only $316 million.
The company owns properties in the Turks & Caicos Island and St Lucia where it intends to operate its attractions when implemented and fully operational these should add to revenues and profit down the road.
Guardian Media profit drops
Trinidad’s Guardian Media (GML) reported profit after tax that declined to $3.8 million for the first quarter this year from $7.3M in the March 2013 quarter. The media group generated revenues of $44.5 Million for the first quarter compared with $46.1 million earned for the corresponding period in 2013. , The 2013 revenue benefited from advertising relating to election campaigning in that year. The March quarter is not the best in the media business coming after the high advertising Christmas period .
Management indicated in their report to shareholders that the 2014 results was impacted by lower revenues and increased operational costs including the acquisition of the West Indies home series cricket rights for the next six years.
Our Balance Sheet continues to strengthen with increases in net assets of $42.2 Million moving from $273 Million in 2013 to $315 Million in 2014 and cash reserves increased by $3.8 Million over the comparative period.
According to management investments made to date in talent, products and capacity enhancement, and a positive outlook for the economy in 2014, they are confident of achieving the budgeted projections for 2014. They did not disclose what their forecast is but IC Insider expects the company will earn close to the results for 2013 of TT$45 million.
Caribbean Cement ekes out meager profit
Caribbean Cement factory
Caribbean Cement reported a meager profit of $35 million for the first three months of 2014 but compared to a loss of $497 million in 2013, the latest results represent a major change in the fortune of a company plagued with low production and massive losses between 2009 and 2012. The significant improvement over 2013 is as a result of the debt restructuring exercise completed in June last year, reducing the Group’s exposure to foreign exchange losses, improved sales volumes and increased plant productivity. But the stock market is expecting more, much more from this the sole manufacturer of local cement. In the September quarter last year Cement, as the company is commonly known, sold 214,000 tonnes of cement and 6,700 tonnes of clinker compared with 215,000 of cement this year along with much more clinker exports and reported operating profit of $303 million compared to $130 million in this latest quarter. The company operating profit for the quarter improved by 33 percent over the prior year, increasing from $98 million.
In the 2013 September quarter, the company reported 20 cents per share but only 4 cents in its latest one. There is clearly a sharp increase in cost which the company was not able to pass on in time in pricing during the quarter. The company has to do better than the results in the quarter to come close to justify the stock price at $3.70. The directors stated that they have taken action to improve the operating margin. Part of that no doubt is a 1.3 percent price adjustment implemented at the start of April but that will only recover about $40 million, there must be other cost incurred in the March quarter that have been or is being dealt with.
While the growth in domestic demand remains anaemic, export cement sales volumes grew by 87 percent with new markets established in Suriname and Guyana. Total cement sales volumes rose by 17 percent. Additionally, 44,261 tonnes of clinker was exported to Venezuela. The increased volume coupled with price corrections to recover increases in certain costs, resulted in revenue rise of 36 percent or $959 million.
Cement Company increased its prices by an average of 1.3 per cent starting April 1st on top of an average increase of 3 percent at the start of January. In October last year there was 2.7 percent upward adjustment.
Outlook| The company in a release to the stock exchange said “We remain cautiously optimistic about increased domestic market demand in the short to medium term as we continue to actively promote new uses for our cement in the domestic market. Our focus on developing export markets, especially in Central and South America, continues and we expect to conclude a new contract for supply of clinker to Venezuela when the current contract is fulfilled in May”.
Borrowings| While Trinidad Cement, the majority shareholders restructured the debt to Caribbean Cement (CCC), CCC still has a large amount due amounting to $1.4 billion costing a huge amount in interest amounting to $66 million during the quarter and picked up exchange losses of $15 million as a result of slippage of the local dollar.
At the end of the quarter the company still has huge build up of deficit on its books standing at $7.35 billion. It will take several years before they are able to wipe this out and place themselves in a position to start paying dividends.
Cash| on a more positive note Cement Company ended with cash of $340 million at the end of the quarter as the operations generated cash inflows of $138 million, this is good news as it could it means that cash build up could during the year end up at close to $900 million.
