Company Results — Page 87

Scotia reports record profit

December 2, 2013 by IC Insider.com

Scotia Group Jamaica (Scotia Group) today reported record profit for the year to October 2013 of $11.92 billion compared to $10.58 billion for the same period last year. The banking group best other year was in 2009 when they reported $11.15 billion, but reported lower profits since until 2013.

It’s ironic that the group is enjoying one of their best year after having taken an almost $400 million hit when they participated in the government debt swap program. For the last quarter to October, net profit was $3.22 billion, $160 million above the previous quarter ended July, 2013 and $595 million above the quarter ended October 2012.

Earnings per share (EPS) for the year was $3.70 compared to $3.26 for the same period last year. The company reported $1 per share in earnings in the October quarter. Return on average equity was 16.88 percent, up from 15.56 percent last year.

Total operating income rose to $41.37 billion, a 6 percent increase over $39 billion generated in 2012.

Net interest income | Net interest income, after impairment losses for the period, was $22.85 billion, up $740 million or 3.35 percent when compared to the same period last year. Loan loss expense increased by $168 million when compared with prior year.

Other revenue | “Other revenue for the twelve months was $11.39 billion, up $2.28 billion or 25 percent compared to 2012. This was due primarily to increased insurance revenue, fee and commission income, as well as higher gains on our foreign currency trading and investment book. Net fee and commission income increased 10 percent, due to increased account and transaction volumes in our retail and commercial portfolios, as well as, growth in our mutual funds and unit trust business” the company stated.

Expenses | “Salaries and staff benefits reflect a reduction of $126 million this year, as it includes a higher actuarially determined net credit of $1.19 billion in relation to our defined benefit pension, group life and health plans. The salaries and staff benefits expense, excluding the post retirement credit, increased by $1.06 billion or 12.22 percent year over year” the company reported. Other operating expenses grew much faster than income at 26 percent to reach $7.14 billion in the year.

Credit quality | “Non-performing loans at year end totalled $4.49 billion, reflecting a decrease of $60 million from prior year, and a decrease of $209 million from the previous quarter ended July 2013 as recoveries increased during the period. Total NPLs now represent 3.29 percent of total gross loans compared to 3.65 percent last year and 3.51 percent as at July, 2013. The Group’s aggregate loan loss provision as at October 31, 2013 was $4.5 billion, representing 100 percent coverage of the total nonperforming loans,” the Group’s management stated.

Balance sheet | Total assets increased year over year by $31 billion or 8.68 percent to $389 billion at October as the Group enjoyed growth in loan and deposit volumes over the period. Loans grew by $12.3 billion to close at $134.8 billion. Cash resources increased by $22 billion primarily as a result of the growth in deposits. Total customer liabilities (deposits, repo liabilities and policyholder’s funds) grew to $296 billion, an increase of $23 billion over last year.

Capital | Total shareholders’ equity grew to $72.8 billion, $5.2 billion above prior year.

Scotia Group has maintained its Buy Rated status as IC Insider projects earnings for 2014 to end up around $4.50. The stock, priced under $18, is already very cheap based on 2013 earnings. With the recently announced dividend of 40 cents per share, the yield is over 9 percent.

Filed Under: Company News, Company Results Tagged With: JSE Company, Scotia

Honey Bun’s profit falters

November 29, 2013 by IC Insider.com

Honey Bun’s last quarter profit got burnt with a $10.5 million loss compared to a small profit of $490,000 for the same period in 2012.

For the full year to August this year, profit fell from $41.5 million to $35.3 million with sales revenues climbing to $712 million from $611 million in 2012. For the quarter, sales rose from $154 million to $163 million hardly enough to cover increased cost. Rising cost and inability to price the products to recover increases in expenses is at the heart of Honey Bun’s 2013 problems that lead to lower profits. For while revenues climbed 14.8 percent for the year, direct cost climbed even faster at 18.8 percent. The increased cost meant $28 million of potential profit just evaporated as a result of not being able to pass on the full cost to customers. Compounding the problem, administrative and other cost rose much faster than revenues by 20 percent to $174 million and selling and distribution cost was contained to an increase of only 8 percent to $90 million. Finance cost at $2.9 million was almost flat.

Image courtesy of dplanet/FreeDigitalPhotos.net

The company may be able to recover some, if not all of the cost increase, during the coming year. Movement in the local currency which would have had a major impact on cost in the 2013 fiscal year should moderate going forward and with signs of stability in the economy and some green shoots of growth showing, the next twelve months should be better for them.

IC Insider is forecasting earnings of $39 million or 42 cents per share for 2014 and 65 cents per share in 2015.

Historical | Gross profit for 2013 increased by 9.7 percent and is the lowest since 2008 when it grew by 12 percent. The gross profit margin for the latest year is not the worst; it is only 2 percentage points below 2011 and well above 66 percent in 2010 and is in line with 2006 and 2007. Profit performance has been less than predictable. In 2007, pretax profit came out at $23 million and decreased to $18.7 million generated in 2008, climbed to $45 million in 2009 but fell to $26 million in 2010 with 2011 enjoying an increase to $37 million; then it was up to $42 million in 2012 only to fall back in 2013.

Finances | Notwithstanding the lowered profited out turn, the company’s finances improved during the year. Shareholders equity improved by $20 million to reach $291 million and borrowed funds was $26 million up from $20 million in 2012. Net working capital increased from $61 million to $98 with cash and bank balances reaching $78 million. Receivables climbed by 40 percent to $78 million and payables by 87 percent to $75 million.

IC Insider outlook | The stock is priced at $3 with a PE of 8 times earnings and is in line with a number of other junior market companies. At best, Honey Bun is currently a stock to watch. It will need increased sales volume to make it to our Buy Rated stock list when compared to others with a better potential for gains.

Filed Under: Company News, Company Results Tagged With: Honey Bun, JSE Company

Blue Power profits continue up

November 29, 2013 by IC Insider.com

Blue Power recorded 33 percent increase in sale revenues to $275 million for the October quarter this year compared to $208 million for the same period last year. The Lumber Depot division achieved sales of $191 million versus $135 million the previous year, an improvement of 42 percent while the Blue Power Soap Division saw sales moving up from $73 million to $84 million for an increase of 15 percent.

Profits for the quarter came in at just over $25 million compared to a shade under $19 million in the same period last year, an increase of 34 percent. The contribution of Lumber Depot contributed over $11 million, improving by 80 percent over the same period in the previous year while Blue Power division added $14 million which was an improvement of 10 percent over the second quarter of 2012. Earnings per stock unit improved from 33 cents to 45 cents in the quarter, an improvement of 36 percent.

Sales grew 18 percent for the six months ended October to $521 million compared to $440 million for the same period last year of which the Lumber Depot division contributed $367 million versus $289 million the previous year, an improvement of 27 percent while the soap division moved up from $152 million to $154 million, an increase of only 2 percent.

Profits increased by 26 percent for the six months to $55 million compared to $44 million in the same period last year. $29 million of the profit for the half year came from the Lumber division for a strong 49 percent increase over the same period in 2012 while Blue Power contributed $26 million which was an improvement of 8 percent. Earnings per stock unit moved from 77 cents to 98 cents in the period, an increase of 27 percent. IC Insider is forecasting earnings for the full year to April 2014 at $2.30 per share and $2.85 for the 2015 fiscal year. The stock remains BUY RATED.

Cost | The group has been able to keep administrative cost under control with figures for the six months showing a slight fall of $1.4 million to end at $62.3 million, while the latest quarter saw a rise of $3.8 million to $34.3 million, a 12 percent increase.

With the shift of increased sales to lumber division, margins shanked in the October quarter to 26.3 percent from 30.3 percent in 2012 and for the year to date 27.3 percent versus 31.2 percent in 2012.

Finances | The group was in a strong position at the end of October with cash funds $126 million, which is down from April’s $145 million, but more funds are now reflected in receivables and inventories which are up by $30 million and $22 million respectively. At the same time payables declined by $11 million. Shareholder’s equity rose to $392 million at the end of the latest quarter.

Blue Power is an IC Insider Buy Rated Stock

Filed Under: Company News, Company Results Tagged With: Blue Power, JSE Company

Teas profit up 32 percent

November 27, 2013 by IC Insider.com

Jamaican Teas just reported a 32 percent rise in profit for the year to September from a 49 percent jump in sales. The company earned profit attributable to the group’s shareholders of $99 million for the year versus $75 million in 2012.

For the last quarter, the group reported profit of $23 million compared $6.2 million in the similar quarter in 2012. The results for the quarter reflect the booking of revenues resulting from the completion of the real estate development and sales of all but two of the units. The 2012 last quarter figures were negatively affected by an adjustment for impairment to an investment amounting to $9 million.

Sales up | The Group recorded improvement in sales for the year increasing by 49 percent to $1.23 billion versus $824.5 million in the prior year. This was due to mainly increased supermarket sales, a strong 46 percent growth in export sales and income from sale of units in the real estate development.

While sales for the manufacturing division were up 26 percent for the year they were only up 5 percent for the latest quarter partially due to flat exports, which was affected by the termination of the sale of coffee that was included in last year’s figure while there were none in the latest quarter.

Image from Behance.net

The sales performance was also helped by Caribbean Dreams’ Jamaica Blue Spring Water, which was introduced shortly before the commencement of the start of the fiscal year.

Sales at the Kingston supermarket in last quarter were up on the similar quarter in 2012 by 15.8 percent and up by 20 percent for the financial year.

Investments | The group holds $140 million including stocks and bonds and generated income of more than $30 million from them during the year. The amount is a part of other income which amounted to $40 million versus $23 million in 2012.

The group absorbed losses of $4.8 million in the latest quarter for the associated company that operates a supermarket in Montego Bay and a loss of $11.3 million versus $8.4 million for 2012. The company made $2.5 million adjustments to differed tax assets during the year based on the change in tax rate to 25 percent thus increasing the loss for 2013 by that amount.

Cost increase | Administrative cost rose by 20 percent to $86.5 million and distribution and marketing cost rose 69 percent to $30.4 million. The admin cost rise is partially due to the booking of the full year’s cost for the supermarket in Savannah La Mar versus only part year cost in 2012 and increased labour cost. Finance cost rose from $8.36 million to $11.3 million due in part to increased borrowings to fund the real estate development and the acquisition of the new factory building.

Statement of Financial Position | Inventories increased mainly as a result of increased cost of inputs and the cost of inventories at the supermarkets due to rising local cost flowing primarily from the devaluation of the Jamaican Dollar. The receivables rose sharply due to pending completion of sales for the apartments sold and increased export sales, especially the last two months of the financial year, causing in the total due from overseas’ customers to rise.

Borrowings | Borrowings jumped from $113 million in 2012 to $245 million at the end of 2013 financial year but this was effectively $162 million as $83 million represented a loan that was kept as a bank deposit for a short time after the year end. The increased borrowings related to the development of the apartment complex and funding of the purchase of the property to house the factory for the manufacturing operation. Subsequent to the year end, most of the short term borrowings were either paid off or converted into long term loans. The amounts used in the funding the construction of the apartment complex were fully liquidated after the year end. Jamaican Teas issued 5 year bonds amounting to $105 million, fixed at 8.5 percent for two years after the balance sheet date. The funds will be mostly used to fund the company’s next real estate development. At the end of the year, shareholder’s equity stood at $596 million, a $85 million increase over 2012.

Outlook | “We expect to build on the foundation created to date. New lines were recently added that will positively impact sales and profit in the new fiscal year. We expect that our latest real estate development planned for St Thomas will contribute positively to profit during the year. Our expectations are that export sales should continue to perform well and so far the local market seems to have stabilized.” Management stated in their release to shareholders.

If the company successfully executes the new real estate development and sales in the other segment continues to grow at close to that of the last year, then the group should go on to see another record year of profit in 2014.

Jamaican Teas is an IC Insider Buy Rated stock.

Filed Under: Company News, Company Results Tagged With: Jamaican Teas, JSE Company

Carreras down but not out

November 22, 2013 by IC Insider.com

Carreras, the dominant cigarette distributor in Jamaica. is reporting lower profit from operations for the September quarter as it did for the June quarter as revenues fell from the 2012 levels even as the company had a price increase earlier this year.

Revenues plummeted by 25 percent for the six months period declining from $5.76 million to $4.4 million and by 16 percent in the second quarter from $2.67 billion in September 2012 quarter to just $2.24 billion; this is a big improvement from the 30 percent decline in the first quarter. The reality is that with a price hike of 17 percent in March, a sharp decline in volume is expected. This has always been the case in the past so there are no reason to think that it would be otherwise this time around. The situation is made worse by the stock piling of cigarettes by the trade in anticipation of the price hike.

Profit after tax was identical in both the June and September quarters at $485 million each; the profit for the six months fell 33 percent excluding the pension refund of approximately $2.5 billion net of tax in 2012. The interesting development is that gross margin improved to more than 100 percent from 90 in the similar period in 2012 and 86.5 for all of the 2013 fiscal year.

The smoking ban which was announced on June 25, immediately impacted the stock price influencing the pull down from $56 to $52.50 on the next day. Although the price recovered to the $55 level shortly thereafter, it slowly drifted to $50 by the end of July, prior to the results being released for the June quarter. The fall in profit seems to have pushed the stock price down to $35 to better equate the value with the lower profit and dividend payment. At the $35 level, it is gaining some support.

The price increase earlier this year had a negative impact on the company’s consumers took a big bite out of sales, far greater than any impact the smoking ban may be having. Sales enjoyed a big jump in the last half of 2012 up to the March this year suggesting that distributors stocked up on the product in anticipation of price increase and stopped stock piling once the price adjustment was implemented.

Expenses rise | While revenues plummeted, expenses have not, with sales & marketing going up by a third to $207 million from $152 million and rising by a smaller 22 percent for the half year to reach $415 million. Administrative expenses, which increased by 15 percent from to $320 million was up 19 percent to $634 million for the six months period.

Tax Recovered | The tax now recoverable that was down to $1.4 billion at June from $1.733 billion at the end of March, is now at $1.17 billion. If the tax authority continues to allow recovery against current liability then the full amount could be recovered before the end of the 2015 fiscal year and most likely be distributed as dividends to shareholders.

Carreras ended up with cash funds of $3.4 billion at the end of September, equity is at $3 billion or $6.30 per share. Current liabilities are at $2.67 billion which includes tax payable of $1.5 billion against current assets of $4.3 billion. There are no borrowed funds incurred to fund operations.

Carreras cut the quarterly dividend from $150 paid last year to $1 in light of the profit decline.

Outlook | Our forecast is for earnings to hit around $5 per share this current fiscal year, and if so, then the stock would be a reasonable buy around $35, the current price level. With a dividend yield of more than 10 percent before tax, the stock will be an attraction for income seeking investors.

Image courtesy of Scottchan/FreeDigitalPhotos.net

Filed Under: Company News, Company Results Tagged With: Carreras, JSE Company

Will Tessanne boost RJR fortunes?

November 19, 2013 by IC Insider.com

Important RJR update | RJR earnings per share for the six months improved to 4 cents compared with a loss of 6 cents in 2012. IC Insider has revised its forecast of earnings and is now forecasting 20 cents per share for the full year ending March 2013 and around 30 cents for 2014, which suggest that the price of the stock has room for growth from the current level of $1.34. It is quite possible that the group could be a big beneficiary of the popularity of Tessanne Chin’s success on the NBC The Voice with RE TV’s broadcast of the program, especially if Chin goes much further in the competition.

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RJR recently released results for the six months to September, but they have the exclusive rights to the telecast of the NBC The Voice program that features Tessanne Chin and is being telecast locally on RETV. Could she give the stalled bottom line a real kick in the butt? The next quarterly figures will shed some light on that.

The economic environment has not been kind for many in the communication sector. We have Cable & Wireless losing market share from high legacy cost, complacency and poor customer service plunging the operations in to huge losses stretching back for a number of years, then there is the staid and age-old Gleaner Company whose main business has not seen a profit for some time as both the state of the local and global economies has conspired against it, pushing up cost without a commensurate level of income.

Then there is RJR who raised capital to invest in a newspaper only to write-off all of it, plus their own old-fashioned management practises in some areas that has seen the once prominent and dominant AM radio loose its dominant market share. They are now fighting amongst the rest try to recoup market share from the new leader, Irie Radio.

Interestingly, all three of these companies were once very dominant in their respective markets but not so any longer. What went wrong and where will they be heading?

The un-audited results showed that RJR recording a profit in the 2nd quarter ended September, 2013 of $13 million and marginally more for the six month a profit of $14.6 million, which is a major turnaround from a loss of $23 million in the 2012 six month period and a small profit of $2.3 million in the 2012 September quarter.

Revenues | Operating revenues were down $21 million for the September quarter to $458 million but was flat for the six months at $899 million. Other Income showed a 63 percent increase for the six months to $52 million and 19 percent increase for the quarter to reach $17.5 million, resulting management said, “from new transmitter site rental income.”

The 2nd quarter performance was driven by a $29 million or 5.9 percent reduction in expenses for the comparative period in 2012 moving from $489 million down to $460 million.

Direct expenses fell $14 million to $212 million for the quarter and but was up $30 million for the six months; selling expenses were marginally down $2.6 million for the quarter and $9 million for the six months while administration expenses fell by $18 million to $84 million and by $21 million for the six month period to reach $183 million. Finance costs rose from $3 million in the six months to $11 million.

Earnings per share | RJR earnings per share for the six months improved to 4 cents compared to a loss of 6 cents in 2012, IC Insider is forecasting 13 cents for the full year ending March 2013 and around 20 cents for 2014, which suggests that the current price of the stock is fully valued at $1.30. It is quite possible that the Group could be a big beneficiary of the popularity of Tessanne Chin’s success on the NBC The Voice and could be a big boost for RETV. Management has also mentioned a new project that should be on stream before the end of the fiscal year but no details have been given.

At the end of September, there was $84 million invested in FIFA rights to broadcast and televise World Cup matches in Jamaica; $446 million of receivables or nearly one quarter’s revenues; cash funds of $230 million and payables of $223 million. Shareholders’ equity stood at $1.2 billion and long term loans increased by $226 million.

Photo courtesy www.nbc.com/the-voice/

Filed Under: Company News, Company Results Tagged With: JSE Company, RJR

Profit blast at LASCO Distributors

November 18, 2013 by IC Insider.com

Lasco Distributors (LasD) posted profit of $139 million for the quarter to September this year compared to $54 million or an increase of 159 percent over the same period in 2012.

In the six months to September, profit of $303 million was up a strong 60 percent over September 2012, when $189 million was reported. The results flowed from revenues of $4.63 billion, an increase of 13 percent over the $4.1 billion generated in 2012. The quarterly revenue grew by 10 percent to $2.3 billion. The growth is likely to pick up as Lasco Manufacturing, its sister company, starts the role out of new products in November, which will be distributed by LasD.

Gross profit was $457 million compared to $362 million and gross profit margin was 24.5 percent, an improvement over the 20.7 percent in the similar quarter last year. For the six month’s period, gross profit margin was 24.8 percent compared to 23 percent in 2012. “There was an overall improvement in the company’s performance and recovery from the one off adjustment to cost of sales which occurred in the comparative period of 2012.” Management stated in their recent report to shareholders.

“The revenue and profit performance was due to increased volumes, aggressive marketing and trade activities and improvements in efficiencies” management further stated.

Operating cost rose just 5.2 percent for the half year, even less for the quarter at 3.4 percent, and was one reason for the jump in profit.

Outlook | IC Insider is forecasting earnings of 22 cents per share for the current year ending in March and 35 cents for the following year to March 2015. This puts the current PE around 7 times and just over 4 times for 2015. The forecast takes into consideration increased revenues as a result of new products to flow from the manufacturing company. Around 60 percent of the listed companies are valued lower than Lasco Distributors and only 4 junior market companies are valued higher, with 3 of them valued between 8 and 9.5 times this year’s earnings. As such the stock is one for accumulation than for rapid acquisition at this stage.

Asset size | Total assets grew by 29 percent to $3.29 billion in September compared to $2.55 billion in September 2012. The contributory factors were cash funds and investments which increased from $435 million in September 2012 to $1,029 million, Trade and Other Receivables increased from $1.23 billion in the prior year to $1.4 billion in September.

Trade and other payables increased from the prior year by $161 million to $1.49 billion this September. Shareholders’ equity amounted to $2.29 billion and borrowed funds amounted to only $15 million.

Lasco Distributors (LasD) is an IC Insider Buy Rated Stock.

Filed Under: Company News, Company Results Tagged With: JSE Company, Lasco

Lasco Financial profit rise

November 13, 2013 by IC Insider.com

Profit at Lasco Financial climbed faster in the September quarter than in the June quarter reaching $50 million, well ahead of the $31 million earned in 2012 by 64 percent and the $39 million earned in the first quarter of this fiscal year. For the year to date, profit is up to $90 million from $57 million in 2012 by 57 percent. The strong improvement in the bottom line flows from revenues that increased by 46 percent to $303 million for the six months to September over 2012, and 43 percent in the September quarter to $159 million.

The company keeps on totting up the quarterly profits as volume of business keeps on growing with some help from the slippage in value of the Jamaican dollar. Robust growth in profit was recorded in the last fiscal year to March of $164 million compared to $102 million, a 60 percent increase. The strong gain in profit achieved in 2012, up by 244 percent, was helped partially by a revaluation surplus on investment property that was booked in 2011.

Growth in 2013 is helped by the acquisition of cambio and money transfer business from Supreme Ventures. As the company grows in size, the growth rate has slowed but the results to date indicate are that the level seen last fiscal year should continue for the current fiscal year.

Expenses up | Expenses have grown steeply with selling and marketing ahead of revenues with a 55 percent increase for the quarter and 57 percent for the six months. Administrative costs are up, well below revenue growth with the September quarter up 19 percent and year to date 26 percent.

The company is now in the major period for earnings when remittances rise ahead of the Christmas season, which is expected to push profit well above what has been earned in any of the two quarters so far.

“The increase in income is a result of the growth in the remittance business due to additions of key partners and ongoing promotions,” management stated in their release to shareholders.

IC Insiders forecast is for earnings to be around $250 million or 20 cents per share for the full year.

Marketing | Management indicated when they released the June quarter figures “that Lasco Financial has commenced significant investments in marketing activities, which are expected to capture even more substantial market share for our remittance division; the outcome of which will also yield growth opportunities in the Currency Trading division. This is noticeable in our selling and promotion expenses which saw a 58 percent increase, up from $36.3 Million in the previous period to $57.6M. Administrative and other expenses rose in the quarter to $47.6 million up 33.7 percent over the same period of 2012.”

The company’s subsidiary Lasco Financial Services (Barbados) Limited and its agent Unicomer Barbados Limited (Courts) began trading in May 2013. Lasco indicates that this business is now at a breakeven level.

Growth | Total assets amounted to just $47 million in 2010 but has enjoyed rapid growth and is at $661 million at the end of September this year, still a small financial company in the local market with room to grow. Loans advanced was nil at the end of 2011 and is now close to $100 million at the end of March this year and is expected to grow at about 30 percent for the year. Loans and receivables rose to $335 million at the end of June up from $237 million at the end of June last year, is down to $261 million at September. Cash also increased and is now at $282 million compared to $136 million at the same period in 2012. Equity stood at $564 million and is expected to increase as profits roll in.

Lasco Financial is an IC Insider Buy Rated stock.

Related posts | LASCO Financial small but tallawah | Buy Rated bargains

Filed Under: Company News, Company Results Tagged With: JSE Company, Lasco

Big profit jump at Purity

November 12, 2013 by IC Insider.com

Profit more than tripled before taxes at Consolidated Bakeries (Purity) and was up more than 400 percent after factoring taxation in the 2012 period to September, as profit after tax rose to $30.4 million up from $5.7 million, a 429 percent increase. For the September quarter, profit rose to $6 million compared to the 2012 quarter when the company reported a loss of $2.8 million.

The improved numbers did not show up in the quarter over quarter results as profit was lower than the $10 million earned in the June quarter. Some of the improvement is a recovery from a bad period in 2012. The second half of 2012, the year Consolidated went public, was not a good one as the company recorded a loss in the period compared to a profit in the 2011 period.

Revenue for the nine month period increased by 37.6 percent to reach $500 million compared to revenue of $363 million for the same period in 2012. For the quarter, revenue is up by 53.2 percent over the same period in 2012 to reach $172 million up from $112 million. “These increases represent growth in both unit sales and average sales per customer. During the quarter under review, input cost increased due to exchange rate movements and other factors,” management stated in their report to shareholders. Gross profit margin came in at 49 percent for the quarter down from 53 percent in 2012 and is 54 percent year to date, an improvement over the 52 percent enjoyed in 2012.

It looks as if the company will enjoy profits in the order of $35-40 million for the year or earnings per share around 20 cents. The company is focusing on improved efficiency, increased sales from existing products and new ones for both the local and export markets.

Cash funds and investments are up to $99 million from $24 million last year September and $98 million at the end of December. Current assets are up to $205 million from $184 million at the end of 2012 helped by increased receivables and inventories which grew $40 million year over year. At the same time, current liabilities are down as a result of the clearing of overdraft balance of $13 million and taxation of $9 million leaving $61 million as owing to third parties. Borrowing is up from $19 million to $49 million at the end of September this year versus last year September.

Filed Under: Company News, Company Results Tagged With: Consolidated Bakeries, JSE Company, Purity

Carib Cement turns profit

November 11, 2013 by IC Insider.com

Aggressive pricing and increased cement sales helped Carib Cement Company turn a big loss last year into a profit this year. For the quarter ending September, profit jumped to $169 million, a marked change from a $245 million loss in the similar quarter of 2012.

For the nine months, profit was only $32 million reflecting a very poor first quarter resulting from a loss incurred along with a big foreign exchange loss of $689 million and interest of $349 million. The nine month figures may not appear great, but when viewed against a mammoth loss of $1.45 billion in the same period in 2012, the extent of the about turn is vivid.

Admittedly, the parent company had to step in to restructure loans that were lent to Carib Cement and were choking them, thus cutting interest cost. Revenues climbed 50 percent to reach $3.2 billion in the quarter and $8.89 billion for the nine months, an increase of 30 percent. The improvement flowed from increased volume of cement and clinker sales which accelerated in the third quarter by 34 percent over the 2012 quarter. For the year to date, volume sales climbed 7.6 percent, as exports declined in the 2013 nine months period. Export sales rose in the latest quarter by 44 percent and local sales by 19 percent, year to date it is up by only 10 percent.

Price increases | Since last year, the company has increased the price of its product on a number of occasions. In January, cement prices increased by 16.5 percent on average, 3 percent in April, 1 percent in July and in October, a 2.7 percent increase, which was on top of a 9.2 percent increase in July last year.

The full 2013 results should come out to be in the order of 20-25 cents per share if all goes well, but it’s the 2014 numbers investors should be focusing on from now as it looks like earnings could well be in the 80 cents per share range, which would see a big hike in the stock price. The situation could get even better if some of the major infrastructure works that have been announced come on stream along with any pick up in the housing market.

All this is why IC Insider has now upgraded the stock to Buy Rated. There are still risks involved. Cement plants are notorious for bad news flowing from accidents or other major setbacks, as is the case in the company parent Trinidad Cement. The company seemed to have been doing very well only to be hit by problems in the factory, as well as in Barbados, and just barely reported a profit in the September quarter. While the company has depended on Trinidad Cement to bank roll it, the group is under strict dictates of its lenders.

Balance sheet | End of the period cash funds were down to $149 million from $244 million at the end of December last year. This needs to be rebuilt to reasonable levels to provide for smooth operations and for the company to be able to ride out any storm they may encounter.

Even if the company was able to continue the profits levels seen in the third quarter, it is going to take about 7 to 8 years for them to wipe out the huge accumulated loss of $7.5 billion and be in a position to start paying dividends again. It may well happen before that time frame due to the likely impact of inflation in driving up profits in the years ahead and, if the Jamaican economy starts to grow at a reasonable pace, sales of cement could surge and boost profits.

Both Trinidad Cement Limited (TCL) and Caribbean Cement Company are IC Insider Buy Rated stock.

Filed Under: Company News, Company Results Tagged With: Caribbean Cement, JSE Company