Company Results — Page 87

Palace triples profit

August 13, 2013 by IC Insider.com

Palace Amusement Company has reported profits that has more than tripled the results for the June quarter last year. Profit after tax came in at $26.6 million in the latest quarter versus $9 million in June 2012.

The company made $18.5 million for the 12 months to June 2013, up from the $14.7 million made for the year to June 2012, a 26 percent increase. The results completely erased the poor March quarter when revenues fell sharply and took profits with it. Year to date revenues are up to $862 million coming from $842 million in 2012 and in the last quarter revenues were $278 million versus $243 million in the same quarter in 2012 for a 14 percent increase, much better than the 2 percent increase for the entire year.

March quarter | Profit for the March quarter fell sharply compared to the March 2012 quarter to a loss of $22 million from $2.66 million in 2012. IC Insider reported in our analysis of the first quarter, that the fall in revenues was due primarily to a shift in a particular brand of film, which would normally be shown in the March quarter, but was shifted to the June quarter. The latest results are confirmation of this.

In the three months to March, operating cost fell by $16 million or 10 percent, while administrative cost was up 11 percent to $34 million. In the 2012 quarter, Palace generated income of $193.5 million, this was down 21 percent or $41 million to $152.3 million in the 2013 quarter. The fall-off in 2013 comes against the background of the company introducing a new product, the showing of live operas on screen and an encore season of opera’s best in the summer. Without them, revenues would have been lower.

June quarter | Gross margin climbed in the June quarter compared with 2012, but year to date, it just barely moved. Administrative cost was kept under raps for the year, moving from $138 million to $147 million, less than 6 percent but for the latest quarter it is up by a much larger 23 percent.

Palace had cash funds and investments of $124 million million at the end of the financial year, which is up from $80 million last year. Working capital would appear to be tight with current assets at $195 million and current liabilities of $173 million. Loans amount to $40 million with equity of $300 million.

Related posts | Palace’s $22m 3rd Qtr hit

Photo via: www.PalaceAmusement.com

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

Salada June profits down

August 12, 2013 by IC Insider.com

Salada Foods, producers of Mountain Peak instant coffee, reports lower profit in the June quarter, a continuation of lower profit in the March quarter versus the same periods last year. Profit came in at $42 million after tax for the latest quarter and $95.4 million year to date versus $52.49 million and $106.6 million respectively to June. Profit for the March quarter was $29.3 million, down from $35 million in 2012.

The lower profits for the March 2013 quarter occurred as sales were lower, emanating from price reductions in the quarter implemented to stimulate sales and market penetration as well as increased cost associated with the new brands being produced by Mountain Peak Ltd. The reduction resulted in sales in monetary terms for the quarter falling 15.6 percent to $141 million, a $26 million decline. Sales for the June quarter were down to $198 million compared to $246 million in 2012, off 21 percent and year to date, $491 million and $532 million in 2012, an 8 percent decline. The level of sales would have been expected to result in worse performance in profits, but better margins helped negate the effects of the fall off.

IC Insider has been reliably advised that the reduced sales is not an indication that demand by consumers have declined but it is more tied to excess inventory being held in the trade that is affecting demand directly from Salada. Translated, sales in the past was inflated to the extent that the trade was building up inventories and the needed adjustment is now taking place.

Expenses | Selling and Promotional expenses rose 29 percent to $15.6 million in the quarter and 24 percent to $29.6million. Administrative expenses rose 24 percent to $25.3 million in the quarter and 23 percent to $75.4 million for the six month.

The increase is attributed primarily with the commencement of operations for Mountain Peak Foods Ltd under which the acquired Roberts brands of processed condiments are being processed and marketed. In addition to this brand, the group is marketing under the Mountain Peak brand as well.

Finances | Salada is clearly very conservatively managed, as can be seen from some of the financial ratios. The company has a large current asset ratio of 9 to 1, well above accepted norms, with cash and investments of $207 million. There was no interest bearing debt on the books, and equity was a high $711 million.

The earnings for the year to September should exceed a $1.40 per share. This could mean that the stock may not have much room to climb in the current market environment. Interest ought to be focusing on 2014 when the new products being produced by the Mountain Peak boost sales and hopefully profit. There are limited supplies of the company’s stocks to trade, so anything is possible with the stock price if demand comes in for them.

Related Post | Salada’s stock price may be stuck

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

Profits up at Barita

August 9, 2013 by IC Insider.com

Barita Investments showed vastly improved numbers for the June quarter with profits of $99 million compared to $48.5 million in the same quarter last year. The June quarter numbers had no taxes applied compared to corporation tax of $22.5 million charged for the 2012.

The results swung the loss at the end of the March quarter to a profit of $78.6 million year-to-date for the current financial year, down from a profit of $191.5 million for the same period to June last year. The nine months results is a huge improvement over the loss reported for the six months to March this year. The improvement in the latest quarter came from a nearly $30 million increase in foreign exchange trading and gain on sale of investment of $47 million more than in 2012. However, net interest income fell from $119 million down to $78 million but this may be due to a shift of the investment portfolio to foreign currency denominated investments to take advantage of the weakness in the Jamaican dollar currency, rather than a permanent shift in reduction in net interest margins.

The improved June results seem to bear the fruits of what management indicated would be a diversification of revenue streams by increasing product offerings and growing non-interest income.

Barita Investments suffered a $240 million hit in February as they wrote off investment gains which related to the government’s bond swap. In a release to shareholders, the company in commenting on the March results, stated “without the impact of the National Debt Exchange, the financial performance would have surpassed the prior year to date profits of $143 million”.

March quarter | For the second quarter of the financial year, losses of $98 million were incurred and year-to-date $20 million. The company was able to grow income with the main drivers being dividends, which grew by $13 million, foreign exchange trading and translation gains with an increase of $78 million and unit trust operations. Operating expenses at the end of the second quarter were $240 million compared to $226 million for the same period of 2012.

Looking forward, earnings for this year which ends in September, is unlikely to match that of 2012 due to the debt swap charge. But looking beyond that one-off charge, the results from ongoing earnings make the stock a very attractive medium investment. Revenues could be boosted above normal as the indicators are that the stock market activities will pick up strongly going forward.

Barita is an investment bank with a stockbrokerage arm and unit trust operations. The company is listed on the Jamaican Stock Exchange. At the current price in the $2.32 range and with signs of the local stock market exhibiting increasing interest, investors could reap good returns from this stock in 2014, if not before.

Insider call | Barita Investments is an IC Insider Buy Rated stock.

Filed Under: Company News, Company Results Tagged With: Barita Investments, JSE Company

Lasco Distributors, more room to profit

August 8, 2013 by IC Insider.com

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Lasco Distributors reported an 11 percent drop in pretax profits in the 12 months ended March this year even as sales climbed 10.6 percent for the same period. The March quarter revenues only grew by one percent, pulling down what was a more robust increase up to the December quarter. But things seem to be back on track in the June quarter as revenues are up 15 percent to $2.31 billion, an increase of $303 million over the corresponding period last year and profit is up to $164.2 million, an increase of 21 percent or $28.5 million over the same period in 2012. Earnings per stock improved from 4 cents in June 2012 to 4.9 cents in June 2013 quarter based on the new amount of shares issued.

LASCO Distributors continues to introduce new brands to market. Most recently, Baby Yum Infant Cereal and Breathezy, a generic alternative for Asthma Management, were launched.

Operating Expenses to Sales ratio was 13.1 percent compared to 14.1 percent, a significant improvement over the corresponding period last year.

“Revenue and profit performance was due to the increased volumes, aggressive marketing activities and improvement in efficiencies,” the company’s Chairman Lascelles Chin stated recently. He went on to say that “It is commendable that even with increased marketing activities and the introduction of new products each year, the company was still able to contain operating expenses. LASCO Distributors continues to do very well and will expand its range with exciting products and grow its revenues with brands from pharmaceutical principals, as well as our own LASCO brands. This will be bolstered in particular from the new products to come from the LASCO Manufacturing expansion.”

The company is looking good going forward, especially after September when the Lasco Manufacturing factory expansion is completed and starts production of new products which will be marketed by the distribution company. IC Insider is forecasting that sales will pick up in the second half of the company’s year and earnings increase to $840 million or 25 cents per share for the year ending March 2014.

The company was able to reduce inventories from $1.28 billion at the end of March to $967 million, as such cash and investments increased from $507 million to $817 million over the same period. Current assets exceed current liabilities by $1.69 million at the end of June. There is virtually no debt financing at the end of the quarter and the equity is at a little over a $2 billion.

Insider call | Lasco Distributors is an IC Insider Buy Rated stock.

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

Honey Bun growth slows to a crawl

August 6, 2013 by IC Insider.com

The year 2013 is the year of the snake in the Chinese’ calendar and the crawling pace that the snake normally exhibits is pretty much what’s happening to Honey Bun, a Junior Market listed company. Increased sales and profit which in slowed down in the first quarter of this year, has slowed even further in the latest quarter to June. Revenues crawled along at just 5 percent over the 2012 quarter compared to 20 percent in the Easter-boosted March quarter. Even then, the March quarter growth was slower than the near 32 percent growth for the first 3 months of the financial year.

Revenues were $161 million in the June 2013 quarter up from $154 million in 2012 and profit was only $2.3 million down from $7.5 million in 2012. For the year to date, sales are $540 million, up 17.9 percent from $458 million in the prior year. Profit on the other hand is flat at $40.8 million versus $41 million in 2012.

Gross profit in the latest quarter actually fell by $2.5 million compared to 2012, but year-to-date gross profit is up 9 percent while administrative expenses are up even more by 16 percent to $125 million. The increase to June clouds what has been taking place earlier. There was one-third jump in administrative and other expenses to $41.6 million, up from $31.3 million a year ago.

The company generated $189.6 million in sales in the March quarter up from $160 million in 2012 and for the six months $381.5 million versus $305.8 in the prior year.

Management attributed the reduced margin to rising prices for flour and other inputs, which could not be passed on to consumers at the same pace as the cost hikes. For the March quarter, management stated that sales improvement was as a result of increased sales to new markets and exports, which increased by over 150 percent, year over year for the 3 months.

Healthy finances | The company continues in a healthy financial state with working capital at a ratio of 3 to 1 inclusive of cash and investments amounting to $75 million. This cash is up from $24 million at the end of September last year. Receivables grew at the end of the quarter to $61 million compared to $43 million in 2012.

Equity was $297 million and loan borrowing at a low of $24 million at the end of June. The stock last traded at $4 each but could well decline somewhat with these results. This year’s earnings at the end of June was 43 cents. The September quarter’s results are difficult to predict as it is the worse quarter of the year for the company. As such, the EPS at year end in September is likely to be lower than for the nine months based on past years’ numbers.

Related post | Honey Bun not so sweet in Q1

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

Cement profit surge – not so fast

August 5, 2013 by IC Insider.com

Caribbean Cement Company is reporting a major change in fortunes in the latest quarter ending June from a loss of $497 million in the first quarter to a profit of $359 million in the June quarter. For the six months to June, the Group is reporting loss of $137 million, compared to a loss of $1,204 million in the corresponding period of 2012.

The loss of $137 million is after charging $701 million of non-cash foreign exchange losses compared to $136 million of foreign exchange losses for 2012. In the June quarter, Forex loss is $252 million but interest cost fell by $62 million and is down $60 million for the year to June. The bright light is not all that it appears to be at first sight as the results benefited from the write back of $591 million of withholding taxes on interest that was due to the parent company which have been reversed. The write back results from the restructuring of the parent company debt into preference shares.

Management states that, “We note that even before the write back of the withholding taxes, operating profit for the second quarter had improved over the prior quarter from $98 million to $153 million. This improvement is principally as a result of increased revenue from the 3% price adjustment in the domestic market in April and a doubling of export sales volumes in the second quarter, due primarily to our entry into the very vibrant Panama market.”

The numbers are saying that excluding extraordinary charges or income and assuming business is maintained at least at the current levels then a small profit should be eked out quarterly. The preference shares which are redeemable are effectively participating shares and are entitled to receive the same amount of dividend per share as the ordinary shares. There will only be a total of 115 million preference shares to 851 million ordinary shares.

Sales | Revenues for the quarter is up to $3 billion from $2.4 billion last year and $2.68 billion in the 2013 first quarter. Local sales in tonnes was the same as the first quarter but exports grew to 68,000 versus 33,000 in the first quarter. Local tonnage is up year to date by 20,000 tonnes but exports are below last year six months by 34,000 tonnes. Last year the local company exported cement to Trinidad as the plant there was under strike.

The restructuring of US$75 million of debt due to Trinidad Cement, contributed shareholder’s equity moving from negative $2.939 billion at the beginning of 2013 to positive $4,501 million at the end of June. The restructuring of the debt was completed with the conversion of US$37 million to preference shares, in accordance with the approval given by the shareholders at the Annual General Meeting, and with TCL making a capital contribution of US$38 million to defray the balance.

Caribbean Cement’s management stated that “they experienced operational gains through significant improvements in our plant efficiency, in particular specific energy consumption, following expenditure of approximately US$5 million in capital maintenance and upgrade works earlier in the year. As a result of the improved performance, we have been able to meet our debt obligations over the last six months. With the restructuring of the intra-group debt, the threat of foreign exchange translation losses has been significantly mitigated. We expect to maintain the improvement in export sales and grow these even further as we enter new markets in South America. While we do not foresee any meaningful growth in the domestic market, with careful cost management and the expected growth in export earnings, we expect to maintain these favourable results over the rest of this year”.

The June results is pointing to earnings per ordinary share of around 40 cents for a twelve month period. With these results, the stock which has risen from a low this year of 60 cents to a $1 recently, could enjoy further gains in the period ahead.

Related posts | Carib Cement profit mired in concrete

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

Grace’s profit up 41% in June quarter

August 5, 2013 by IC Insider.com

Thanks to good pick up in other income and increased segment profit from the food division, GraceKennedy’s profit before tax was pushed up by 53 percent to $1.19 billion and 41 percent after tax of $703 million in the second quarter of the year to June.

In the first quarter, profit after tax was up by just 4 percent and 13.5 percent before tax but the results were negatively affected by the cost associated with the government debt swap. For the year to June, after-tax profit increased by 21 percent over 2012 to $1.39 billion with revenues being up 8 percent to $33.9 billion. The second quarter revenues were up 12 percent to $17.2 billion versus the 4 percent in the first quarter.

In the first quarter, the retail and money transfer divisions did well in growing profits. Banking and investment recorded a loss of more than $200 million while the huge food division only eked out a very small increase over 2012 figures. In the second quarter things looked better all-round except for Insurance which recorded a loss of $100 million compared to a break even position in the first quarter. In the second quarter, the food division contributed $170 million of the increased profit as sales climbed by $1.33 billion compared $470 million in the first quarter. Retailing with just $144 million more sales contributed $74 million more to profits. Banking and investments’ contribution in the second quarter was $229 million, while money transfer contributed $55 million to the increase in profits for the quarter.

In 2012, the first quarter was the highest for revenues than any other quarter, while the profit in the second quarter of 2012 was the lowest. The big jump in profit in the latest quarter is unlikely to repeat at that level for the remaining of the year but earnings seem set to reach between $9.50 and $10 per share for 2013.

Grace is a dominant player within the Jamaican market in its traditional business of food and trading and its focus on overseas markets for expansion and growth is obvious. Any meaningful growth in these two areas in the local market would have to come from growth in the economy, which is not likely to happen for a few years due to fiscal deficit reduction. Grace’s deeper involvement in investing in overseas markets with a physical presence could provide the needed market intelligence to grow by acquisitions and thus speed up the growth rate as well as providing a solid platform for the company to introduce some of its existing products to a wider populace.

Increased lending by banks, or the pace of it, gives a good indication about likely growth in profits. As such the 17 percent annual growth of lending by the group’s commercial bank, First Global, is a good indication that there should be pretty healthy growth in profits going forward, subject to strong control on non-performing loans. Banking, of course, is only one area of the group’s business.

Grace is financially solidly based with equity of $33 billion and total assets of $107 billion at the end of June.

The shares are trading at around 6 times this year’s earnings and sells for just under 60 percent of book value and approximately 30 percent of sales, making it historically cheap but relatively adequately priced. This should be a good medium to long term buy — don’t expect an explosive movement in the stock price unless the entire market were to do the same.

Related posts | Dividends: Carreras cuts, Grace ups | Grace looking up

Filed Under: Company News, Company Results Tagged With: Grace Kennedy, JSE Company

Access growth continues

August 5, 2013 by IC Insider.com

Access Financial Services is reporting another successful quarter but at a slower pace of 22 percent for the June quarter than for the first quarter. For the six months to June, earnings are up a still strong 34 percent to $119.59 million and $89.38 million in the same period last year. First quarter earnings increased 47 percent to $61.5 million from revenues of $173 up $19 million over 2012 first quarter. For the June quarter earnings came in at $58 million from revenues of $197.6 million versus $47.5 million in June 2012 based on revenues of $166.8 million.

Revenues for the year which was up by 13 percent in the first quarter is up 18 percent in the second quarter over 2012 and up 16 percent year to date. In the June quarter, revenues grew by $20 million over that of the March quarter but expense increased by $23 million led by a $11.5 million increase in provision for bad loans which resulted in slightly lower profit for the quarter versus the first quarter.

The results are coming off of a successful 2012 when it clocked up earnings of $238 million from an increase of 47 percent from revenues of $661 million.

The company’s growth is emanating from very strong growth in loans which increased from $643 million in March 2012 to $758 million at the end of March this year and to $776 million at the end of June. The last quarter is the period of greatest demand for loans and therefore the most profitable period.

Access is primarily involved in payroll lending at high interest rates amounting to about 60 percent per annum but they have been moving to more rapidly expand their offering to the small business sector. Investor’s Choice projects $1.37 per share earnings for 2013 and recommends the stock as a good buy.

The company has increased profits in each year and the stock has grown from $18.30 to the equivalent of $90 each (the stock was split into 10 units for each 1 owned and now trades at $9 each). Investors would have received a dividend in each year since the listing amounting to 65 cents based on last year’s earnings, 45 cents for 2011 earnings and 31 cents per share based on 2010 earnings — not bad for those who backed the issue.

Insider Call | Access Financial Services is a IC Insider Buy Rated stock.

Filed Under: Company News, Company Results, Stocks to watch Tagged With: JSE Company

LASCO Financial small but tallawah

August 5, 2013 by IC Insider.com

LASCO Financial may be the smallest of the three listed Lasco companies but its performance has been tops for the past 2 years with growth in profits far out pacing its two bigger affiliates. The company which recorded strong growth in profit in the last fiscal year to March has continued that trend with profit of $39 million compared to $26 million for the first quarter, a strong 50 percent increase.

For the full year ending March this year, the company reported profit of $163.9 million compared to $102.4 million, a 60 percent increase. The strong increase in profit, helped propel the stock price up by more than a 200 percent increase from the end of December last year and 275 percent from the June 2012 when the price was of $4.25. The stock now trades at 42.5 cents based on a recent 10 for 1 stock split.

Profits grew 60 percent for the year to March this year, in 2012 it grew by 244 percent, helped by revaluation surplus on investment property that was booked and in the prior year growth was 187 percent. As the company grows in size, the growth rate has slowed but indications are that this should continue into the current fiscal year and the first quarter numbers support this so far.

According to management, the latest results emanated from trading income which is up by 47 percent to $144 million as a result of a 100 percent increase in the Cambio Division and a 28 percent increase in the Remittance Division.

Management also indicated 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 $57.6 million. 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. Transaction growth has been satisfactory to date and LASCO Financial Services will continue to expand in the Caribbean region.

Growth | Total assets amounted to just $47 million in 2010 but has enjoyed rapid growth and is at $690 million at the end of June this year — still a small financial company in the local market with lots of 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. Loans and receivables rose to $334.5 million up from $237 million at the end of June last year. Cash also increased from $135.5 million to $221.7 million over the same period. Equity stood at $514 million. Based on the recent growth levels and investments in marketing to expand revenues IC Insider is forecasting earnings between 22-25 cents per share for the current year.

Insider call | LASCO Financial Services is an IC Insider Buy Rated stock.

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

LASCO Manufacturing profits in the future

August 2, 2013 by IC Insider.com

In the aftermath of the first quarter results to June, investor’s would be forgiven if they were disappointed in the results of what many see as the flag ship of the three Lasco companies listed on the junior market. Revenues grew “oh so slightly” to $842.7 million from $835.4M in 2012. However, the company was able to maintain and control its costs of sales, thus achieving gross profit of $250.3 million slightly above that of the first quarter of 2012. Profit was not as fortunate as it slipped to $138.751 million from $153.54 million in 2012. The stock which was trading at $1.80 pulled back on the release of the results and closed at $1.45 on Wednesday.

Operating expenses | The first quarter operating expenses increased due to an under-accrual for a promotional expense during the last quarter of 2012-2013, which was brought to account in the current quarter. In addition, the company had to honour a retroactive duty charged by customs on the disposal of damaged raw material, which consequently impacted on the profitability for the period. But investors should be looking well beyond the latest results and focus instead on the major expansion that is currently under way. Once completed, the increased sales from new products will not only boost sales but profits and ultimately the stock price.

Not to be underestimated is the impact that the factory expansion is having on costs and the diversion of cash to fund the factory expansion that would otherwise have been available for investments.

Exports | LASCO Manufacturing exports 10% of sales as finished products to the United States, Canada, England, Panama and the Caribbean. The company is currently exploring West Africa, and Ghana in particular, as a new market. Exports are planned to move to 25% within a short time period. That will take some doing as local sales is also expected to grow. Current export sales would be need to increase by one and a half times to meet this target.

The chairman, Lascelles Chin, told the attendees at a press conference on Monday that “the development of a new product range has become an important facet in our strategic plan and every effort is being made by the team to ensure the margins required are obtained.

The chairman also disclosed that the factory expansion will cost just under US$30 million, this well be over the original planned figure of US$10-15 million. The factory is expected to be operational by September, at which time the company expects to roll out new products that will be priced very aggressively to compete with others in the market place. According to Chin, “The results of the manufacturing expansion currently underway at the White Marl location will undoubtedly unlock potential in the company for our consumers, shareholders and other stakeholders”. He indicated that this will be the largest factory in Jamaica at 340,000 square feet and will produce many new products to add to the current range.

The expansion is not only about new products. A significant factor will be the reduction of current costs and the ease of production. The new factory and machinery will result in waste reduction and eliminate the doubling-handling of goods.

The chairman reiterated, “With the expansion project near completion within the next two months, we expect that LASCO Manufacturing’s financial performance will improve significantly. Over the next year – many new products will be pivotal to the company’s growth and we look forward to being able to make further positive announcements about new products to you in the near future.”

Balance Sheet | Trade payables increased from $258.8 million at the end of 2012-2013 financial year to $333.8 million in June 2013 due to increased purchases of raw materials, which is typical for the period in anticipation of the summer, back to school and hurricane season. This was affected also by the exchange rate fluctuations during the first 3 months of the financial year. The receivable surge was due to extended credit terms offered to a major distributor. The company borrowed $1 billion to help fund the expansion of the factory with about $1 billion being internally generated funds. The loan represents just under 2 years of cash flow at present revenues.

Insider call | LASCO Manufacturing is a IC Insider Buy Rated stock.