Company Results — Page 88

Caribbean Producers’ impressive profit

November 11, 2013 by IC Insider.com

When Caribbean Producers pitched their vision of an impressive future, many investors saw a new rising star on the horizon coming from the west and the company easily raised $425 million. The shares were heavily oversubscribed and shot up as high as $3 but reported results never met the hyped expectations.

All that has now changed with the latest quarterly results to September showing a 19 percent jump in revenues and a big turnaround for CPJ in the first quarter of the 2014 fiscal year which ends in June. From a loss of US$172,981 in the 2012 quarter, the company swung into a profit of US$447,421. IC Insider projects the company should pull in profits for the full year of US$8 million, around J$0.80 per share. However, the market’s lackluster reaction to the robust results leaves one searching for reasons why CPJ is not pleasing to investors’ palates.

Cost control | Although sales rose strongly from US$14 million to US$17 million contributing to the big improvement in profit, a major factor is the improved profit margin that rose from 37 percent in 2012 to 44 percent in the latest quarter helping to increase gross profit by a strong 35 percent. Also contributing is the maintenance of other cost increases to levels below or just above revenue growth as well as a turnaround of other operating activity from a loss of US$48,000 to a surplus of US$7,041. Selling and administrative cost rose 20 percent, a shade over the rise in revenues. Depreciation increased faster than sales, at 27 percent to reach US$435,500 but finance cost rose by just 7 percent to US$476,664.

The numbers suggest that the expansion into meat and juice processing is now bearing fruit and should get even better as they capture more market share with their new products.

Borrowings | The company took on a large amount of debt to help fund its expansion with borrowings at US$29 million at the end of September and equity of US$13.5 million, which was quite a risky financing arrangement. Since September 2012, loans have been used to fund a US$3 million increase in inventories and receivables and US$1.6 million increase in plant and machinery.

Positive cash | The good news is that in the latest quarter, there was a strong positive cash inflow of more than US$900,000 which should end up around US$10 million by the end of the fiscal year. That will be enough, coupled with cash now on hand of US$2.7 million, to meet loan payment of US$8.6 million due by June next year and US$9.5 million due in the next twelve months.

If the forecasted cash inflows materialise, equity would jump to US$21 million and borrowed funds should fall in line with equity, subject to funds being used in further expansion by the financial year end.

The company’s working capital is in very good shape with slightly more than 2 to 1 ratio, a situation that should improve as loans are reduced.

The company will begin operations in St. Lucia in 2013 with a well-established partner in the Eastern Caribbean. The new company, CPJ St. Lucia, will primarily focus on setting up beverage system programmes for the hotel sector on the island.

Insider call | IC insider is not only forecasting continued strong growth for this new fiscal year but a continuation into the next year as well, making the stock a good medium term investment. Caribbean Producers Jamaica Limited is an IC Insider Buy Rated stock.

Filed Under: Company News, Company Results Tagged With: Caribbean Producers (CPJ), JSE Company

LASCO manufactures more profits

November 11, 2013 by IC Insider.com

Profit rose 15.5 percent for Lasco Manufacturing in the September quarter over the similar period of 2012 to reach $176.4 million versus $152.7 million. This reflects an improvement over the results in the first quarter, which when combined with the second quarter results, amounted to $315.2 million compared to $306.3 million for the same period last year, an increase of $8.9 million or 2.9 percent. The company had taken a $40 million hit in custom duties for spoilt raw material in the first quarter that occurred during the 2013 fiscal year.

The improved profit for the latest quarter came about primarily due to a rise in revenue, from $958 million in 2012 to $1.03 billion in 2013, an increase of 10.75 percent and far stronger than the year-to-date performance of 4.6 percent increase to $1.88 billion up from $1.79 billion to September last year. Gross profit for the six months rose from $502.4 million to $526.2 million, an increase of $23.8 million or 4.7 percent. For the quarter to date, gross profit rose margin declined a bit as evidenced by the by slower growth in gross profit of $18.5 million or 7.2 percent, which is below the growth in revenues. “The company was able to mitigate the effects of foreign exchange volatility by making early payments to foreign suppliers” management stated in their release with the results.

Operating expenses for the six months to September 2013 rose by a mere 2.2 percent or $4.5 million over the prior year’s $200 million to move to $205 million in 2013. For the quarter, operating expenses was just $97 million, a reduction compared to $108 million in prior year.

Improved cash management has resulted in a reduction in the finance cost of $7.2 million over prior year’s $13.8 million in 2012, compared to $6.7 million in 2013.

The new factory is expected to come into production during this month starting with liquid products of water and juices. The powder products factory will come into operation in 2014. The company was allowed to add interest on it $1 billion plus loan to the cost of the plant but once it’s in operation, interest and depreciation will be expensed and this could have a drag on profits for awhile until sales from the new plant can cover fixed cost.

Financial position | The company increased amounts tied up in inventories sharply to $664 million up from $283 million last year September and $490 million in March as trade and other receivables grew to $881 million from $710 in September last year and $629 in March this year. Trade and Other Payables have also gone up with the amount standing at $699 million from $481 last year and just $259 in March. Long Term Debt used in the expansion is now $1.37 billion versus $350,000 in 2012 and $804 million in March. The rate on the loan is under 9 percent.

The future | The real excitement about Lasco Manufacturing is the major expansion of the factory operations and the relocation of some of its activities that should reduce cost while expanding the products to be produced. This should translate into strong revenues and profits going forward, more likely in the next fiscal year which starts in April next year.

IC Insider is projecting earnings of 17 cents per share for the year ending in March 2014 and 30 cents for the following year with the new factory in full operation.

Lasco Manufacturing is an IC Insider Buy Rated Stock.

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

Profit inches up at D&G

November 5, 2013 by IC Insider.com

Desnoes & Geddes, the brewers of Red Stripe beer is reporting moderate growth in after tax profits, moving by 8 percent to $368 million from $340 million in 2012. Sales barely grew from $3.1 billion to $3.28 billion in a quarter when local sales were up 14 percent to $2.8 billion and exports were down from $643 million to $465 million with the shift of the production of beer to USA.

The company spent less on marketing, $266 million versus $313 million in the 2012 quarter while general selling and administrative expenses declined to $288 million from $310 million due most likely to the transfer of this side of the operations to Celebrated Brands, their joint venture distribution arm. The transfer may also have impacted the dollar value of sales. Other income turned a loss of $8 million compared to a surplus of $59 million in 2012. On the other hand D&G’s share in the joint venture distribution was a positive $19 million.

Segment results | In spite of the climb in local sales and a decrease in marketing spend, segments results show profit for the local operation was flat at $553 million while exports rose from $210 million to $283 million.

Financial Position | At the end of the quarter, the company has cash of $1.38 billion but receivables jumped to $1.9 billion from $739 million in 2012; things in this area would look a lot better. The company’s reduced funds tied up in inventories from $1.36 billion to just over a billion at the end of September. D&G has no interest bearing debt with equity capital of $8 billion.

D&G dominates the beer market in Jamaica and a lot of sales have been lost over the last several years as governments placed increased taxation on the products it sells. This along with a sluggish economy has held back its growth in profits and by extension the stock price. In the short turn, the company has had to resort to various cost reduction measures to help improve the bottom line. The September quarterly figures suggest that the company needs a Jamaican economy recovery in order to start delivering decent growth in profits. Nevertheless, the rate of return on equity is around 20 percent, which is not that shabby.

Filed Under: Company News, Company Results Tagged With: D&G, JSE Company

AMG gearing for further growth

November 4, 2013 by IC Insider.com

AMG Packaging is out with flat results for the year to August with profits of $49 million up about 4 percent from 2012, even as revenues from goods sold climbed 24 percent to $444 million as a result of a 16 percent increase in the volume of items sold.

The company reported improvement in gross profit which increased by 32 percent compared to the 2012 figure of 31 percent as it grew faster than sales. Increased administrative cost ate up just about all of the improvement in increased efficiency in the factory operations. This was due mainly to what management attributed to a revision to wage package, as there was no increase since 2009. Gross profit margin increased to 33 percent in the year from 31 percent in 2012 and 26 percent in 2011. In 2010 the margin was at 32 percent.

August quarter | Data indicates a 37 percent jump in revenues to $128 million but that was not enough to prevent a fall in profits in the quarter to $14 million versus $16 million in the 2012 quarter as just about all major areas of cost rose sharply. Raw material cost is up 49 percent, direct manufacturing cost grew by 42 percent, administration grew 36 percent, finance cost rose 197 percent and depreciation by 71 percent.

Negatively, return on equity fell in the year to 18.6 percent versus 22 percent in 2012 and 24.5 percent in 2011, clearly an area where work is needed. The company is working to improve efficiency and expansion of production by investing in new machines. During the year the company expended money on roof relays and some other items that have an one-off effect and not likely to be repeated in the coming year and should free the profit going forward. They are also moving to use LPG instead of placing total reliance on the electric grid, which they say will reduce energy cost in the coming year.

Management, in their report to investors, indicated that a multi-functional machine on order will replace older manual ones and a rotary die cut machine is being manufactured. Both are expected to be functional in the November quarter of 2013. These machines are expected to increase production and enhance the quality of products.

Finances | Current assets of $209 million including cash of $34 million is more than adequate to cover current liabilities of $71 million. Inventories climbed sharply to $93 million from $75 million in 2012 but it represents just under one and a half months of raw material cost.

Money borrowed rose to $85 million, an increase on the $29 million at the end of the prior year, with most of the increase used to fund expansion of the factory and added machinery. The debt compares favourably with equity of $291 million.

The stock recently declined to $3.50 and became weak sometime after the third quarter numbers were released suggesting minimal growth in the bottom line. Notwithstanding, the junior market has been exhibiting softness across most stocks. As such there could well be further decline in this stock price as there does not seem to be any major buying interest currently.

Insider call | With the expansion and modernisation that is underway and the tendency for sales to be boosted by increased volume the stock should be an attractive buy as a medium to long term investment around $3 per share.

Related posts | AMG is investing for tomorrow

Filed Under: Company News, Company Results Tagged With: AMG Packaging, JSE Company

Profit up 92% for Eppley

October 28, 2013 by IC Insider.com

Recently listed Eppley Limited released results for the quarter ending September with profit almost doubling from $12 million to $23 million for the nine months and with profit of $9.8 million in the 2013 September quarter compared to $6.3 million in 2012. These figures contrast with the full year’s earnings for 2012 of $15 million.

The improvement in the latest quarter came primarily from tax reduction due to the tax free status junior market companies enjoy for 5 years. It was also helped by a $3 million increase in other income which had grown to $5.9 million. Interest income declined in the quarter from $20.5 million in the 2012 quarter to $14.9 million in the latest quarter but a reduction in interest expense to $1.3 million versus $7.2 million took effect as a result of conversion of some debt to equity and some that was paid off resulted in a slight improvement in net interest income. Income from interest in the nine months amounted to $45 million which is down from $59 million in the similar period of 2012.

Loans due from customers shrunk from $509 million last year September to $308 million in 2013. Post September, loans would have increased as the company reported having $33 million in uncommitted cash on hand compared with $121 million in actual cash on the books at September. Loans payable amounted to $109 million at the end of September and is down from $361 million at the end of September last year.

Earnings per share for the September quarter is $13.43 and for the nine months period $48.19. The company reports that yield on the total assets is 14 percent per annum, if this is maintained then the company which has 796,000 issued shares should end up in a full year with approximately $40 per share in profits. But then the company is seeking to raise added capital from a preference share issue, which if successful, will provide increased profits as the funds will allow them to provide loans at higher rates than the capital cost of the funds to be raised.

The company will hold an extraordinary general meeting this coming Thursday to seek approval of a resolution to create and offer up to 100 million preference shares to raise added capital.

The IPO prospectus stated that the board expects to distribute not less than 50% of its after-tax earnings to shareholders in the form of cash dividends, with the projected earnings that would translate to about 5 percent return.

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

Profits up 80% at Berger Jamaica

October 23, 2013 by IC Insider.com

Berger Paints starts off the new earning season for the quarter to September with improved profit for the six months of $13 million, up 80 percent compared to $7.2 million for the same period in 2012 as sales rose 12 percent to $787.4 million. Importantly, revenues accelerated in the September quarter by 17.8 percent over that of 2012 compared to only a 5 percent increase in the first quarter.

Profit in the latest quarter was up by 76 percent to $16 million and augurs well for the all-important December quarter when it has the bulk of sales and profit.

Cash resources, which amounted to $130 million at the end of the March 2013 year end, is down to $33 million at the end of September. The bulk of the reduction went into working capital which rose from $512 million to $637 million excluding cash funds.

A dividend of 13 cents per share totalling $27.362 million was paid in July, 2013. Berger has no significant borrowed funds used to fund its operations.

If the present trend in revenues and margins continue, profit for 2014 should end up around 35 cent per share compared to 19 cents in 2013 to March. The problem with Berger is its strong reliance on the performance in the wider economy for growth. Right now that is not happening although there are signs of some pick up in the construction sector that the company could benefit from even as large amount of paints are sold for renovation of existing buildings than new start-ups.

Related posts | Economy pressuring Berger

Filed Under: Company News, Company Results Tagged With: Berger Paints, JSE Company

Paramount misses Buy Rated crown

October 16, 2013 by IC Insider.com

Paramount Trading’s past profit performance was adequate for the Junior Market company to be ranked as an IC Insider Buy Rated stock in 2012. However, after two quarters in a row with outsized receivables, we downgraded the stock to the market watch category. Our concerns still stand as we see potential dangers with receivables that are nearly three months sales when the norm would be 30 days and no more than 45 days.

In the company’s latest quarterly report to shareholders at the end of August, total receivables was at $152 million and in May it stood at $146 million but last year August the amount was only $85 million when revenues was $152 million. Inventory at $187 million is also an area of concern. However, since the rate of exchange for the Jamaican dollar is slipping, the higher inventory level can provide an edge in setting prices and margin. The company had cash on hand of $42 million.

Paramount disclosed increased profits for the 3 months to August amounting to $19 million before tax compared to $10.7 million in 2012, up 78 percent. In the previous year 2012, after tax profit reached to $8 million and sales climbed 11 percent from $152 million to $169 million in the quarter. Helping with the increased profit was an improvement in gross profit margin which rose from 29.6 percent to 31.3 percent in the latest quarter versus last year’s and the holding of administrative and other cost to only a 7 percent increase. Other revenues also increase to $3.9 million compared to just $700,000 in 2012. Finance cost climbed from $5.1 million to $5.85 million as borrowing declined from $107.5 million to $74.5 million.

The company’s management stated that during the quarter they pursued growth opportunities. Production of formulated products for contract manufacturing commenced and the Oxyterge formulated product was launched. They also completed a significant engineering solutions project, representing a value-added service that should result in increased revenues in the future. The company also indicated that they made key management movements and recruited externally to strengthen their leadership capability.

Profits are up in the latest quarter but sales are not likely to make a big surge, which suggest that investors should pay attention as this implies that profit increase after this year may be slow. Hopefully, the changes in management will address these weaknesses and restore normality to them and reduce the risk.

IC Insider projects earnings for the year of 70 cents per share on the basis that the receivables and inventory are of good quality and will not result in large amounts being written off in later quarters.

Related post | Higher cost flattens Paramount’s profit

Filed Under: Company News, Company Results Tagged With: JSE Company, Paramount Trading

Changes, changes, changes

September 23, 2013 by IC Insider.com

Monday 23 September, 2013 | Both the Buy Rated and Market Watch lists have undergone major changes based on trading over the past week.

Buy rated additions | Grace Kennedy and Pan Jam made it to the Buy Rated list in Jamaica based on their low values while GraceKennedy, JMMB, Scotia Investments and Sagicor Finance have been added to the Buy Rated list in Trinidad based on a very low PE of 6 times 2013 earnings.

Buy rated removal | First Citizens Bank was removed based on the stock’s rise to the $35 price range and a 58% appreciation reached after listing on the Trinidad Exchange.

Market Watch | The Caribbean Flavours IPO hits the streets this week and has been added to the Market Watch list as it has the potential to generate capital appreciation after listing on the Junior Market. Cable & Wireless is added to the main market of the Jamaica Stock Exchange based on the company’s reporting of the rapid addition of mobile customers. Agostini’s has been added to the Watch list of Trinidad Stocks based on its current low PE.

The IC Insider’s Buy Rated seal of approval is given to a stock that we believe is a compelling buy with earnings that are strong relative to the price and strong prospects of generating high price gains within the next twelve months.

Better than a broker’s ‘buy’ recommendation, IC Insider has no vested interest in any stock transaction or conflict of interest. Our research is backed by published reports of the company’s performance and insights of future earnings that can be found at ICInsider.com. The final decision to buy, or not, is your personal choice.

To find published reports for a Buy Rated stock on IC Insider, please use category ‘Buy Rated’ under Company News or enter the company name, in full or part at ‘Search IC Insider’.

Image courtesy of ImageryMajestic/FreeDigitalPhotos.net

Filed Under: Company News, Company Results, Initial Public Offers, JSE Main Market, Stock Market, Stocks to watch, TTSE Market Tagged With: TTSE

JBG profit held back

September 12, 2013 by IC Insider.com

A drop in Hi Pro profit from flat sales, increased corporate taxes provision and increased finance cost held back profit for the first quarter of the new fiscal year for Jamaica Broilers Group, one of Jamaica’s leading agro product company. This is despite a big jump in revenues and profit from the US operations, as well as a turnaround from a big loss in the ethanol operations in 2012 into a profit in this latest quarter.

Jamaica Broilers’ financial results for the quarter to July, 2013 show profits attributable to stockholders increasing by 10 percent to $140 million or earnings per share of 11.68 cents against $127 million or 10.60 cents per share last year. The moderate improvement in profit flows from revenues of $7 billion, a 17 percent increase over the $6 billion generated in the corresponding period last year. Gross profits for the quarter amounted to $1.32 billion, a 17 percent increase over the $1.13 billion of the corresponding period last year.

Expenses up | Distribution and selling expenses grew by a strong 26.5 percent to $280 million while administrative costs increased 13.4 percent to $838 million. Management states that the increases essentially reflect the impact of inflation along with costs related to organizational strengthening. Finance cost rose from $51 million to $79 million in the quarter reflecting increased borrowing from $4.5 billion in 2012 to $5.3 billion at the end of the quarter.

Segments | The US operations climbed sharply in sales to $805 million, a 176 percent increase to external parties, contributing to a rise in segment profit to $76 million from $7 million in 2012. The broiler segment sales rose by 14 percent to $3.5 billion as segment profit moved to $234 million versus $189 million in 2012. At Hi Pro division, sales, which include feed and retailing of non-feed products, were flat at $2.56 billion but profit slipped from $230 million to $149 million. Ethanol sales at $248 million in 2013 was lower than for 2012 at $289 million, as profit from the operation ended up at $16 million, a turnaround from a $49 million loss. Other operations, which delivered sales of $200 million and profit of $36 million in 2012, reported a 154 percent sales jump to $309 million in 2013 but profit inched up to only $39 million. Other operations include the sale of feed ingredients, beef products, fish, cattle rearing, processing and co-generation energy supply.

The recent expansion in fertile egg production in Georgia and increased procurement activities is beginning to show positive results as stated by management in their release to shareholders.

Acquisitions | The quarterly results do not include revenue and profit from the just concluded acquisition of England Farms Company, a well-established fertile egg operation based in Arkansas. While this company operates in a different state than the current Georgia one economies of scale can be achieved by merging most of the administrative activities into one thus cutting cost. Specialisation may also be possible as well as savings in shipping cost where each unit can deliver supplies closer to the individual plants. In the release announcing the acquisition of this entity, management stated that it will double existing sales.

The purchase of Hamilton’s Smokehouse will result in an expansion in the volume of products available under the Hamilton Smokehouse brand and will provide opportunities for greater utilization of the Best Dressed Further Processing facilities at Spring Village, St Catherine, management stated. With the processing of Hamilton products to be done in JB existing facilities will mean higher profit margins as most of the former overhead cost of a stand-a-lone operation will no longer exits.

The build out in the 68 percent owned Haiti operations is continuing with increased sales of Haitian produced baby chicks, feed, layer birds, table eggs, and processed chicken.

The group has been spending on capital improvement apart from acquisitions, nevertheless they still had $1.4 billion in investments and cash at bank at end of July.

Insider Call | Jamaica Broilers is still on track to report between $1.50 – $1.80 earnings for the year notwithstanding the almost flat first quarter results and is an IC Insider Buy Rated stock.

Filed Under: Company News, Company Results Tagged With: Jamaica Broilers, JSE Company

Mystic Mountain $500m Pref shares

September 11, 2013 by IC Insider.com

In July, Mystic Mountain issued $500 million in 10.50 percent preference shares in a private placement. So how do they look financially? IC Insider got hold of some data to help investors understand what the operation is looking like. The funds raised are expected to cut borrowing cost, provide working capital and allow for expansion.

The company intends to apply to the Jamaica Stock Exchange for the listing of all of the Preference Shares by way of introduction and to make such application six months or as soon as conveniently possible after the closing of the Offer.

The company operates an attraction facility in Ocho Rios, Jamaica catering to all, but relying a great deal on foreign visitors to the island.

Information from the company states that “The Rainforest Sky Explorer is a chairlift ride which takes riders from the entrance to the heart of the action, 700 feet higher. The journey takes approximately 15 minutes each way and covers approximately 1.3 miles, giving riders superb views of the rainforest, the beautiful Caribbean Sea on the north coast of Jamaica and educational pictorial displays featuring Jamaican Olympian athletes that are set up at the top of the route.

RFA is a British Virgin Islands registered corporation that, through its Hong Kong wholly owned subsidiary, is the majority owner of five ecotourism parks, two in Costa Rica, one with a management agreement in Mexico, one in St. Lucia, and Mystic Mountain in Jamaica. RFA owns 54.9 percent of Mystic Mountain. The remaining 45.1 percent is owned by Mike Drakulich, Norma Clarke and John Dalton. Additionally, the Company is planning to build a sixth park in St. Maarten and is in advanced negotiations to develop a seventh park in Rio de Janeiro.”

Profitability | Net profit for September 2012 amounted to US$1.186 million up from US$1,018 million in 2011 with profits being made in the last four years, the period that the company disclosed results for. Financial performance for 2nd quarter ended March this year and March 2012 showed operating revenues up to US$2.20 million, a US$179,000, or 7.5 percent decline compared to 2012. Direct operating expenses totalled US$940,000 in the quarter, a 10.4 percent or US$48,000 increase over the 2012 quarter. Administrative expense increased marginally by 3 percent from US$441,000 in the second quarter 2012 to US$455,000 this year. Finance costs fell from US$56,000 to US$40,000 in the second quarter this year compared to the similar period in 2012. Net Income declined by 34 percent or US$299,000 to US$580,000 in the quarter.

Revenues for the 2012 fiscal year amounted to US$7.146 million, an increase of 16 percent or $1 million over 2011 primarily as a result of an increase in visitors over the year. The compounded average growth rate (CAGR) for the 4 year period is 9 percent. Direct operating cost of US$2.40 million increased by 25 percent or US$500,000 compared to 2011, resulting in a gross profit of US$4.75 million for a 12 percent improvement over the previous year.

Operating expenses of US$3.36 million increased by 12 percent or US$358,000 relative to 2011, primarily as a result of increases in general operating expenses such as repair and maintenance and office expenses. Gross profit margin declined from 67 percent in 2011 to 66 percent in 2012. In 2009 gross profit margin was 74 percent.

Finance costs of US$205 thousand declined by US$27 thousand or by 12 percent relative to 2011 of US$232 thousand. Finance cost was reduced from a high of US$611 thousand in 2009. Mystic has reduced its total borrowings from US$4.824 million to US$2.454 million in 2012 by paying down loans resulting in reduced interest cost.

Liquidity | As at September 30, 2012, the company had a current ratio of 1.05. This represents an increase of 22 percent of the liquidity position relative to 2011, in which the current ratio stood at 0.86. The level of equity to debt which was 110 percent in 2011 improved sharply to 160 percent in 2012.

The company’s working capital has been negative for the three years to 2012 and just went into the black in 2012.

Filed Under: Company News, Company Results, General Business News Tagged With: Mystic Mountain, Preference Shares