Company Results — Page 92

Carreras takes a big hit but tax recovery starts

August 1, 2013 by IC Insider.com

The only good news from Carreras‘ first quarter results is buried in the notes to the end of the quarterly report. Namely, the Tax Authority has made arrangements with the company to offset current tax liabilities against the amount owing and that they have so far recovered $338 million during the latest quarter.

Elsewhere, revenues plummeted from $3.1 billion in June 2012 quarter to just $2.155 billion, a sharp 30 percent drop that is not all coming from the recently announced smoking ban. Profit after tax fared even worse than the fall in revenues dipping by 40 percent. That is not good news for the stock which has been declining ever since the ban on public smoking was announced.

An interesting development is that gross margin improved to 100 percent from 90 in the 2012 similar quarter and 86.5 percent for all of the 2013 fiscal year. The price increase earlier this year has clearly had a negative impact with the company’s customers, which seems to have taken a big bite out of sales. A look at sales in 2012 showed a big jump in the last half of the year coming into the March 2013 quarter, suggesting that distributors were stocking up on the product in anticipation of price increase and stopped stock piling once the price adjustment was implemented. As such, the fall off in sales may not be as bad as it appears on the surface.

Expenses rise | While revenues plummeted, expenses did not. In fact sales & marketing went up by a third to $207 million from $152 million and administrative expenses from $278 million to $320 million, a 15 percent jump.

Tax Recovered | The tax now recoverable is down to $1.4 billion from $1.733 billion at the end of March. If the tax authority allows a full recovery, then the full amount of the current liability could be recovered this fiscal year and most likely be distributed as dividends to shareholders.

Carreras ended up with cash funds of $3 billion at the end of June, equity is at $3 billion or $6.30 per share. Current liabilities are at $2.6 billion which includes tax payable of $1.5 billion against current assets of $4.1 billion.

These are clearly times of uncertainty for the stock with the fall in revenues and the smoking ban that no one really knows what impact the ban will have over the next few months. With the stock not having a great deal of bids in the market currently, it’s anyone guess where the price will settle in the short term.

Carreras cut the latest dividend from $1.50 paid last year August, to $1 to be paid in August this year, an amount that is in line with the latest quarterly profit.

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

Unilever Q2 profits up

July 29, 2013 by IC Insider.com

Investors who owned Unilever stock from 2010 would have been very happy as the stock price has benefited from the impact of lower interest rates and some profit growth resulting in the stock price more than tripling.

But profits have lagged the stock price performance. For example, for the 3 months to June this year, profits are up to $14.4 million after tax, compared to $12.6 million in 2012 an increase of 14 percent increase. For the 6 months, profit is higher by 13.6 percent to $27.4 million, that is just a few points below the near 17 percent increase in stock price this year, the stock seems poised to increase in price even more than it has done so far. For the 3 months to March this year, profit was up to $13 million after tax, compared to $11.9 million in 2012. The June quarter represents a higher increase than that enjoyed in the first 3 months of the year.

Revenues up | Revenues which climbed to $133.6 million in the first quarter, grew to $147.3 million in the June quarter, up from $142.2 million for June 2012 quarter. For the 6 months, revenues are up from $269.7 million for the same period last year to $280.9 million this year, a mere 4 percent increase.

Stock price | Unilever’s 17 percent stock price growth this year so far is ahead of the gain in earnings and is on top of a 45 percent increase in 2012, 44 percent in 2011 and 35 percent in 2010 after a 16 percent fall in 2009. The stock seems poised to rise further as demand exceeds the supply of the stock on the Trinidad market. When stock prices rise much faster than the growth in profits, it is time to take serious note of what is happening. Investors in such stocks should be fully conversant with what are the factors at play to ensure their investment can be properly protected if, and when, the factors change.

Unilever products – Unilever Caribbean continues to trade at new highs virtually each time it trades.

The company | A subsidiary of Unilever PLC, a United Kingdom company, and based in Trinidad, the company manufactures a range of homecare, personal care and food products for the Caribbean region including Jamaica and has been having a reasonable profit performance for a number of years. In fact, they have been able to improve sales and margins in a market that has been in recession since 2009.

Some of the company’s brands include Mistolin, Radiante, Breeze, Vaseline, Lux, Lipton, Becel and Blue Band. The product range also includes dishwashing liquids as well as fabric conditioners.

Big quarter | The December quarter is the biggest period for earnings with more than a third being generated in the period. For 2012 full year to December the company reported after tax profit of $59.5 million, an increase of 2.8 percent over that earned in 2011. Profit for 2011 was up 11 percent over 2010 and 2010 profit was up 26 percent over the previous year. Lower interest rates in Trinidad have helped to push the PE ratio to 21 times the IC Insider’s projected earnings of $1.58 per share for 2013. Presently at a stock price of $55, this is up from 14 times in 2011 and 11.5 for 2010.

Improved margin | Unilever is not doing exceptionally well in a tight economy but it is clearly enjoying areas of success reflected in good growth in some of it products. Management earlier this year expressed concerns about rising input cost for some of the products it manufactures and competition from cheaper products. From all indications, management seems to have managed to be steering the operations well, resulting in improved margins and continued growth in profit. Gross margin climbed to 66.2 percent in the June quarter, up from 63.8 percent in the first quarter and up from 63.7 percent for the twelve months of 2012 and is a continuation of the marked improvement seen for 2012 over the 59.2 percent in 2011.

While cost increase seems to be under control for the first quarter in 2013 that was not the case in 2012 when selling cost rose by $17 million or 17 percent and administrative cost rose 22 percent, well above the growth in revenues.

In the latest quarter, sales & marketing cost is flat with 2012 but administrative cost climbed 38 percent to $10 million, a change to the flat numbers in the first quarter. While for the 6 months, sales & marketing cost is flat with 2012 but administrative cost is up 20 percent and is up faster than revenues are growing.

The company boast equity capital of $156 million, has no interest bearing debt and a high current asset ratio with liabilities almost covered twice over.

Filed Under: Company News, Company Results Tagged With: TTSE, Unilever

Berger TT profit poised for big gain

July 29, 2013 by IC Insider.com

The economies of Trinidad & Tobago and that of Jamaica are two contrasting ones. In the case of Trinidad, after a few years of decline the economy is growing again, albeit moderately. Jamaica on the other hand, is still experiencing decline. Interest rates, while sharply down in Jamaica at more than 6 percent, are nowhere near those of the Twin Island state with Treasury rates at less than 1 percent.

But a look at the results for Berger Paints in the two territories would make one wonder if the state of the economies aren’t the same. Both companies are struggling to maintain profitability as the construction sector suffered decline in both countries and are yet to be restored to health. In both countries, there are signs that things may be picking up. For example, Trinidad Cement reported improved sales in the first quarter this year over 2012. In the case of Berger Trinidad, there was a big improvement in the bottom line in the quarter to June with slight pickup in sales to $13.395 million versus $12.891 in 2012. Not much, but enough. This along with a cut in expenses to $13.52 million compared to $14 million, reduced the loss from $1.25 million before tax in 2012 to $185,000 this year and the after tax loss to $179,000 to June this year versus $973,000 in 2012. For the 12 months to March this year, on revenues of $64,146 million and expenses of $62,504 million, the paint company made a profit of $791,000 after tax.

According to figures released for the quarter to June, the company has eliminated some cost. This should made quite a difference to the full year results which IC Insider is forecasting to be 50 cents per share for the year to March 2014.

The price earnings ratio (PE) of the stock is low at just 7 times this year’s earnings, making it a good candidate for investors to profit from.

The financial position of the company is healthy, with working capital being more than two and a half times current assets to current liabilities. Equity capital stands at nearly $25 million with no major debt capital being used in funding its operations. There is virtually no cash on the balance sheet suggesting that they are using cheap bank financing to ensure shareholders max out on profits.

Insider call | Berger TT is an IC Insider Buy Rated stock.

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

Mayberry’s tough year so far

July 28, 2013 by IC Insider.com

So far 2013 is not proving to be a good one profit wise for Mayberry Investments. First government debt swapped earlier in the year hit $337 million from profits in the March quarter and vestiges of the debt swap measures still reverberate in the numbers to June. For the latest quarter, net profit was $48 million after the company benefited from a tax credit of $16 million which raised the bottom-line from $32 million. This compares to profits of $36 million for the similar period in 2012.

For the 6 months, profit after tax amounts to a loss of $20 million and $149 million in 2012. Pre-tax profit of $214.6 million compares favourably to $165 million in 2012.

Revenues | Gross revenue for the quarter of $386 million is down on the same quarter last year of $432 million. During the quarter, there was growth in gain on sale of investments of 119 percent to end at $54.4 million, net foreign exchange gains moved from a loss of $10.6 million to a surplus of $30 million. There was a reduction in fees and commissions from $40 million to $17 and net unrealized market loss of $62 million on trading portfolio. All of these, along with interest expenses contribute to a net income of $186 million versus $217 million in the 2012 quarter before expenses.

First quarter recap | Containment in expenses and a slight boost in income helped Mayberry to record an operating profit of $158 million over the $104 million generated in the first quarter of the prior year. A one-off hit to the profit of $337.3 million arising from the NDX debt exchange plunged the operations into a loss of $178 million, before a tax credit of $87 million and share of associated profits of $24 million resulted in an overall loss of $67.7 million compared to a profit of $113 million last year. Revenues net of revaluation gains or losses came in at $473 million in the quarter up from $452 million in 2012.

The company made increased profits from trading gains in the first quarter which rose to $117.9 million up from $36.4 million in the similar quarter of 2012. Mayberry sold 12 million shares in Access Financial Services for $69 million, reducing their shareholdings to 38 percent. The sale of Access would have contributed a large portion of the trading gains. Net foreign exchange gains helped too in boosting the top line with an increase from $9 million to $40 million. So did dividend income which moved from $15 million to $34 million, while fees and commission fell from $70.6 million to $19.4 million this year. Gains on investments fell to a loss of $11 million from nearly $3 million gain, the year before. For a full recap of the first quarter, read our post Mayberry profit bleeds from NDX

Second Quarter Expenses | Expenses for the quarter were $176 million compared to $194 million for the comparative period as loan loss provision fell from $40 million in 2012 to $9 million in 2013. Other operating expenses rose from $69 million to $86 million, due mainly to a new asset tax imposed by the Government earlier this year. Year to June expenses are down from $354 million to $341 million due mainly to reduced loan losses which was partially offset by the asset tax.

Mayberry stock which was trading at $2.05 per share after the release of the first quarter results has since moved to $2.60 which it traded at for several weeks and closed at on Friday.

Financial Position | Assets on the balance sheet, declined from $23.7 billion at March 2012 and $20.77 billion in December, to $19.5 billion at the end of March but it is back up to $20.8 billion in the latest report. A decline in the investment portfolio of $5 billion countered by a decline of $4.5 billion on the liability side for securities sold under repurchase agreements accounted for the bulk of the change since March 2012. On the other hand promissory notes and loans increased over June last year by approximately $2 billion. The equity capital is holding steady at $3.7 billion.

Related posts | Mayberry profit bleeds from NDX

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

OCM profits growth slows

July 26, 2013 by IC Insider.com

One Caribbean Media revenues climbed 21 percent in the June quarter and 32 percent year to date over 2012. Profit after tax was up 10 percent in the latest quarter and 23 percent for the six month period. The growth in the second quarter is down on that of the first quarter when management stated that acquisitions and revenues flows from a state election in Tobago and elections in Barbados helped to boost revenues and profit for the March quarter by 40.4 percent.

OCM better results came as profits for the 3 months climbed to TT$20.3 million, up from TT$ 18.3 million in 2012, emanating from revenues which were up to TT$131 million. For the six months, profit after tax is up to TT$38.4 million from TT$31 million in the prior year. Both revenue and profits grew over the amount generated in the first quarter of this year.

Management is, however, cautioning as they did in the first quarter report when they stated that the second quarter will be tougher than the first but expect growth to continue. They are again sending a message of caution that the second half of the year will be more challenging.

Results comparison | The June quarter profit is just a shade off from the amount earned in the December 2012 quarter of $21.4 million from revenues of $145.7 million, as well as the amount earned in September quarter last year of $21.8 million from revenues of $132.6 million.

For most media houses, the first quarter of the calendar year is not usually the best in either revenues or profit as advertisers take a more moderate position in the first quarter coming out of the high expenditure of advertising during the Christmas period.

Profit 2012 | For the 12 months to December last year, earnings came to $74.75 million slightly up on the $69.45 million generated in 2011 from revenues of $495 million versus $451 million for non-interest income, an increase of 9.7 percent. Gross profit rose by 14.6 percent to $178 million from $155 million in 2011, showing greater level of efficiency in generating income.

Gross profit margin was 36 percent for 2012 up from 34.4 percent in 2011 is now up to 36.5 percent for the year to June reflecting a big improvement over the 32.6 percent generated in the first six months of 2012.

Financial health | The company is in a healthy financial position, generating annual cash flows of more than $70 million per annum, some of which it is using to acquire other income generating assets. Cash inflows could rise in the current year as profit seems poised to climb above that of 2012. Equity stands at $609 million with no debt and current asset ratio of more than 3 to 1, and cash funds of $144 million at the end of March. Funds are clearly being built up for further acquisitions.

Forecast | IC Insider continues to forecast profits of $95 million or $1.41 per share for the current year giving the stock a PE of 12.75 times earnings. Based on the Trinidad stock market PE ratio and Guardian Media which is at PE of 22, the stock is rated a buy for medium term appreciation, as the stock price could almost double based on these comparisons.

Insider call | OCM is now an IC Insider Buy Rated stock.

Related posts | OCM profits rise strongly

Filed Under: Company News, Company Results Tagged With: One Caribbean Media, TTSE

NCB recovers from NDX hit

July 26, 2013 by IC Insider.com

Despite the cost of the Government of Jamaica debt swap earlier this year the year, National Commercial Bank results to June are just a little distance away from the 2012 profit for the similar period. The banking group reported after tax profit for the nine months at $6.8 billion down from $7.36 billion in 2012 and profit of $2.27 billion in the June quarter compared to $2.587 billion in 2012. Contributing to the results is improvement in operating income which increased by 6.3 percent, or $1.7 billion, when compared with the nine months ended June, 2012. The increase is mainly as a result of net interest income, which increased by 7.9 percent ($1.3 billion) coming from the growth in loans, and investments, net fee and commission income increasing by 11.6 percent ($618 million), primarily due to increased card transaction volumes and increased fees earned from new loans.

Premium income, increased by 143.4 percent, or $2.1 billion, due mainly to the inclusion of general insurance premiums as a result of the acquisition of Advantage General Insurance Company. This is in contrast to the six months ended March when operating income declined by $26 million when compared with the six months ended March 2012. The decline was mainly caused by a $2.4 billion reduction in gains on foreign currency and investment activities arising from the bank’s participation in the debt exchanges, which plunged income for foreign currency and investment activities to a loss of $729 million in the March quarter, compared to a profit of $1.4 billion in 2012.

Loan Loss | A $450 million increase in provision for impaired loans compared to June quarter 2012 helped to keep earnings below that quarter’s net profit resulting in the net 2013 profit falling.

The data suggest that they have almost recovered from the low interest rates they are getting on Government of Jamaica debt instruments. The results for the quarter represents a recovery from the profit of $1.744 billion reported for the March quarter when the write down of the government bond was recorded. The NCBJ group accepted the Government’s debt swap offer and exchanged $118 billion of eligible securities. The primary impact of the exchange is a reduction in coupon rates and an immediate hit was felt from the lower interest rates from new instruments, compounded by the extension of the tenure of the securities.

Expenses up | Operating expenses increased by $670 million in the three months to June over the March quarter, of which $230 million is due to loan provisioning and $400 million to other operating expenses. For the nine months, operating expenses are up by $3 billion but much of this would be due to the acquisition of the general insurance company who financials are merged into the group’s figures.

Loans and advances, increased from $128.8 billion at the end of March 2013 to $135 billion and is up from $107.6 billion at June 2012, growing by 25.8 percent year over year. Investments of $227 billion have grown, but at a slower pace than loans, which is a good thing as the former has lower yields than loans. While the provision for loan losses is up, the total non-performing loans totalled $7.5 billion as at March is now at $6.6 billion due to writing off of loans that were previously provided for.

Dividend | NCB declared a dividend of 8 cents per share payable on August 24. The stock closed at $19.51 at the end of trading on Thursday with 368,314 shares trading before the results were released.

Insider call | NCB is now an IC Insider Buy Rated stock.

Photo via MLAArchitect.com

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

H&L – big profits boost

July 23, 2013 by IC Insider.com

Hardware & Lumber, a Grace Kennedy subsidiary, which recorded moderate increase in sales for the March quarter of this year, accelerated sales a bit in the June quarter at 8.9 percent pace over the second quarter of 2012 compared to a mere 2.4 percent increase in the first. Revenue out turn was $1.744 billion in the latest quarter up from $1.548 billion in the first quarter as well as an increase on the $1.6 billion generated in the second quarter of 2012. Year to June revenues increased to $3.29 billion over the $3.1 billion in 2012.

The second quarter revenues contributed to a big jump in profits for the quarter and the six months as profits jumped to $43.3 million from a revised loss of $1.44 million in 2012. For the six months profits amounted to $52.17 million up from a loss of $6.26 million.

Gross profit margin increased to 26.22 percent in the latest quarter, roughly the same for the six months period, compared to 25.5 percent in 2012. Operating expenses were kept to just $398 million in the June quarter just a few million up from the $391 million spent in 2012, but the six months figure grew quite a bit to $791 million versus $755 million.

“Operating efficiencies were achieved through the rationalization of the staffing model as well as in other areas such as security and utilities. However, there was a significant increase in the costs associated with the company’s pension scheme and other retirement benefits, in keeping with the revision of the accounting rules governing such benefits which became effective January 1, 2013. For the first six-months, these charges increased by $40.7 million compared to the same period last year,” Management stated.

Interest cost also declined for the six months as the company paid down loans which stands at $458 million versus $650 million at June 2012. At the same time cash grew to $376 million compared to $196 million in 2012, but payables climbed to $1.1 billion up from $992 in June 2012 and $694 million at the end of December last year.

While there is a clear sign of a turn-around in the operations, the segment results for agricultural products and equipment reflect a loss of $55 million in the half year results compared to a profit of $129 million. The 2013 figure is only a slight improvement over the loss of $66 million in 2012. There is much room for improvement in the hardware division that could swell the bottom-line if that segment is turned around.

Outlook | Earnings should pick up as the year progresses and IC Insider expects to see earnings for the full year around $2 per share, making the stock very cheap.

Insider call | Hardware & Lumber is an IC Insider Buy Rated stock.

Filed Under: Company News, Company Results Tagged With: H&L, JSE Company

Kremi up, hardly out of the blocks

July 16, 2013 by IC Insider.com

Caribbean Cream’s 49 percent jump in revenues in the first quarter to May this year, melted down to just 24 percent in pre-tax profits as costs rose above the growth in inflows. The situation for the February quarter was even worse as a 48 percent increase in sales delivered just $1.5 million in profit, a collapse from $18.6 million in 2012. Profit after tax rose to $11.7 million, up from $5.4 million, thanks to a roughly $6 million turn around in taxation.

Costs rise faster | In the May quarter, direct labour cost climbed 69 percent to $11.4 million, electricity moved up by 86 percent, water jumped 106 percent to $1.2 million, machinery depreciation was up 117 percent. There were savings in packaging cost, down 53 percent to $725,000, factory rental was down by 44 percent to $1 million. IC Insider understands that the company underwent some major changes in how some aspects of the operations are done. The company used to purchase certain items from Scoops Unlimited, but this operation is now taken over, hence costs are structured differently than in the prior year period. The acquisition of their own warehouse means reduction in rental but a rise in finance cost. There was also a price adjustment in March for the products to help cover the increased production cost.

Admin cost | Administrative cost was fairly well contained having increased far less than sales. The increase most likely would have been partially impacted by added costs to facilitate the IPO which occurred in the quarter. As such legal and professional fees were up nearly $1 million and audit and accounting fees by $1 million. Utility cost were down as well as depreciation but these may be due to reallocation of charges to direct expense instead of administrative expenses as was shown in the prior period. Interest and finance cost also showed an increase of $1 million. There was also a loss of $937,000 on disposal of fixed asset. The growth in profits before tax would be 36 percent if the loss on fixed asset is excluded. With the increased level of revenue, far more would have been expected under normal circumstances. The next quarter will be the true test when one-off costs should not recur.

Caribbean Cream’s rapid sale growth is phenomenal and looks as it can continue for a while yet. This is the aspect that many investors should be looking at as the company expands its customer base and captures market share with good products at competitive prices. As sales continue to rise rapidly, cost is likely to grow at a much slower pace thus helping to boost profits at a rapid pace.

At the end of May, current assets stood at $131 million up from $102 million at the end of February. Increased cash which stood at $65 million and a $24 million reduction in inventories were the factors giving rise to current asset change. Current liabilities on the other hand stood at $75.66 million a decline from February’s $126 million as the amount for payables was cut from $100 million to $64 million. Borrowed funds stood at $81 million, just a bit lower than the amount due at February.

Capital spend | The company spent $100 million on capital prior to the IPO but more is to be spent as new cold room machinery is to be installed later this year. Management states that this will cut cost and increase efficiency in freezing the product.

Valuation | The stock is selling at roughly 30 percent of sales. This compares with AMG Packaging at 100 percent of sales, Blue Power 50 percent and Jamaican Teas is around 100 percent of sales. The PE on forward earnings for 2014 is only 2 and there is much room for the stock price to move upward.

Management | The report containing the results show signs of some management weakness that they need to correct. In the investment world, communication is key. The changes in the operations and the resulting changes in the line items of costs should have been addressed in the directors’ report to shareholders. Costs that were of a one-off nature should have been highlighted so that investors could get a clearer picture about ongoing costs and profits. Instead, investors have to dig into the numbers making assumptions that really should not be necessary.

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

First Citizens’ $1B IPO opens today

July 15, 2013 by IC Insider.com

The government of Trinidad & Tobago, through the holding company for First Citizens Bank Group, launches a billion dollar Initial Public Offering (IPO) of shares to reduce its ownership in the bank. The issue opens today, Monday 15th July, and when completed will be listed on the T&T Stock Exchange. The offer of 48,495,665 shares, approximately 19.3 percent of the total shareholding of the bank, is expected to rake in $1.1 billion before expenses for the Government of Trinidad. The issue has an offer price of TT$22 per share for sale to the public. The proceeds will go to the holding company for Citizens and is expected to be paid over to the government.

Citizens, a banking and finance company, has total capital of $6 billion and total assets of more than $37 billion. When compared to the two other banks listed on the Trinidad Stock Exchange, Republic has capital of $7.94 billion and total assets of $55 billion while Scotia Bank has capital of $3.2 billion and total assets of $18 billion as of March this year.

First Citizens Brokerage & Advisory Services (a subsidiary of First Citizens Investment Services) is the Lead Broker for the Offer for Sale.

THE COMPANY | The First Citizens Group is a financial service organization headquartered in Trinidad & Tobago that offers a range of retail, corporate, capital markets, investment management, wealth management, asset management, trustee and brokerage services. The provision of corporate, commercial and retail loans, deposit and other retail services, including credit card accounts, internet, and telephone banking is conducted in Trinidad & Tobago via a network of 26 full service banking locations, one foreign exchange bureau, seven operations centres and 96 ATM machines. In Barbados, these services are provided via five branches, one lending centre and eight ATM locations. In Costa Rica, the provision of corporate loans is done via a centralised corporate banking team that covers both Costa Rica and the Central American region.

COMPANY HISTORY | First Citizens Bank was formed in March 1993 and acquired, The Trinidad Co-operative Bank, Worker’s Bank and National Commercial Bank. At that time, 62 percent of its loan portfolio was in arrears. In the 10 years to 2003, First Citizens Bank grew its profits to TTD233 million, doubled its asset base to TTD6.1 billion and had attained international credit ratings of BBB- and A-3 by S&P and Moody’s, respectively.

In 2009, First Citizens acquired Caribbean Money Market Brokers Limited, now First Citizens Investment Services Limited, a full service securities company with offices in Trinidad & Tobago, Barbados, St. Vincent and St. Lucia. In January 2012, a representative banking office was opened in Costa Rica as the Bank’s first entrance into Central America and in August 2012, the Group continued its expansion with the acquisition of Butterfield Bank in Barbados, now called First Citizens Bank (Barbados) Limited.

BALANCE SHEET & PROFITS | At the end of March this year, the bank loaned out $13. 8 billion, an increase over the March 2012 of $11.2 billion. Customer deposits climbed faster to $26.7 billion versus $22.9 billion. Profit before tax grew to $388.7 million, $40 million or 11.5 percent over the $348.7 million earned for the corresponding period last year. Profit after tax amounted to $306.4 million. For the 2012 fiscal year, the bank earned profits of $446 million giving a return on equity of 8 percent and return on assets of 1.58 percent. Return on equity is around 11 percent for 2013.

Citizens is underperforming its two major competitors in a number of areas. Importantly, two critical measures tell the tale as to where the bank sits with its peers. Scotia Bank’s return on equity is 18 percent and return on assets 3 percent while Republic Bank is 14.6 percent return on equity and 2.25 percent return on assets. Republic sells at a PE of 15 and Scotia Bank at 22.5 times 2013 earnings and Ansa Merchant Bank has a PE of 19. The lower numbers of PE for Citizens suggest there is much room for the stock price to climb after the shares list with their PE at only 11.

The performance of the loan portfolio is a matter of concern. Data shows that there is not much impairment in the loan portfolio. However, it is noted that the level of loans that are past due increased markedly in 2012 over 2011 from $1.96 billion to $2.99 billion. “Corporate past due amounts” increased by $800 million, an indication that things may not be a sanguine as the profit figures are suggesting even as the provision for loans losses in the March six months period was much less than what was provided for in the comparable half-year results in 2012.

DIVIDEND POLICY | The dividend policy of the Issuer will be to distribute funds surplus to the operating capital and strategic requirements of the Group, as determined by the Directors, with an annual target dividend pay-out percentage range between 45 to 55 percent of net profit after tax.

Filed Under: Company News, Company Results, Initial Public Offers, Stock Market, TTSE Market Tagged With: First Citizens, Trading Activity, TTSE

AMG is investing for tomorrow

July 12, 2013 by IC Insider.com

AMG Packaging invested $108 million since last August in fixed assets including land, building and equipment. The additions moved fixed assets to $230 million, a major increase for a relatively small company. The company took on debt to help fund the expansion as well as providing working capital financing, while both inventories and trade receivables rose and was partially offset by a rise in payables.

At the end of April, loans stood at $91 million up from $30 million in May 2012 as borrowing added $70 million to debt with repayment of principal over 7 years at 9.25 percent interest for 5 years and variable thereafter at 3.25 percent above Treasury bill rates. Capital spend is yet to end. 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 that is being manufactured will be shipped shortly. They are expected to increase production and enhance the quality of products.

2013 profit | Profit for the quarter came in at $7.3 million down from $15.7 million in 2012. For the nine months period, the bottom line reflected an increase in profits to $37.7 million up from $32.56 million in 2012. Revenues climbed in the latest quarter over that of 2012 but only by 5.7 percent to reach $111.37 million, while revenues for the nine months was up by 18 percent hitting $315.77 million. Sales slowed down sharply in the latest quarter from 34 percent increase in the three months to February and 18 percent increase in the November quarter.

Interestingly, even as revenue growth slowed in the May quarter, the margin continues to show improvements as gross profit increased over that of the 2012 May quarter and production raw material cost marginally more to generate the increased sales. Direct expenses climbed 27 percent in the quarter. Rises in administrative cost, finance, interest and depreciation combined to squeeze profit for the quarter, although profit before these expenses grew by $2 million, net profit fell by $8.4 million. In the quarter, interest cost came in at $2.8 million. There was none reflected in results in the prior period. Financial cost rose by $1.3 million and administrative cost increased by $1 million over the February quarter. Some of the increased cost is not expected to recur in the subsequent quarter but indications from the rise in administrative cost in the previous quarter compared with 2012 figures suggest that the cost structure going forward is set at higher levels than before. The company has been focusing its energies on cost containment and the reduction of raw material waste. The improved margins indicates that they have succeeded in this latter area. But there others that they are working on that will bring results in the future. The results to date indicate that they need to get revenues up at a faster pace than the latest quarterly results indicates to more than cover the increased overhead cost.

2012 profit | Sales for the year ended August, 2011 increased by 15.71% to $357.46 million as a result of an increase of 27.19% in the number of units produced. This increase in sales resulted in a 27.23% increase in Gross Profit of $81.31 million (2011- $63.91 million). For 2012, profit of $47.66 million was realised, up 52.45% over the 2011 prior year of $31.27 million.

Finances | Current assets of $199 million including cash of $49 million is more than adequate cover for current liabilities of $87 million. At the end of the February, cash was down to $7 million. Inventories climbed sharply and may well be attributable to the weakness of the exchange rate of the Jamaican dollar, in which case holding inventory at a lower exchange rate will act as insurance coverage for loss in value of the Jamaican dollar. The increase in inventories could well be that sales were taking place at a much slower pace than anticipated based on the hike in sales in the prior quarter.

Production improvement | AMG told its shareholders last year that the new 10,000 square feet warehouse facility was completed and will allow for additional space to stock raw material and finished products as well as expand the production capacity. The facility boasts two loading bays which will enable loading and unloading containers and minimise damage to the rolls. It will enable the company to store raw materials in a secure and proper environment. A paper clamp forklift was acquired and enables moving paper rolls in a more efficient manner.

A new two-colour printing and rotary die cut machine is installed and in production. This acquisition increased production as well as widens the product base. A partition machine was also acquired, expanding the product offering to service companies that package glass products.

Management decided to rearrange the shift system to accommodate a third shift in the near future. The new hours will be 6am to 2pm and 2pm to 10pm. This will eliminate the down time as well as minimize the overtime.

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