Jamaica’s trade deficit during the first seven months of 2014, deteriorated compared to the same period last year. The worsening position occurred as a result of a sharp fall in non-traditional exports, rather than increased imports.
The deficit ended at US$2.613 billion, compared to US$2.573 billion in the comparable period for 2013. The deterioration flowed from merchandise imports during the 7 months, valued at US$3.47 billion, decreasing by 2.4 percent or US$86 million, compared to the $3.55 billion recorded in the similar 2013 period. On the other hand, exports for the 2014 period, amounted to US$852 million, a decline of 12.9 percent or US$127 million below the US$979 million earned in the similar 2013 period.
Imports| According to the Statistical Institute of Jamaica (Statin), the decline in imports was largely influenced by lower spending on importation of Mineral Fuels, Chemicals, Beverages & Tobacco.
Exports fall| During the first seven months to July, traditional exports earned US$453 million, falling by 5.3 percent or US$25.6 million below the exports earnings during the 2013 period. Non-traditional export earnings from January to July 2014, fell by US$91 million or 20.2 percent, to US$360 million.
Drop in export pushes up Jamaica’s trade deficit
Sales up margin down at Lasco Distributors
Peter Chin – Lasco Distributors’ Managing Director
Operating cost jumped 15 percent in the quarter, to $377 million and just over 17 percent for the six months to $738 million, pushing profit down 19 percent to $112.5 million for the quarter, from $138.7 million in 2013 and down a much larger, 33 percent, to $203 million for the half year, versus $303 million in the 2013 period.
As disappointing as the second quarter numbers are, they represent a major improvement over the first quarter with a revenue increase of 4 percent, and a fall in profits of 45 percent compared to the 2013 June quarter.
Finances|The company has quite a bit of funds tied up in inventories $1.3 billion and receivables $1.7 billion, that are in excess of normal trading levels, cash funds on the other hand is up to $850 million and will be handy in helping to finance the 110,000 square foot warehousing facility, that they will be embarking on shortly, to meet what management says, is increasing demand flowing from new products to be distributed by the company.
The expected payment from their successful law suit against Pfizer is not yet booked and the amount not yet made public but should exceed $1 billion.
Lasco Manufacturing new “I Cool” drinks
Impressive sales growth at Medical Disposables
Kurk Boothe – Medical Disposables Managing Director
In 2013 after taxation of $4.4 million, $13 million was left as net profit. For the six months, profit after tax of rose 60.6 percent to $38.7 million from $24 million, after accounting for $8.4 million in taxes.
For the quarter, gross profit grew 29 percent to $70.4 million compared to $54.5 million and for the six months an increase of 28 percent to$136 million. “This improvement was due to the increased sales in all categories and consistent review of our pricing structure to maintain gross margin efficiency,” Kurk Boothe, Managing Director said in his report to shareholders. The increase in gross profit was helped by an improvement in gross profit margins, increasing during the latest quarter to 33.14 percent from 32.12 last year and to 33.65 percent for the six months versus 32.90 percent in the same period of 2013.
Sales revenue climbed 26.2 percent to $283 million in the September quarter over the $224 million in 2013. For the half year, sales grew 26 percent to $540 million from $429 million in 2013. “This result was in keeping with the company’s strategic forecast of growing market share and widening the customer base in all categories of its business operations,” Boothe stated.
IC Insider understands that sales have moved to more than $100 million per month since the latter part of the last quarter. If this is maintained then it should lift profit going forward and could push earnings to around 40 cents per share for the current financial year.
Expenses| Total operational expenses increased 49.8 percent for the quarter and the half year to September to $47.6 million compared to $31.8 million in 2013 and to $93.8 million for the six months period.
“This increase was driven mainly by staff related expenses, utilities, professional fees and information technology services. Staff related expenses, in particular, were driven by the strategic decision to realign the staff complement and compensation to sustain the current growth, development and expansion of the business, Boothe said.
Finances| Trade receivables have climbed to more than two months of sales at $240 million and inventories have moved up as well to just under three months’ supply at $182 million. Cash funds are at $86 million but borrowed funds have climbed to $106 million.
The stock is one to watch with the price of the stock on the junior market of the Jamaica Stock Exchange at $1.92 at a PE less than 5 times the 2015 profit. The company declared a 4 cents per share dividend, payable in November 19.
Flat sales higher cost hit Lasco Manufacturing
Lasco Manufacturing new “I Cool” drinks
Earnings per share fell to 3 cents for the quarter and 7 cents for the six months. Year to date revenue was $2.08 billion compared to $1.88 billion for the same period last year, an increase of 11 percent. “This growth was driven mainly by increased volume in our export markets. Our International Division reported a growth of 40 percent during the quarter” management stated in their release with the financials.
Gross profit for the six months rose 14 percent to $602 million from $526 million and in the September quarter it grew to $287 million from $276, bettering gross profit margin moderately. Net profit for the six months declined 15 percent to $268 million against the comparative period last year. “The net profit performance was in line with the expectations of management and the board, this was due to temporary increase in manufacturing cost resulting from the effect of changes in staff complement, overhead costs associated with the new manufacturing plant, and increased finance cost,” the company’s management stated.
Operating expenses climbed 54 percent to $151 million in the latest quarter, and 41 percent, for the six months period. While there is no breakdown for the operating cost, other than the increased staff cost mentioned above, increased depreciation charge on the liquid factory would also be one of the factors pushing cost. With the other factory to be opened after the quarter’s end, the depreciation charge will rise again. Finance cost jumped to $25 million in the quarter from just $2 million in the 2013 quarter and for the half year to $57 million from $2.3 million. Prior to the completion of the factory, the finance cost associated with building and equipping the factories was capitalised as part of the factory cost. With the completion of the facilities, the cost will be a direct charge against income.
Heating of raw material to make bottles for Lasco’s new drinks
“The company is on target with its long-term plan to invest in innovation across all facets of the business – from new product development to powering a pipeline of new products, drive financial performance and fuel continued consumer passion for the LASCO brand,” management stated.
Finances| At the end September, borrowed funds was at $1.49 billion with $187 million to be paid within the next twelve months, while cash funds were at $153 million. $2.1 billion is in work in progress to be transferred to fixed assets and will push total fixed assets to $3 billion when effected. The company is also in the process of constructing a new warehouse of 30,000 square foot. Up to the end of the September the company was operating from two factories one at the White Mall facilities as well as at Red Hills Road, thus resulting in duplicated cost. The liquid plant is to be up graded further by $3 million to reduce raw material cost and expanded for other products, including production for some foreign partner.
Lasco Financial rolls out profit gains
Lasco Financial Managing Director Jacinth Hall-Tracey
For the six months to September, profit is up by 25 percent to $112 million or 9 cents per share and revenue climbed 14 percent to $366 million from $303 million in 2013. All things being equal, the full year earnings to March next year should exceed 20 cents per share.
Cost rose 19 percent in the six months as increased marketing cost helped push cost up, but the increase for the September quarter was only 14 percent. The company is embarking on some new initiatives to expand the business. One will be the utilization of 14 locations island-wide for the provision of loans. They indicated earlier this month that they have already signed an agreement to facilitate this. New software that that has been installed will allow for Money Grams’ data to reside locally and thus speed up the processing in the money transfer transactions, thus creating a better experience for their customers. The focus in this area, is a partial recognition that that the traditional business of cambio and to a lesser degree remittance services are fairly matured and growth has to be explored elsewhere.
Lasco Financial should generate in excess of 40 percent return on equity for the current fiscal year. As of September, equity stood at $726 million, loans and other receivables on the books is at $325 and cash funds $448 million.
A look at Access with return on equity of more than 50 percent, contrast with Lasco Financial more than 40 percent. For one, it indicates that high risk lending is very profitable area if done right as well as the benefit that leveraging can deliver, with Access borrowing funds to relend versus Lasco using its own capital alone.
NCB to face $500m wages hit in 2014
National Commercial Bank (NCBJ) advised that the Industrial Disputes Tribunal made an award in respect of salaries and benefits for most of the clerical employees of NCBJ and its subsidiaries (NCB Group).
The award included an increase in salaries of 8 percent per annum for each of the financial years ending September 2013 and 2014. The increases for those years will now have to be paid retroactively. NCB Group said they make provision for salaries to be increased once the award was received, but the increases awarded exceed the amounts provided. The extent to which the retroactive payments for those two financial years exceed the provisions that had been made will be taken into account in the income statement for the financial year ended September 30, 2014. Union leaders for the staff association claimed that the bank offered five percent for 2013 and four percent for the current year. Such an offer would mean that the group would need to book an additional 7 percent to the wage bill. The groups wage bill was approximately $11 billion for the 2013 fiscal year to September and would place the additional charge, somewhere in the $800 million region. The net effect would be closer to $500 million or around 20 cents per share after tax. The bank’s wage bill for the 2013 financial year was $9.5 billion.
IC Insider originally projected earnings of $4.80 per share for the 2014 fiscal year. The adjustment to be reflected in the 2014 accounts will most likely results in a lower out turn.
Revenues up strongly at Access
Access Financial Services’ profit increased 13 percent in the June quarter and is up by 17 percent in the September quarter, to reach $93.57 million that is still down from the robust 30 percent increased profit, in the March quarter.
The third quarter profit grew much more slowly than revenues that grew 31 percent to $272 million and slightly more than in the second quarter’s $267 million and $254 million in the March 2014 quarter.
For the nine months to September, profit is up by 20 percent to $239 million or 87 cents per share. The company becomes taxable in the December quarter, but earnings should surpass $1.20 per share for the full year. In the nine months to September, revenues climbed 37 percent to $793 million from $579 million in 2013, continuing its strong growth trajectory since the shares were listed. The December quarter is traditionally the biggest quarter in income and profit generation. All things being equal, the earnings of 34 cents in the September quarter, should be well surpassed and putting full year earnings around $1.40 per share.
Increase in the provision for bad loans climbed much faster than revenues in 2014 so far, with $54.6 million provided in the latest quarter, bringing the nine months to $169 million compared with $52 million in 2013. The nine months provision amounts to 23.4 percent of the loan income, this is a major increase from 12.6 percent for full twelve months of last year.
Access should generate in excess of 50 percent return on equity for the current year. As of September, equity stood at $744 million, loans on the books is at $1.1 billion, a 26 percent jump from $889 million at September last year. Total borrowed funds used in the financing of the business, amount to $582 million compared to $422 million in September last year, cash funds stand at $146 million.
The company paid a dividend of 36.5 cents per share payable to shareholders on September 1st this year.
Dividend likely for Eppley
The Board of Eppley Limited will meet on Thursday, November 13, to consider the payment of an interim dividend.
For the current year, Eppley paid an ordinary dividend of $9 per share on September 2. An ordinary interim dividend of $9 per share was paid on May 29 and $9 per share was also paid on February 28, this year.
Profit before tax, was up 67 percent for the six months to June this year, but only 21.5 percent in the June quarter, and after tax it was up 112 percent for the quarter, and 119 percent year to date, for a net profit of $29.6 million. There is no tax payable of the profit for the current year, as the company enjoys tax free status for 5 years, under the junior market listing incentive.
Proven to consider a dividend
The Board of Directors of Proven Investments will to consider dividend payments to both its ordinary and preference shareholders at a meeting on November 4.
A dividend of US$0.0022 per ordinary share was paid on December 3, last year. For 2014, the investment company, paid dividends of US$0.0020 per share to ordinary shareholders on June 24 and US$0.0015 per ordinary share, on March 13, this year.
The net profit for the quarter to June 2014, excluding a loss on extra ordinary activities and gain on purchase of subsidiary amounted to US$1.18 million, an increase of 14.3 percent, compared to the same period last year.
JMMB to consider a dividend
The Board of Directors of Jamaica Money Market Brokers will meet on November 7, to consider an interim dividend payment on the company`s ordinary shares.
The company paid a dividend of 17 cents per ordinary share on June 26, this year. A payment of 16 cents per share was made on December 18, last year.
JMMB Group posted net profit of $558 million and earnings per share of 34 cents for the quarter to June this year, 26 percent lower than the $754 million earned in 2013. The decline in the June quarter, contrast with a 5 percent increase in profit for the March 2014 quarter over the 2013 period.
