The payment of a dividend based on the financial year ended June, 2014, will be considered by Desnoes and Geddes at a meeting scheduled for Wednesday, October 29.
The company paid an interim dividend of 20 cents per share and a special dividend of 5 cents per share on December 20, last year.
They also paid interim dividend of 10 cents per share and a special dividend of 15 cents per share on May 16, this year. Profit after tax, for the 2014 fiscal year was $3.15 billion, but excluding the gain from the shares the company had in two breweries in the eastern Caribbean, it would have been $2.2 billion or an increase of 80 percent, instead of the 160 percent increase the net result shows. This means that shareholders can look forward to a healthy increase in the dividend to be declared.
D&G to up December’s dividend?
Profit climbs 21% at Margaritaville
Revenue jumps 30.7 percent to US$1.7 million, in the first quarter, ending August and pushed up gross profit by 33.24 percent to hit US$1.267 million, as margin improved over the similar quarter in 2013, at Margaritaville Turks Ltd. It was not all good sailing for the second US dollar listed stock on the Jamaica Stock Exchange, as administrative cost climbed faster that revenues at 37.76 percent, and kept growth in profit to US$245,000, for a 21.18 percent increase.
Full year profit| For the current year, based on the growth in revenues so far, profits should climb to US$1.6 million, up from US$732,000 in twelve months to May this year and result in earnings per share of 2.4 US cents and put the PE of the stock at 4.6 making it an attractive buy currently. The standalone business depending on ships docking is not without added risk, a factor that investors should be cognizant of. The shares are not in great supply but there are offers ranging from 11 US cents to 18 cents but there has been no buying interest for weeks.
Construction of a new restaurant, is to commence in the second quarter of the financial year and end in the third quarter, to expand their offerings to customers.
Concerns| The company has little debt, but has a big jump in the amounts owing to creditors, growing from $716,000 to $973,000 while amounts owing by related companies to it, jumped sharply, from $424,000 to $987,000. This is not a good sign and there is not even an ounce of comment by management about this unusual buildup of these amounts. While all of this is happening, cash is down to only $4,000 from $58,000 a year ago.
Margaritaville is new to listing on the stock exchange, but they need to get a few things right. The prospectus stated that the shares would be listed on the stock exchange main market, the audited statement for 2014 says the same, and the current report repeats it as well. These are all incorrect as the shares are listed on the US dollar denominated market, which differs from the main market. The actual financial statement does not provide readers with the number of shares issued, this should be a part of the financial statement. The listing of the number of shares issued in the top 10 shareholders is not a part of the financials and investors should not have to look there for it.
Price increase to push Witco 2015 profit
Trinidad’s West Indian Tobacco (Witco) raised prices on cigarettes approximately 15 percent, effective October. The increase should push revenues to over $1.3 billion dollars in 2015, from TT$1.185 billion in 2013.
An increase of that level on top of one in 2013 will most likely reduce the volume of sales on the Trinidad market, where the increase was effected. The price adjustment should help boost next year’s profit and by our calculation that should hit $700 million after tax or around $6.80 per share. That would put the PE ratio of the stocks at just over 17 times next year’s earnings and should help move the stock back into the $20 region which should be helped with an expected increase in dividends in the region of the EPS.
Witco’s profit jumped 23.5 percent in the June quarter, this year to hit $127 million as revenues climbed by a smaller 15 percent, to $324 million. For the six months to June, profit is up to $224 million from $188 million, a 19 percent spurt, from revenues of $590 million versus $556 million in 2013. Earnings per share came in at $1.50 for the quarter and $2.65 for the half year. Earnings for the full year to December should reach $5.70 per share.
Profit up in Q3 at Carib Cement
Caribbean Cement reported profit of $78 million for the September 2014 quarter, losses of $89 million in the second quarter, helped pull the results down to just $25 million, for the nine months to September this year.
A profit of $32 million was reported in the nine months to September last year. The 2013 profit performance includes exceptional income of $591 million arising from the reversal of charges previously accrued from the debt restructuring with the parent company, Trinidad Cement, but the results for that year also had some exceptional charges, that have not recurred in 2014, including foreign currency losses amounting to $689 million.
Sales Volume| Both domestic and export cement sales volume grew over the nine month period, 2 percent in the local market and 7 percent for exports, while clinker sales grew from 6,700 tonnes to 80,400 tonnes to satisfy the contract to supply clinker to Venezuela. Overall, the plant sold a total of 650,000 tonnes of cement and 80,000 tonnes of clinker, well below the rated capacity of the plant. Sales revenue amounted to $3.5 billion in the September quarter and $10.75 for the year to September, up from $3.2 billion for the September 2013 quarter, and $8.9 billion for the nine months. While the volume of local sales rose, export of cement fell but clinker is up in the quarter.
Outlook| “The recent trend in the domestic market is expected to continue as well as improvement in the export earnings. In addition, we have entered into a new agreement to supply 240,000 tonnes of clinker to Venezuela, starting shipments in October 2014. We therefore remain cautiously optimistic that these favourable results can be sustained.” New chairman Christopher Dehring stated.
The 2015 year, could well experience further growth in domestic sales, as the local economy slowly improve as interest rates should continue to recede, thus lending some life to the construction industry.
But the company continues to be saddled with high debt and the cost of servicing it, which for the nine months is $250 million. With profit after depreciation, but before interest being $270 million, the risk of falling into a loss is great, unless volumes increase at a faster pace that is has so far this year.
The company has accumulated a pile of losses and will require several years of profitable trading to wipe it off and commence the payment of dividends, until then investors will have to look to growth in profits and movement in the stock price for compensation.
Power cut disrupts trading on TTSE
The Trinidad and Tobago Stock Exchange, is reporting a delay in transmission of trading reports for Wednesday, due to what the exchange states is the encountering of a power outage which adversely affected their trading system and has delayed the transmission of trading reports.
“The power outage was actually several outages in quick succession which adversely affected our servers. This problem was exacerbated by low voltage that was occurring previous to the outages”, the stock exchange stated.
The exchange sated that “We are working aggressively to resolve the issue and will provide an update later this evening. We appreciate your patience and assure you that we are doing everything possible to resolve this situation”.
Profit continues at TCL but equity needed
Profit for Trinidad Cement’s third quarter improved over the second quarter, with net profits of $30 million up from $18.7 million in the June quarter and just $6 million in the similar quarter in 2013. For the nine months to September, profit for the group’s shareholders amounted to $60 million versus $69 million in 2013.
The 2014 figures reflect cost of nearly $29 million associated with an attempt at restructuring the heavy debt the company has, but the 2013 results benefited from a tax credit of $27 million.The profit flowed from revenues of TT$514 million for the September quarter, an increase of only 3.6 percent from $496 million in 2013, and for the nine month in 2014, the Group recorded growth in revenue of $97 million or 6.5 percent, to reach $1.587 billion. “This improvement was driven by growth in the domestic cement markets in Trinidad and Jamaica, whilst the Barbados market remained relatively flat. In addition, concrete sales improved by 12.3 percent. In Jamaica, Caribbean Cement was able to supply 80,300 tonnes of clinker to Venezuela. Price increases were implemented in Trinidad, Jamaica and Guyana,“ management stated in a release with the financial report.
Net finance costs fell by $30 million, due to lower foreign exchange losses of $15.4 million and lower net interest cost of $14.3 million to hit $144 million for the nine months period. Finance cost fell to $47 million in the September quarter, compared with $51 million in 2013.
Operating Profit before Interest, taxes, depreciation and non-recurring items from continuing operations increased by $31 million or 9.6 percent to $125 million in the latest quarter and was $326 million for the nine months, to September versus $326 million in 2013. According to management “the increased revenue was eroded by escalating costs in Jamaica due to the depreciation of the Jamaican dollar and increased operating costs in Barbados.”
Earnings per Share amounted to 24.4 cents compared with 28.2 cents for the nine months period in 2013, but the latter was boosted by a large tax credit. For the quarter earnings per share amounted to 13 cents from continuing business.
Management stated that “The operations of Premix & Precast Concrete Inc. (Barbados), a subsidiary of Readymix West Indies, was discontinued in September due to the prolonged operating losses at this location, resulting in a loss of $3.4 million recorded for the quarter and $4.2 million for the nine months of 2014.”
The Board stated that they are currently negotiating with the financiers to have a restructured loan agreement. Negotiations are also in progress between the Company and the trade union to have an agreement with regard to retroactive payments for the expired collective agreements. A comprehensive financial and operational review of the Group is in progress and a restructuring plan, which seeks to secure the long-term viability of the Company, is scheduled to be completed by October.
The debt at the end of 2013 was just under $2 billion all of which has been switched to current liabilities as a result of the default occasioned by the decision of the company to suspend payment on the debt pending negotiation of the terms. Equity stood at $570 million at the end of September, well below the debt. All amounts are in TT dollars.
Trinidad Cement is list on the Trinidad, Jamaica, Guyana, Eastern Caribbean and Barbados stock exchanges.
More JMMB insider selling
Insiders have been selling Jamaica Money Market Brokers (JMMB) shares in fairly large quantities this year, even as the company’s fortunes seem to be bright.
JMMB advised the Jamaica Stock Exchange that a related party sold 5,000,000 of the group’s shares on October 10, 2014. On September 18, this year a connected party also sold 1,000,000 of the Group’s shares.
In March this year CEO Keith Duncan was reported to be telling investors in Trinidad: “If ever there was a time to get excited about JMMB Group’s performance prospects, that time is now!” but while he was telling the Trinidad investors this, persons close to Jamaica Money Market Brokers were continuing to sell shares in the company.
Earlier in the year, five related parties sold a total of 9,663,800 JMMB shares during the period March 17-18, 2014 but that is not the only sale of large amounts around that time. A connected party sold 1,500,000 of the shares on March 4, 2014. A Director sold a relatively small amount of 31,146 JMMB shares on March 11, 2014 but there was a big sell out of 19,464,448 shares on February 17, 2014.
Kremi invest for future growth
Caribbean Cream, producers of the Kremi ice cream, has been spending big bucks for expansion and growth. That action has seen a major improvement in sales but little change in profits for the six months to August. While sales revenues climbed 20 percent in the two quarters this fiscal year, profit is down in the second quarter to August from $7.9 million to $1.35 million and for the six months, profit is flat at $17.8 million.
Gross profit climbed 29 percent to hit $58 million, but margin fell in the August quarter to 30 percent from 37.8 percent in the May quarter, putting the six months margin at 34 percent, from an increase in the gross profit of 44 percent, to $127 million from $88 million. Profit margin has improved in 2014 over the levels in the first and second quarters of 2013. Last year, gross profit margin was 26.5 percent for the August quarter and 27.3 percent for the half year. Management in their report to shareholders, indicated that the slippage in profit margin in the August quarter, is due to unexpected repairs and maintenance of equipment, as well as increased depreciation charge.
Forecast| Based on greater sales in the last half of the fiscal year, margins are expected to move into the 80 percent range, as direct overhead costs are fairly static. IC Insider is forecasting earnings of $77 million or 25 cents per share for the year ending April 2015, from projected revenues of $1.05 billion. The Kremi brand is now being introduced to the retail market to compete with other brands, mostly imported, on the shop shelves. Its better taste and pricing should ensure an increasing presence and sales in the future.
Financials| In the last 12 months the company acquired fixed assets amounting to $212 million, pushing total fixed assets net of depreciation, to $400 million, from $221 million at the end of August 2013. Inventories climbed to $115 million from $69 million a year ago, due to increased containers and raw materials, to facilitate expansion of the product line and increased sales. Receivables fell from $70 million to $33 million. Cash that was at $63 million has been used up leaving less than a million dollars at the end of August. Borrowings climbed to $163 million from $141 million, at the end of 2013 second quarter. Amounts due to creditors ballooned to $130 million from $61 million the year before.
Paramount on a role profit jumps 79%
Sika one of the brands Paramount handles
The improved results for the latest quarter, came from a 19 percent climb in revenues over the similar period in 2013, with revenues of $207 million versus $173 million in 2013. The latest quarter’s revenues are the highest the company has had, since listing in 2013. Gross profit margin was maintained at 46 percent the same as in the 2013 August quarter but slightly down on the full 2014 fiscal year’s 48 percent. Of import, is a new line of lubricants launched during the quarter but sales are in their infancy. According to a company executive, the increased sales is mostly from new customers added as well as increased sales of a product to an existing customer, who was not supplied with that product last year.
Administrative, selling and distribution cost, fell from $32 million last year to $31 million in this year’s August quarter. Profit is projected to by IC Insider to come in around $152 million in 2014/15 year or around $1.15 per share. At the current price of $2.50 the stock would be priced at a PE of only 2.2 making it a very good buy, bearing in mind that that many junior listings have been valued around 8 times earnings in the recent past, and around 6 times now.
Financials| The profit for the August quarter provided a strong 39 percent annualized return on the equity, based on $345 million at the end of May. Borrowed funds amounted to only $40 million, compared to the level of equity. Cash is up from $56 million at May to $90 million, while receivables climbed to $178 million from $172 million at May, this year. But the figures include more than just trade receivables, with the latter being under $150 million. Still high but one of the company’s executive stated that they are actively managing this area and have put in place measures to mitigate losses. Inventory at $203 million is flat with the amount at the end of May, this year, but payables moved up to $137 million from $128 million at May. With a new level of stability in the value for the Jamaican dollar, inventory levels may be reduced going forward as there would be little need to hedge against the devaluation of the local dollar.
The performance of the company during the quarter, and for the 2014 year would normally elevate the stock to BUY RATED status but the high level of receivables of more than two months, is a concern, especially in an economy, as tight and difficult as the Jamaican one at this time.
Dehring now Caribbean Cement chair
Christopher Dehring has been appointed Chairman of the Board of Directors of Caribbean Cement (CCC) Company and its subsidiaries, effective October 14, 2014, a release from the company stated.
The appointment is in line with IC Insiders report, that he seems slated for the post following the shake-up of the board of CCC’s parent company, Trinidad Cement. The company also reports that Messers Parris Lyew-Ayee and Dehring have also been appointed members of the Board Audit Committee.
After a long running battle between a group of disgruntled shareholders and the former board of Trinidad Cement, the way was cleared for an extraordinary general meeting to be held in August which ousted a number of directors from that board, as well as the CEO Rollin Bertrand. This led three members of the CCC board to hand in their resignations, including its former chairman, Brain Young.
