Desnoes & Geddes, brewers of the world famous Red Stripe beer, racked up a 30 percent increase in after tax profit, for the quarter to September this year, thanks partly to a reduction in tax, a 3 percent revenue increase and static to reducing cost. Profit before tax increased 14.5 percent to $640 million from $559 million in 2013. Revenues grew just 3 percent to $3.4 billion in the quarter but taxes fell from $192 million in the 2013 to $164 million as the tax rate for companies dropped to 25 percent form 30 percent for 2013.
Gross profit margin improved to 71.76 percent, in the latest quarter, from 69.25 percent last year. The improvement in the margin flowed in part from what management says are “efficiency gains from the investment in the brewery modernization such as the new combined heat and power plant.”
Gross profit improved by 14.7 percent to reach $1.156, as local sales grew 4.8 percent year over year, to reach $2.95 billion. Exports sales fell to $414 million from $465 million in 2013 leading to a fall in gross profit in the export segment to $226 from $291 million. Management stated that the reduction in exports is due to shift in the timing of a Shipment from the September quarter to the December quarter.
The company benefited from lower general, selling and administrative cost which fell to $261 million in the quarter, compared to $288 million in the 2013 quarter.
Cash funds at the end of the quarter, stood at $1.79 billion. The company declared a dividend of 27 cents per share, payable in December to cost $760 million and will be adequately funded by the earnings, for the December quarter. With the planned dividend, the company will pay 52 cents per share, in dividend for the 2014, providing a yield of just over 10 percent, based on the price of $5.10 at the end of 2013.
IC Insider is projecting earnings of 85 cents per share, for the year ending June 2015 and $1.05, for the following year. The stock which last sold at $4.95 remains an IC insider BUY RATED stock.
Tax cut help boost D&G profit 30%
NCB wage award adds J$430M to cost
National Commercial Bank (NCBJ)has provided an update to the two Stock Exchange that its shares are listed on.
The bank has now stated that the total gross provision required to meet the total sum needed to satisfy the award, for the two year negotiating period, ending September 30th, 2014 is, approximately J$1.7 billion. The total amount to cover the award exceeds by approximately J$430 million, the amount that NCBJ had been providing for increased salaries and benefits, for the negotiating period. The amount is lower than the net sum of approximately $500 million IC insider suggested, would be the charge net of taxation. This shortfall, NCBJ says will be reflected in their income statement, for the year ended September 30th, 2014.
Scotiabank Canada to cut 1,500 jobs
Scotiabank Canada is to cut 1,500 positions worldwide and take a profit hit in fourth quarter of its 2014 fiscal year, ending in October. About two thirds of the cut will come from its Canadian operation and according to Yahoo.com will result in a charge of $340 million against 2014 profit.
Despite the charge, profit outlook remain good for 2014 and beyond, but the move is as a result of general weakness of Caribbean economies, sporadic use of branches, weekly and bi-weekly, instead of consistent daily use. The sporadic branch use will result in branch closures, mainly in Caribbean and Mexico. The bank’s foot print in Mexico are many, BNS management said, but the branches to be shuttered lack traffic, which means the bulk of the branch closure will occur in this country. The bank says they will be moving to use more ATMs and internet banking facilities, in place of the physical branches.
The BNS has written down its investment in the economically challenged Venezuela, reducing it to only $50 million.
What is known is that the Caribbean region has suffered considerably from the economic downturn experienced since 2008. The operations in Jamaica has seen profit stagnated in Jamaican dollars and slipped in Canadian dollars as the Jamaican dollar was devalued. Profits stagnated in Trinidad banking subsidiary, as well. Loan demand has not been robust within the region either, and the absence of a meaningful pick up in this critical area will result in a drag on profit growth, as long as that remains the case. The sharp fall in the price of oil is going to place pressure on the twin island state of Trinidad and Tobago and by extension some of the other territories that may be dependent somewhat on business out of Trinidad. This latest development could be negative for Scotia’s Trinidad operation. Compounding the problem for Scotia, is that Jamaica that has started enjoying moderate growth that could lead to increased private sector loan demand, is faced with lower demand for government funding, as the government moves from deficit financing to one of surplus.
More inside buying at Sagicor Group
Insider trade is often an important insight into the fortunes of companies. It is not always the case, but large buying or selling is usually a tell tail sign of where company profits are heading.
Executives have been buying into Sagicor Group in recent months. In October another purchase of shares took place. The company advised the Jamaica Stock Exchange that an executive purchased 417,016 of its shares on October 24, 2014 under the Executive Long Term Inventive Scheme.
Sagicor Group reported profit of $1.62 billion for it June quarter this year, versus $1.56 billion last year, and $2.7 billion in the six months to June, this year. Third quarter profit results which are scheduled for release shortly, should be hit with redundancy and other costs, related to the acquisition and rebranding of RBC Jamaica operation at the end of June.
Dividend for JPSCO shareholders
Jamaica Public Service Company has a series of preference shares listed on the Jamaica Stock Exchange.
The company announced a dividend for one of its recent listings, a US dollar based preference share. The company, the sole distributor of power through the national grid, approved a dividend payment of the Class F9.5% Preference Share of US$0.236849313 per share to be paid on October 31, to shareholders on record as at October 29, 2014.
Jamaica Public Service Company previously paid a dividend for these preference share amounting to a total of US$1,137,652.66 or US$0.463287757 per share on August 15, 2014.
Dividend by Medical Disposables
Image courtesy of DreamDesigns/FreeDigitalPhotos.net
Medical Disposables will be paying an interim dividend of 4 cents per share on November 19, to shareholders on record at November 14, 2014. The stock which is listed on the junior market of the Jamaica Stock Exchange, will start trading ex-dividend, on November 12, 2014.
The company is enjoying good times, with improved results for the September quarter, with profit after tax rising 66 percent for the quarter, versus the 2013 quarter. For the six months, profit after tax rose 60.6 percent, to $38.7 million, from $24 million.
D&G increases dividend
Desnoes & Geddes will be paying an interim dividend of 27 cents per share on December 15, to shareholders on record at November 13.
The stock will trade ex-dividend on November 11. 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, 2014.
Drop in export pushes up Jamaica’s trade deficit
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.
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.