Scotia Group Jamaica made profit of $2.6 billion for the third quarter ending July, $337 million above the previous quarter ended April but $278 million below the quarter ended July 2013 and $7.4 billion for the nine months period, down from $8.2 billion last year.
The group increased bad loan provisions by $130 million to $497 million for the quarter over April this year and an Increase of $320 million over the July 2013 level. For the nine months to date provisions for loans is up $550 million to $1.376 billion.
Operating expenses have been under control with an increase of 7.3 percent for the quarter and 6.7 percent year to date but this is much higher than the 2.7 percent increase in income, net of interest cost for the quarter, and 1.4 percent increase for the nine months to July. “This is due primarily to higher staff related costs of $279 million and operating expenses of $579 million, reflecting an increase in the asset tax of $498 million, resulting from the recent increase in the rates,” management said in their report to investors.
The group would have enjoyed higher income from foreign exchange trading in 2013, as the value of the Jamaica dollar slipped more than it has done during the current period, leading to a $300 million decline for this line item. Importantly, while gross interest income was flat, at $15 billion up to April versus 2013, it has grown in the July quarter, due to the stronger loan growth.
Earnings per share (EPS) for the nine months is $2.36 compared to $2.64 for the same period last year and seems set to report $3.45 for the full year ending October and $4.50 for the next fiscal year.
The Return on Average Equity was 13.74 percent, down from 16.67 percent last year.
Scotia approved a third interim dividend of 40 cents per stock unit payable on October 16.
Total assets increased year over year by $12.5 billion or 3.2 percent to $401 billion, due primarily to growth in the loan portfolio of $13.6 billion. Loans grew by 10 percent since July 2013, to hit $144.6 billion. More importantly, while loans grew only by $2 billion up to April from October last year, it jumped $8 billion in the latest quarter, a 20 percent increase, annualised, putting it on track for a big surge in lending going forward if maintained, and strong growth in profits, as well. Deposit declined marginally to $197 billion at the same time. The stock remains Buy Rated.
Scotia Group’s profit down, future much brighter
Jamaican $ stability holding
In Thursday’s forex trading, authorized dealers sold more foreign currency than they purchased. Dealers bought the equivalent of US$32,479,891 versus US$33,226,788 on Wednesday, and sold the equivalent of US$37,797,115 compared with US$42,349,863 on Wednesday.
In US dollar trading, dealers bought US$27,452,497 compared to US$27,754,091 on Wednesday. The buying rate for the US dollar fell 14 cents to $112.26 and US$33,759,732 was sold versus US$37,453,095 on Wednesday, the selling rate remained unchanged at $112.76.
The Canadian dollar buying rate gained $1.61 to $102.64 with dealers buying C$2,224,524 and selling C$2,629,200 at an average selling rate that gained 14 cents to $103.57.
The rate for theBritish Pound rose 23 cents to $184.26, for the purchase of £1,694,610, while £774,420 was sold, as the rate fell 21 cents to $185.29. Other currencies bought, amounted to the equivalent of US$212,180, while selling was for the equivalent of US$349,882.
Highs & Lows| The highest rate for the US dollar, rose by 10 cents to $113.20 and lowest buying and highest selling rates remained unchanged at $91.85 and $117.70 respectively, the lowest selling rate rose $16.48 to $110.50. The highest buying rate for the Canadian dollar fell 15 cents to $103.85, the lowest buying rate remained unchanged at $81.67, the highest selling rate rose 48 cents to $106.02 and the lowest selling rate remained at $98.40. The highest buying rate for the British Pound, fell 96 cents to $185.74, the lowest buying rate declined 37 cents $148.49. The highest selling rate rose $1.93 to $191.42 and the lowest selling rate declined by 45 cents to $178.90.
Inside trades at D&G & NCB
National Commercial Bank Jamaica (NCB) advised that two directors purchased a total of 34,607 of the bank’s shares, on August 27, 2014 and Desnoes and Geddes reported the purchase of 100,000 of the company’s shares by a Director, on September 1. The company had previously reported a purchase of shares by a directors on August 29.
NCBJ reported good gains in profit for the nine moths to June this year with IC Insider forecast of $4.80 per share for the year to September and Desnoes & Geddes earned 77 cents per share from ongoing operations for the year to June.
Peart & James for Access Board
Access Financial Services has advised of the appointment of Messer’s Neville James and Gary Peart as shareholder Directors to the board of the company. The appointments will take effect at the end of the Annual General Meeting scheduled for September 10.
James represents the his family side, while Peart will represent Mayberry Investments, one of the major shareholders in Access.
The appointments will increase the number of board members, but still leave the board short of adequate number of independent directors to help guide the company and try to bridge the differences that have developed over the past few years, between the two major shareholders. The company needs some directors who will see to the monitoring and maintenance of corporate governance and good corporate practices, the absence of which resulted in some of the issue that is the subject of the dispute that is now the subject of a court battle.
Following the announcement by Access, Lasco Financial Services advised of the resignation of Gary Peart from the Board of Directors of the company, with effect from September 2, 2014. This removes a conflict that existed, with Peart being a director of Mayberry as well as a director of Lasco Financial Services.
RJR & Caribbean Producers paying dividends
Radio Jamaica (RJR) will be paying an interim dividend of 5 cents per share on October 15, 2014, to shareholders on record as at September 9.
The stock will traded ex-dividend on September 5, 2014. RJR last paid a dividend of 10 cents, in November 2011 and 12 cents in October 2010. The latest dividend comes against to back ground of a jump in the company’s first quarter results to June.
Shareholders of Caribbean Producers (CPJ) will be enjoying a dividend of 4 cents per share payable on October 1, 2014 to shareholders on record as at September 10, 2014. The stock trades ex-dividend on September 8. CPJ paid a dividend of 3 cents per share on January 31, this year and 4.5 cents March 2013.
Caribean Producers enjoyed increased profits for the Year to June 2014, but the last half was lower than for the similar period in 2013.
Kingston Properties sells & buys apartments
Kingston Properties has successfully concluded the sale of 4 of its 19 residential condominium units, for approximately US$980,000, realizing cumulative gains of 69.5 percent over the four year holding period.
The Company, re-invested the net proceeds in a 19 unit residential apartment building in the Miami area. The property was purchased for US$1.88 million, a release from the company said. Kingston Properties is listed on the Jamaica Stock exchange and reported rental income $50.4 million, an increase of 15 percent for the six months ended June this year. Total comprehensive income for the period was $28.3 million, an increase of 7.4 percent, over the $26.3 million reported for the six months to June 2013. Comprehensive income includes, results of operating activities and foreign currency translation differences for foreign operations. The latter was positive $27.8 million for the six months in 2014 versus $33 million for the similar period in 2013.
The company owns and rents properties in Jamaica and Miami, in the United States.
Inside buying at D&G and Mayberry
Hot on the heels of Desnoes and Geddes reporting strong full year results, with the promise of higher earnings in the new fiscal year, the company reports the purchase of it’s shares by a Director, who acquired 250,000 shares on August 29. 2014.
Mayberry Investments reported a small transaction, by a related party, who purchased a total of 16,690 of the company’s shares, between August 22 – 26, this year.
Jamaican Teas reported that a related party sold 1,592,907 of the company’s shares, on Friday August 27.
Caribbean Producers disappoints – Watch
Much has been expected of Caribbean Producers (CPJ), but it disappointed investors with lower profits in the second half of the fiscal year to June, with profit of $95 million in the June quarter, versus $140 million in 2013.
The March quarter numbers had sent the signal of a lousy second half, with virtually flat profits of $124 million, in contrast to a vibrant increase of 82 percent in the December quarter of J$118 million, up from $65 million in 2012. Revenues climbed by 34 percent in the quarter compared with 2013 to reach J$2.57 billion and 24 percent in the prior quarter. Revenues in US dollars, climbed 13.37 percent to hit US$78.64 million for the 12 months to June.
Administrative and selling cost rose by 17.7 percent year over year, faster than the growth in revenue. Part of the increase management states, is due to some reorganizational restructuring, which contributed to short term increased cost during the period.
Gross profit in US dollar climbed 14.67 percent but gross profit margin improved slightly to 40.9 percent for the full year, from 40.2 percent in 2013.
Management attributes the performance to competitive pricing pressures and changes to the product mix, they also speak to new products now being distributed and the startup of their St Lucian operation, during the September quarter.
The stock has pulled back, to sit at $2.35 which is about where it should be, based on valuation in the local market at this time. While new products should add to revenues, the performance of the company in the last half of the fiscal year, suggests some amount of caution. The next set of quarterly results will be important to glean clearly, if the recent set back is over. Accordingly the stock is being considered a watch for the time being.
CPJ has managed to reduce the poor debt to equity ratio, with borrowed funds now at US$24.7 million, versus $24.5 million in 2013, and equity now at US$16.2 million, up from US$13 million at the end of June last year. By the end of this current fiscal year, they should be close to a ratio 0f 1:1 with the likelihood of continuing profitability, close to that of the past year’s figures.
Blue Power Q1 profit flat, upturn ahead
Sales at Blue Power, for the quarter to July, were $278 million, an increase of 13 percent over the $246 million for the same period in 2013. The Lumber division enjoyed a 5 percent increase, from $174 million to $185 million, while sales for the Blue Power division, jumped impressively, by 33 percent, from $70 million to $93 million.
The Lumber division in the 2013 quarter, benefited from significant sales to one client, which was not repeated in the recent quarter.Blue Power recorded profits of $29 million, compared to $30 million in the same period last year. The Lumber division delivered $6 million of the overall profit, compared to $18 million in 2013, while the Blue Power division made $23 million versus $12 million in 2013. Earnings per stock unit, moved down slightly from 53 cents to 51 cents. IC Insider forecast earnings of $165 million or $2.90 per share, for the year ending April 2015, and $3.40 for the following year, which will see taxes being applied at half the regular tax rate for companies.
The Lumber division’s profit was negatively affected by bad debt provisions made, for receivables which were due for over 90 days. The provision pushed administrative and other costs to $40.35 million, up $12.4 million, from the $28 million in 2013.
Gross profit margin improved with the higher sales from the Soap division, moving to 31 percent for the latest quarter versus 28.4 percent in the 2013 period, and 26.4 percent, for the twelve months to April this year.
Blue Power had no loans the end of July, but had cash and bank balances of $156 million, with the forecasted profit, the amount should increase to well over $250 million by the fiscal year end. Current assets stand at $460 million and current liabilities $65 million. The latest results has confirmed the stocks Buy Rated stamp of approval.
Profit up strongly at D&G, more expected
Desnoes & Geddes brewers of the world renowned Red Stripe Beer, reported impressive results for the year to June 2014, with pretax profit jumping 96 percent, including a gain on sale of shares, in two overseas breweries in the Caribbean. Excluding this one off gain, profit before tax would have been up by a still respectable 45 percent to $2.7 billion, instead of the $3.68 billion reported.
Profit after tax ended at $3.15 billion, but excluding the gain from the shares, it would have been $2.2 billion or 80 percent up, instead of the 160 percent increase the net result shows. Net profit benefited from a reduction in the tax rate from 30 percent in 2013 to 25 percent in 2014, in addition, other income that was negative in 2013 at $130 million, was a positive $232 million in 2014, a swing of $360 million. Profit before tax amounted $928 million for the June quarter versus just $371 million in June 2013 quarter and after tax credit, $1 billion, compared with only $161 million in 2013.
Gross profit margin improved slightly from 50.13 percent in 2013 to end at 50.38 in 2014. In 2012 gross profit margin was at 44.86 percent. The 2014 performance is still well off the 60 percent achieved in 2006. During the 2014 financial year staff cost was cut due to redundancies, from $2.25 billion in 2013 to $1.74 billion for 2014, a reduction of $500 million, in addition the company spent $311 million in making staff redundant in 2013. These two items resulted in more than $800 million cost reduction in 2014 versus 2013.
Revenue for the year climbed 10.6 percent to $14 billion and in the final quarter it grew by a stronger 17 percent, to $3.84 billion, from $3.3 billion in 2013. Foreign sales declined by 7 percent for the year to June, to end at $1.8 billion while local sales climbed 13.75 percent to $12.3 billion. The US market declined the most, falling from $566 million to $300 million. Royalties earned declined during the year to $525 million, from $556 million.
While earnings per share in the audited accounts is $1.12, earnings from ongoing operations is 77.6 cents for 2014. IC Insider forecast earnings of 90 cents per share for the current year ending June 2015, with the stock price under $5, the potential exists for investors to make a nice capital gain down the road and collect tidy dividend payments while they wait.
D&G has embarked on a brewery consolidation “project which will configure the brewery and process layout to ensure more cost effective production. By closing down the cellars and moving from horizontal to vertical processing vessels, we will reduce operating cost” management said in a report to shareholders. The company in April commissioned a combined heat and power plant which is expected to reduce energy cost.
At year end cash funds stood at $1.79 billion, current assets amounted to $4.6 billion and current liabilities at $2.6 billion, there were no loans on the books as of June.
The stock which was placed on the Buy Rated list months ago, remains there.