Company News — Page 163

Higher cost flattens Paramount’s profit

August 2, 2013 by IC Insider.com

Direct expenses rose 7.55 percent for the year to May but sales only increased 4.7 percent to reach $642 million highlighted by a 14 percent increase in administrative, sales and distribution cost. Staff cost rose by 18 percent to $50.5 million, plus an $11 million devaluation loss only made matters worse.

In the end, while Paramount Trading showed an improvement in net profit for the year, it was a reduction in tax payable of $10 million versus $30.75 million in 2012 and gains from acquisition of a subsidiary amounting to $21 million that helped pushed profits for the year above that of 2012, as pre-tax profit hit $83.5 million and after tax $73.3 million compared to pre-tax profit of $84 million in 2012 and $53.4 million after tax.

Problems | Concerns arise about amount due from debtors which rose sharply even as revenues have not. While amounts due up to 60 days accounts for the bulk of the increase or $28 million, amounts more than 90 days is up at $15 million, up from $5.5 million in 2012. Amounts owing for 31 to 60 days is up to $37.7 million, an increase of $11 million. Provision against the debts amount to only $6 million. The company seems exposed to potential doubtful debt problems with what appears to be a tighter economy. The increase is also robbing the company of cash that could be used to pay down expensive borrowings.

While sales grew by less than 5 percent, segment results show an interesting picture with chemicals sales growing 9 percent but gross profit declining from 32 percent to 29 percent. Construction and adhesives sales fell by 22 percent but the margin increased from 36 percent to 52 percent and the manufacturing margin improved from 38 percent to 43 percent as sales fell by 19 percent. Overall margins increased from 41 percent in the first nine months of the year to the 44 percent by the end of the financial year 2013, but it’s down from 48 percent for 2012. The margin for February was just 36.6 percent, which helped to drag down the margin for the year. Margin for the final quarter results was restored to 48 percent.

Forecast | Earnings per share for 2013 amounted to 54 cents for the year based on the average number of shares in issue for the year. In December last year the public purchased 30.85 million shares bringing the total to 154.247 million units.

IC Insider’s forecast for the current year is for earnings per share of 74 cents and 88 cents for 2015 fiscal year. The forecast is based on a restoration of profit margin, removal of taxation on profits and reduction in interest cost as loans are reduced.

Balance sheet | Receivables have climbed to $146 million from $99 million in 2012, inventories fell to $172.5 million from $186 million. Receivables represent nearly 3 months of sales and inventories and 5 months of cost of sales, both these items appear to be out of line and is costly. Cash helped by the proceeds from the public share issue is up to $60 million after repaying $39 million of loans. Current assets exceeds current liabilities by more than 2.6 to 1 and borrowings have decrease to $71 million from $110 million. Equity climbed to $273 million helped by the inflow of new capital last year and profit for the year to May.

Stock Outlook | The stock which last traded at $3.30 is recommended as a cautious buy at this stage.

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

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

Dividends: Carreras cuts, Grace ups

July 30, 2013 by IC Insider.com

Carreras | Carreras has cut its interim dividend to be paid in August from $1.50 paid last year to $1 this August. The decision by the Board of Directors to approve a lower amount must be seen as a reflection of the uncertain situation with demand of its product in light of an announcement last week that sales had slipped sharply with the advent of the ban on smoking in public spaces.

Carreras Limited disclosed today that it declared an interim dividend of $1.00 per share per share payable on August 28, 2013 to shareholders on record as at August 14, 2013. The ex-dividend date is August 12, 2013. The dividend paid at the same time last year was an interim dividend of $1.50 per share on August 23.

Grace Kennedy | The Board of Directors of Grace Kennedy increased its dividend partially in line with the increase in profits for the period. Accordingly, the company declared an interim dividend of 78 cents per share payable on September 30, 2013 to shareholders on record as at September 11. The ex-dividend date is September 9. The last dividend paid was 70 cents per stock unit on March 27, this year. In September last year a dividend of 70 cents per share was paid.

Filed Under: Company News, Dividends Tagged With: Carreras, Dividends, Grace Kennedy

Unilever Q2 profits up

July 29, 2013 by IC Insider.com

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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

Epply fast listing

July 29, 2013 by IC Insider.com

Shares of Epply Limited, the latest initial public issue to make it to the junior market that came to market last week, started trading today. The public issue, which closed on the July 22, is the fastest IPO listing since the junior market started and probably the fastest listing on the JSE ever. For the listing to take place within a week suggests that something must have gone right with it. Nevertheless, it’s a snail pace compared to international standards.

Previously, the listing of the JSE’s own shares took 2 weeks after the issue closed on July 8th and that was one of the fastest. There clearly is much improvement needed in the timeframe between listing and IPO close. There is no reason why the JSE can’t get to international standards a list within a day or two after closure of an IPO and so ensure greater liquidity in the market. All that is required is the reconciliation of subscriptions application, money paid and the allocation of shares where there is oversubscription. In this regard, the formula for dealing with oversubscription can be determined ahead of the closure of an issue.

All the other things such as paying stock exchange fees and final approval can surely take place within a day if the application for listing is effectively done ahead of the IPO.

Well into its first trading day, there were no stocks of Epply on offer nor was there any listed to be bought. One week after listing, the JSE ordinary shares are yet to traded even as the bid is now up to $3.25 in Monday’s trade.

Image courtesy of Simon Howden/FreeDigitalPhotos.net

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: Eppley, JSE Company

Eppley 18th junior market listing

July 29, 2013 by IC Insider.com

Press Release 29-Jul-2013 | Eppley, the latest initial public which was closed on Monday July 22, was listed on the junior market of the Stock Exchange on Monday July 29 and brings the junior market listings to eighteen. Eppley is only the second company to be listed on the junior market for 2013 and only the third listing on the stock exchange this year. Eppley is one of Proven Wealth stockbrokers’ first introduction to the market. The stock did not trade on the opening day, had no bids or offer to buy or sell.

Marlene Street Forrest, General Manager of the Jamaica Stock Exchange speaking at the ceremonial listing, stated that “We cannot overemphasize the importance of the Junior Market in ensuring that new creative ideas, whether manufacturing or in this case, service gets the chance needed to make it from idea to development. The benefit of this market is not only in creating longevity but transparency. The benefit is also in seeing the companies that are listed produce excellent financial results for the company and by extension the shareholders. Growth in companies is almost always accompanied by growth in the economy. We understand that these companies receive a temporary shelter whether from corporate taxes, reduced listing or annual fees but this is done against the backdrop of full disclosure of their financial statements and other pertinent information to shareholders. I believe we can proudly report the following statistics which compares prelisting results to results as at the end of December 2012:

Percentage increases in revenue ranging from 7.75% to 1,626.32%
Percentage increase in profit ranging from 8.08% to 589%
Percentage increase in GCT from 4% to 3,770%
Percentage increase in Statutory Deduction from 3% to 173%

I urge you to remember the advantages of raising capital and listing on the Junior Market; which continue to be the possibility of reducing debt burden and high interest payments by substituting or adding equity capital; the daily valuation of a company’s shares; the ten year corporate tax concession for companies listed on the Junior Market; the low listing fees and the improvement of a company’s profile among other benefits”.

Nigel Clake, Chairman of Eppley, told the audience that Eppley was delighted to have access to the capital market to raise funds to finance their business and to be listed on the Stock Market was a privilege and Eppley would do all in their power to ensure that their reporting would be of the highest standard. He went on to thank the shareholders for the confidents they displayed in Eppley by purchasing the stocks.

Chorvelle Johnson, CEO of Proven Wealth took the opportunity to thank all the persons involved in the listing. She stated that the process was fairly easy with the help that Proven got from the JSE, the lawyers and the regulators. Miss Johnson went on to say that Proven will be working assiduously to bring more companies to list not only on the Junior Market, but on the Main Market, along with other products.

Sharing the historic moment | Andrea Kinach; Marlene Street Forrest; Chorvelle Johnson; Andre Tulloch; Melanie Subratie; Keith Collister; Nicholas Scott and Nigel Clarke.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: Eppley, JSE Company

Ready. Set. Go!

July 29, 2013 by IC Insider.com

Monday, 29th July 2013 | The earnings season has begun! Over the next few weeks, our IC Insider analysts will be busy scouring over company quarterly reports, crunching the numbers and calling it as we see it.

As in any race to perform, there will be winners and losers. The markets will be sure to respond and with the JSE and TTSE having a limited supply of some stocks, the bulls could be on the run.

Buy Rated Stock | Of the 5 company quarterly reports reviewed to date, 3 have been added to our Buy Rated list. National Commercial Bank, One Caribbean Media and Berger TT have interesting story lines that could improve your wealth health.

Better than a broker’s ‘buy’ recommendation, IC Insider has no vested interest in any stock transaction or conflict of interest. Our research is backed by published reports of the company’s performance and insights of future earnings that can be found at ICInsider.com. The final decision to buy, or not, is your personal choice.

To search for published reports for a Buy Rated stock on IC Insider, please use ‘Search IC Insider’ and enter the company name, in full or in part.

Filed Under: Company News, Stocks to watch Tagged With: JSE Company, Trading Activity, TTSE

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