Company News — Page 173

FX rate change hits Kingston Profits

May 16, 2013 by IC Insider.com

Kingston Properties is reporting lower profits in the March quarter this year compared to last year. Not only are profits lower, there was a significant hit from financing costs, caused by foreign exchange losses on loans denominated in US dollars due to slippage of the Jamaican dollar during the quarter. The company reported a loss of $10.8 million before foreign exchange loss and after a tax credit, the loss was down to $7.2 million. In the similar quarter last year the company reported a profit of $3.2 million before tax and $2.45 million after tax. Other Comprehensive amounting to $22.5 million resulting from translation gain on the operations resulted in a positive picture at the end of the day ,with Comprehensive Income being $15.44 million. In 2012, the company reported Comprehensive Income of $6.2 million.

Income | Rental revenue for the quarter was $21.86 million, a 14 percent move from $19.1 million in 2012 but operating expenses climbed by 44 percent, much faster than income to $14.8 million. Management states that indirect property expenses accounted for approximately $2.9 million of the $4.5 million increase in overall operating expenses, with the major contributors being repairs and maintenance, home owners’ association fees and property taxes.

Group finance costs were $19.6 million for the quarter compared with $7.4 Million for the similar period in 2012.These amounts include unrealized losses of $14.3 million and $2.5 million respectively, due to foreign currency translation losses resulting from the devaluation of the Jamaican dollar.

At the end of the quarter, Investment Properties were $850 million, an increase of $641.4 million over the 2012 first quarter. Fair value gains of $166.3 million on the Red Hills Road property and positive currency impact of $30.3 million on the Miami residential condominiums, accounted for the increase in property values.

Cash and equivalent amounted to $200 million of which $168.1 million is restricted amounts.

Assets & Loans Concerns | Group liabilities were $350.3 million at the end of March, including current and long term loans payable of $325 million of which $186 million in payable within twelve months. Although the company has enough cash to meet this year’s pay out, the real concern is that the amounts to be paid over the life of all the loans is, in the short run, not being supported by cash flow. The quarterly report did not address this issue.

Funding options | In its annual report to shareholders, the company stated that they have a number of options to raise funds, these include:

Convertible bond, with incentives for holders to convert to equity
Secured bond with first claim on the property
Equity capital; preferred, common
Other types of instruments based on investor preferences and objectives

Property holdings | Kingston Properties holds a portfolio of 89,957 square feet of property consisting of a fully tenanted office/warehouse building of approximately 26,000 square feet located on Hagley Park Road in Kingston, Jamaica and 19 condominium apartments in downtown Miami.

The company discloses that it has been evaluating doing transactions in the affordable segment of the local residential market with the goal of providing a housing solution for the large group of buyers with steady income who are looking for units priced below $7 million. Finished homes will be in the range of 800 square feet at a minimum, allowing most home buyers a comfortable unit size without the immediate desire for expansion.

Filed Under: Company News, Company Results Tagged With: JSE Company, Kingston Properties

Cargo Handlers profits up 38%

May 16, 2013 by IC Insider.com

Cargo Handlers enjoyed a boost in revenues and a 38 percent increase in profit for the six months to March this year. The business is an uncomplicated business, it deals in one main area providing stevedoring services on the wharf in Montego Bay. The company has plant and equipment of with a book value of $11.5 million, an indication of its size. Current assets on books at March this year was $134.6 million and current liabilities $36.2 million. Included in current assets is cash of $102 million. There is no interest bearing debt, another indicator of simplicity.

What the company may lack in sophistication is more than made up in its ability to earn positive and quite robust profits. For the March quarter, the company bettered the earnings of 2012 by netting $18.9 million this year compared to $15.98 million in the 2012 first quarter from revenues of $40.6 million and in the 2012 March quarter $27.7 million. For the six months to March, revenues are up 35 percent to $82.3 million. Earnings per share for the quarter came out at 45 cents and 98 cents for the six months.

The results were achieved despite a $10 million increase in operating expenses compared to what was incurred in 2012 when $9.7 million was incurred in this area. On a year to date basis, $37.7 million was incurred for this cost item versus $28 million in 2012.

The stock is an income play with a high pay out rate. In the last twelve months it paid dividends of $70 million.

Filed Under: Company News, Company Results Tagged With: Cargo Handlers, JSE Company

Big jump in H&L profits but small sum

May 16, 2013 by IC Insider.com

Hardware & Lumber enjoyed moderate increase is sales for the March quarter of this year. Revenue amounted to $1,547.8 million, a mere 2.4% more than the $1,511.8 million reported in the same quarter in 2012. At the same time, net result for the quarter was a profit after tax of $9.9 million compared to a loss of $5.2 million in 2012. This translated to earnings per stock unit of $0.12.

Gross profit increased by 6.2% to $408.3 million, achieving an average margin of 26.4%, a full one percentage points higher than the comparative quarter. Management attributes the improved performance to increased sales, greater focus on margin management and the integration of the wholesale segment into the Rapid True Value operations. Effective January 1, 2013, the company re-organised its operations into two operating divisions, down from the previous three, which saw the wholesale segment subsumed into the retail segment.

While there was improvement in gross margin, operating expenses increased at a much faster pace than sales by increasing 8.5 percent to $394.3 million. Gains made from operational cost-saving initiatives and ongoing control of discretionary spending were not enough to offset the significant increase in the charges associated with the company’s pension scheme and other retirement benefits. In a release to shareholders, management stated that the revision of the accounting rules governing such benefits, which became effective January 2013 triggered a restatement of the expense recorded in 2012 and a significant increase in the carrying value of the liability in the Statement of Financial Position as at December 2012.

Working capital management continued to receive management’s focus. At March, inventory balances were $1,158.4 million or 13.9% lower than the balance at March 2012. Over the same period, improved credit management resulted in a 4.9% reduction in trade and other receivables balance to $459.9 million. At the end of the period, the amount owed to trade and other creditors was $913.2 million, being 3.1% lower than the balance at March 2012. Total cash generated from operating activities was $209 million with $57 million used to service loan commitments and pay dividends, leaving cash balance of $357.8 million at the end of the period.

Stock outlook | Earnings should pick up as the year progresses and IC Insider.com expects to see much higher earnings for the full year than in 2012.

Filed Under: Company News, Company Results Tagged With: H&L, JSE Company

Caribbean Cream trading on Friday

May 16, 2013 by IC Insider.com

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Caribbean Cream will commence trading of Friday under the ticker symbol Kremi. This confirms IC Insider report last week that the listing was set for this week. The company is the latest to be listed on the Jamaica Stock Exchange.

Stock outlook | The company which went to the market in April to raise $75.7 million was just oversubscribed on May 1, well ahead of the closing date of May 10. Not much is expected in terms of price movements when trading starts since there was not the usual demand and heavy subscription for the shares as has been the norm for majority of the junior listing stocks.

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

Honey Bun not so sweet in Q1

May 15, 2013 by IC Insider.com

Junior market listing Honey Bun reported revenue growth of 18 percent in the first quarter of this year but that is slower growth than the near 25 percent growth for the first six months of its financial year. The company generated 189.6 million in sales in the quarter, up from $160 million in 2012 and for the six months $381.5 million versus $305.8 in the prior year. Growth in revenues lagged the increased direct costs in the quarter. Management attributed the shrinking margin in the quarter to rising prices for flour and other inputs which could not be passed on to consumers at the same pace as the cost hikes.

Profit for the quarter was $23.2 million which was marginally lower than the $23.8 million garnered in 2012, and for the six months $38.4 million was generated versus $33.64 million to June 2012, or 14 percent.

A major part of the flat results in the quarter is a one third jump in administrative and other expenses to $41.6 million, up from $31.3 million a year ago. The increase is in line with the costs in this area for the December quarter.

Healthy finances | The company remains in a healthy financial state with working capital at a ratio of 3 to 1 inclusive of cash amounting to $70 million. This cash is up from $24 million at the end of September last year.

Receivables grew at the end of the quarter to $85 million compared to $57 million in 2012. However, with Easter coming towards the end of March, this would have resulted in most sales taking place towards month end, thus leading to a buildup in this item.

Management indicated that the receivables increase is due to the growth by over $10 million in monthly sales when compared to the prior year and also due to $16 million prepayments made on equipment and property. Payables also increased mainly as a result of the general increase in purchases to meet higher sales and the higher cost of goods year over year. Management went on the further state that sales improvement was as a result of increased sales to new markets and exports, which increased by over 150 percent, year over year for the 3 months.

Equity was $294 million and loan borrowing at a low of $14 million. The stock last traded at $4 each. This year’s earnings could end up at between 50-60 cents. The September’s quarter’s results are difficult to predict as that is the worse quarter of the year for them.

Filed Under: Company News, Company Results Tagged With: Honey Bun, JSE Company

Profits up at Jamaica Producers

May 15, 2013 by IC Insider.com

Jamaica Producers (JP) recorded improved profits for the quarter ended March this year, with after tax profits up 30 percent, hitting $85.5 million for the company’s shareholders. The 2013 performance compares to $65.8 million reported in 2012. The improvement is in spite of finance cost rising by $22 million and taxation by $42 million. The group’s directly managed operations did not fare as well as in the prior year as a $43 million profit made in 2012 was turned into a loss of $12.6 million. Damage to the agricultural segment by hurricane Sandy resulted in a loss in that division of $55 million which compares unfavourably to a profit of $38 million last year, as revenue declined $89 million to $450 million. The group is reporting improvement in its European operations with a profit of $60 million, which is up from just $7.4 million in 2012.

Revenues | Overall, revenues moved up from $1.74 billion in 2012 to $1.86 this year. Profits were helped by gain on sale of fixed assets and investments amounting to $98.7 million. In 2012, gains were $40 million and the 2013 gain was offset by a one-off charge of $36 million. Share of associated company’s profits contributed $99.6 million versus a small loss in 2012.

Dom Rep operations fully-owned | JP acquired ownership of all the shares in the Dominican Republic operations where banana chips are produced for the Latin American market. The company says it benefited from growth in exports of juice to northern Europe from its Holland juice operations, cost cutting and increased efficiency from a new packaging plant.

Financially strong | The group has equity of $5.2 billion and loans of $1.2 billion of which just $68 million is due within twelve months. Short-term liquid funds amount to $485 million at the end of the quarter. The challenge for JP is to build on the performance of the first quarter and show satisfactory improvement in its core business to justify the investments in those areas.

Stock outlook | The 2013 performance so far could help the stock price recover some of its former sparkle. How much is uncertain.

Filed Under: Company News, Company Results Tagged With: Jamaica Producers, JSE Company

Salada’s stock price may be stuck

May 13, 2013 by IC Insider.com

Salada Foods, best known as producer of Mountain Peak instant coffee, reported lower profits for the March 2013 quarter as sales were lower, emanating from price reductions implemented to stimulate sales and market penetration. The reduction resulted in sales for the quarter falling 15.6 percent to $141 million a $26 million decline. Six months sales were up nevertheless by 2.5 percent. Administrative expenses rose 27 percent to $40.6 million to $50 million for the six months period. The increase is attributed primarily with the commencement of operations for Mountain Peak Foods which is the company used to acquire the Roberts brands of processed condiments.

For the six month period, sales were $294 million and $286 million in the similar period in 2012. Profit for the period after tax came in at $55 million while the 2012 net figure was $54 million.

Salada is clearly very conservatively managed as can be seen from some of the financial ratios. The company has a large current asset ratio of 9 to 1, well above accepted norms, with cash of $223 million. There was no interest bearing debt on the books and equity was a high $668 million.

Stock outlook | The earnings for this year which ends in September should exceed a $1 per share. This could mean that the stock may not have much room to climb in the current market environment. There are limited supplies of the company’s stocks to trade, so anything is possible with the stock price if demand comes in for them.

Filed Under: Company News, Company Results Tagged With: JSE Company, Salada

Profits on the improve for D&G

May 13, 2013 by IC Insider.com

Desnoes & Geddes is reporting improved results for the nine months to the end of March this year with profits after tax up 30% to $1,050 billion, however in the latest quarter, profits was down 18% to $243 million after tax. The company took a $152 million charge, in the third quarter for making workers redundant, flowing from the decision to transfer the sales and distribution of its products to Celebration Brands, a joint venture company with Pepsi. The company’s management indicates that the amount written off in the quarter is 50 percent of the total separation cost. Based on these numbers Investor’s Choice, a sister publication to ICInsider.com, is projecting 66 cents per share earnings for the year after the one off staff separation cost, but expect earnings to close in on $1 per share in the 2013/14 year as growth in sales and cost cutting improve profits.

Overseas production | The results reflect the decision last year to switch the production and sales of Red Stripe to the USA. Export sales are down as a result, but so is cost relating to exports. The difference is a plus for the bottom line for D&G. Marketing cost is one area of major savings as the company no longer picks up that cost in the USA market. Gross margin for local and exports climbed during the nine months period. Local sales grew to $2.67 billion up from $2.56 billion in 2012 and for exports it was $564 million in the current fiscal year versus $450 million, but exports earnings jumped to $530 million after marketing cost, a large improvement over $127 million reported in 2012. General selling and administration cost rose from $906 million to just $938 million for the 2013 period.

Local sales climbed 12 percent over the same period in 2012 and was driven by the launch of the new beer, Talawah, a stronger performing spirits portfolio and price increase, the company reported. Local marketing cost increased by $21 million primarily due increased spend to promote and televise Red Stripe Premier League football.

Financial position | The group is in a healthy financial position as the improved results have contributed to cash moving from $230 million in March 2012 to $1.964 billion, after paying $560 million in dividends in December last year. Current assets exceed current liabilities comfortably by almost two to one, borrowed funds were only $157 million.

D&G has in the past stuck to paying out around 80 percent of profits as dividends and if this policy is maintained then the upcoming dividend to be considered this week should be around 30-35 cents per share. With the present price being $4.15 the annual yield will be around 12 percent making the stock very attractive.

Stock outlook | Investor’s Choice’s analysis points to the prospect of potential good growth levels for this company, as the local economy as well those overseas, show improvements in the years ahead. The major risk to this company is any weakness in the economy and potential for government to impose addition taxes on the products. On the positive side, the company is dominant in the local market and is enjoying increased acceptance of the flagship product Red Stripe overseas.

Filed Under: Company News, Company Results Tagged With: D&G, JSE Company

More cash for Lascelles’ former owners

May 13, 2013 by IC Insider.com

Some 985 former Lascelles deMercado shareholders are once more pretty happy as they received another distribution from their old company. The payout was made through New Transport Group, the company formed to take over the companies that Campari did not acquire when they took over Lascelles last year.

The amount being paid works out at $18.6533 per share of which $13.62 has been paid over, leaving $4.29 left to be paid later. No date was disclosed for when the balance is to be paid.

The former majority holders had arranged that amounts in excess of working capital needs would be paid over by Lascelles to the new company. This distribution is being made under that arrangement.

The directors of the new company indicate that they have engaged experts to advise on the future of the company and that shareholders would be updated at the annual general meeting later this year.

Filed Under: Company News, General Business News Tagged With: JSE Company, Lascelles

Dividends to come

May 10, 2013 by IC Insider.com

The Board of Directors of Desnoes & Geddes (D&G) has advised that they will meet on Thursday, May 16, 2013 to consider the payment of a second interim dividend for the year 2013. On the same date the Board of Directors of Pan-Jamaican Investment Trust will meet to consider the payment of a second interim dividend for the year.

If the dividend is approved, Desnoes & Geddes would be returning to the regular practice of paying two dividends per year, which was suspended when the operations was faced with challenges after the global economic crisis took full effect in Jamaica. The company paid 20 cents per share in December.

Pan Jamaican already made a payment of $1.10 cents in March and if the Board approves, it would be the second of four for the year and likely to be $0.50.

The Board of Directors of Dolphin Cove has declared a dividend of $0.10 per share payable on June 6, 2013 to shareholders on record as at May 20, 2013. The ex-dividend date is May 16, 2013. This payment is likely to be the second of three for the year having paid one in March already.