36% sales surge at Fontana

June 15, 2020 by

Sales surged 36 percent at Fontana for the March 2020 quarter, to $1.1 billion, from $885 million in 2019 and rose 25 percent for the nine months, to $3.5 billion from $2.8 billion in 2019, with the company’s new Kingston store adding to revenues for the first time.

Fontana Waterloo Square Branch just after it was opened in October 2019.

Gross profit jumped similarly to sales, with a 36 percent increase in the third quarter to $404 million from $297 million in 2019. For the nine months, gross profit was up 25 percent at $1.3 million from $1 million for the comparative 2019 period.  The surge in gross profit is mainly due to revenues generated by the new flagship location at Waterloo Square in Kingston.
The store opened in October 2019 and helped in pushing revenues up by 21 percent year-over-year for the six months to December, with gross profit increasing 20 percent. Revenues to September before the Waterloo store opening were up 9 percent. In the December quarter, revenues climbed 30.5 percent and 33 percent for the March quarter. The numbers suggest that the new store contributed approximately $235 million in the December quarter to revenues and $220 million in the March quarter. Information gleaned, indicates that this may be understating the actual numbers generated by tat store. The odds suggest that there is some cannibalizing of sales at the Barbican store by the new store.
Profit before other income and finance cost rose a healthy 67 percent for the March quarter to $57 million and grew 13 percent for the nine months to $281 million. The operating profit numbers provide a great indication of the impact of the new store is having on profit.
While gross profit advanced for the third quarter, net profit dropped 27 percent from $29.7 million in 2019 to $21.6 million in 2020. Still, it was up 15 percent for the nine months to $235 million, with the 2019 results incurring taxation of $40 million the 2020 profit is down 4 percent from the pretax profit of $244 million.

Fontana patrons lined up at the cashiers In October 2019.

The decline in profit for the quarter was mainly due to a $10.6 million unrealized loss in the value of a Unit Trust investment and a near doubling of finance cost to $25 million from $13 million in 2019. Without, the loss on the investment profit would have increased in the third quarter over the 2019 amount.
Overall, operating expenses rose 32 percent to $369 million in the quarter with “the Waterloo Square location accounting for $79.7 million of the increase”, the directors advised in a report accompanying the results. Selling and promotion cost increased by 31 percent for the third quarter, up $5.3 million, from the $17 million recorded over the comparative period in 2019. Depreciation went up by a staggering 374 percent from $21 million to $100 million for the nine months, while operating expenses increased by 29 percent coming in at $1 billion from $794 million from the prior year.
Fontana generated a gross cash flow of $335 million for the nine months, pushing cash and equivalents to $533 million. As of March 2020, current assets stood at $1.4 billion with trade and other receivables landing at $66 million; inventories ended at $751 million, an increase of $130 million over March 2019. Current liabilities ended at $846 million, including the current portion of bank loans at $52 million and trade and other payables of $655 million. The company has loans payable amounting to $221 million of which, $52 million is due during the next twelve months. Shareholders’ equity closed the period $1.45 billion, up from $1.16 billion, year over year.
Earnings per share came out at 2 cents for the quarter and 19 cents for the nine months and should end the fiscal year ending June under 30 cents. IC Insider.com is forecasting 55 cents per share for PE of 10.7 times earnings.

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Profit dips at Lasco Manufacturing

June 9, 2020 by

The booking of the cost of stock options amounting to $185 million resulted in profit at Lasco Manufacturing falling in the December quarter, from $289 million to $203 million and the full-year results to March slipping from $1 billion in 2019 to $982 million.

Lasco Manufacturing products

Revenues in the March quarter rose 4.5 percent to $2 billion. For the full year to March, revenues grew 4.2 percent to $7.9 billion.
Gross profit margin ended at 38 percent for the fourth quarter, down slightly from 38.1 percent in 2019 but better than the 37 percent for the fiscal year and 35.4 percent in 2019.
Other income for the fiscal year climbed to $30 million, from $1.8 million in 2019, but was nearly flat at $130 million for the year to March.
Administrative expenses increased by 20 percent to $1.36 billion, while selling and promotion expenses rose 1.8 percent to $291 million for the year. The expensing of the value of stock options granted to staff amounting to $185 million, resulted in the big increase in Administrative expenses for the year.
Earnings per share ended at 23.67 cents. IC Insider.com projects earnings of 30 cents per share for the 2021 fiscal year, with the stock now trading at a PE ratio at 13 at the last traded price of $3.96.
Cash flow from operations generated $1.7 billion before working capital changes. Loans consumed $350 million in net repayment, while the company spent $196 million on the acquisition of fixed assets. Current assets stood at $4.6 billion, including cash and equivalents of $1.35 billion at the end of March and investments totaled $268 million. Current liabilities closed the year at $1.8 billion. Shareholders’ equity ended the year at $6.75 billion, with borrowed funds being just $1.05 million, of which $496 million is due for repayment during the current year and will help to cut interest costs in half.
The company paid $250 million in dividends during the fiscal year.

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Profit up 21% at Lasco Distributors

June 4, 2020 by

Lasco Distributors reported full-year results to March, with revenues rising 7.5 percent to $19.5 billion and profit increasing 21.4 percent to $726 million. The year’s performance reflects a big recovery after profit fell 30 percent in the first quarter to June last year, and 10 percent to the end of the third quarter.
The company enjoyed an 8.24 percent rise in revenues for the March quarter to $5.2 billion, with profit after tax for the quarter at $183 million, up 961 percent from just $17 million in 2019. The quarter suffered from a fall in gross profit margin to 18.4 percent versus 19.2 percent in 2019. Gross profit was 19.4 percent for the fiscal year versus 19.6 percent in 2019.
Other income in the fourth quarter climbed to $60 million, a turnaround from a loss of $37 million in the March quarter in 2019, but was nearly flat at $130 million for the year to March.
The increase in cost for the year was kept close to the growth in revenues, with Administrative expenses rising 8 percent to $2.37 billion while selling and promotion expenses fell 9 percent to $703 million for the year.
Segment results show revenues rising 3.6 percent for the Consumer division for the fiscal year to $15.7 billion while the Pharmaceutical division jumped 27.7 percent to $3.8 billion. Segment profit jumped 36.5 percent for the Consumer division to $557 million but the Pharmaceutical division dropped by 18.6 percent to $154 million even as revenues rose strongly.
Earnings per share ended at 21.27 cents and IC Insider.com projects 38 cents per share for the 2021 fiscal year, with the stock trading at a PE ratio at 7.7 at the last traded price of $2.91, well below its sister company, Lasco Manufacturing.
Cash flows from operating resulted in the generation of $1 billion before working capital changes. Current assets stood at $6.9 billion, including Cash and cash equivalents of $1.47 billion at the end of March with current liabilities closing the year at $3.38 billion. Shareholders’ equity ended the year at $5.7 billion, with borrowed funds being just $116 million.
The company paid a dividend amounting to $151 million last year, with profit rising, a large pool of cash and virtually no borrowed debt, there is room for a big increase in future dividend payments that could make the stock an attractive dividend payer.

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138 Student Living huge gains

May 27, 2020 by

Revenue at 138 Student Living, jumped 31 percent for the March quarter, to $289 million from $221 million in 2019. For the six months to March, the revenue jumped 69 percent to $753 million from $445 million in 2019.
138 Student Living boasted an eye-popping turnaround in its profit before interest and taxes of 262 percent for the quarter and 588 percent for the six months to March 2020. The company recorded a profit before tax and finance cost of $137 million for the March quarter and $396 million for the six months. Profit after tax ended at $87 million for the March 2020 quarter versus a loss of $45 million in the prior year’s second quarter, for the half-year, profit after tax climbed to $270 million compared to a loss of $44 million in the 2019 period.
Since reporting profit before tax for the 2017 fiscal year, the current period is the first that the company is reporting profit that suggests a full-year profit. The company noted four consecutive quarters of recording an operating profit, peaking in December 2019. Contributing factors included the decrease in operations costs, particularly utilities, increased occupancies, and variation claims relating to Irvine Hall.
There is much more than meets the eyes of the glowing 2020 performance. “Three main items positively impacted this result: (i) effective management of operating costs (primarily utilities) (ii) increased occupancies for long-term and short-term rentals and (iii) variation claims relating to Irvine Hall. The last item includes a variation claim for the full 2019 year as well as a first and second quarter claim for the year 2020. Adjusting for the variation claims, the group recorded year-to-date profit amounting to $71 million,” Chairman Ian Parsard informed shareholders by way of directors’ report accompanying the quarterly.
138SL is yet another company that fails to provide shareholders with relevant information by bundling direct and administrative expenses into just one line item on the financial report. Administrative costs fell by 17 percent for the quarter and 8 percent for the six months to March, posting figures of $153 million and $358 million, respectively. Finance cost amounted to $67 million for the quarter down slightly from the 2019 period, with $68 million and for the half-year $134 million down from $138 million.
Earnings per share came out at 21 cents for the quarter and 65 cents for the six months and should end the fiscal year higher, but profits from the continuing business will be far less than the half-year numbers indicate.
At the end of the 2020 first quarter, 138SL generated gross cash inflows of $267 million but saw receivables rising by $181 million and had a net repayment of loans amounting to $106 million leaving cash equivalents at $270 million. Current assets stood at $712 million, with receivables of $418 million. Current liabilities were $1.15 billion, including payables of $602 million. Shareholders’ equity stood at $5.8 billion, with borrowings of $4.6 billion.
138SL adjusted its operations as a result of COVID-19, which has resulted in an occupancy reduction of 25 percent in April. The Chairman noted that while they expect to see the continued impact on their revenue, the company has made necessary changes and the Concession Agreement of a 90 percent occupancy guarantee provides a meaningful buffer.
The stock traded at $6.69 on the Main Market of the Jamaica Stock Exchange, with a PE ratio of 13.5 times 2020 earnings from ongoing revenues.

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Sweet sales but Bun’s profit drops

May 25, 2020 by

Revenues climbed 12 percent at Honey Bun for the March quarter to $454 million, but rising direct and administrative cost drove profit down 39 percent to $43 million from $71 million for the second quarter last year. 
The deterioration started with a 5 percent decline in gross profit margin for the quarter, from 50 percent to 47 percent. The six months margin remained at 49 percent, year over year, with direct expenses coming in at $239 million for the quarter and $449 million for the half-year.
The half year’s performance, although negatively impacted by the March quarter results had a 13 percent rise in revenues to $876 million from $775 million in 2019, but profit suffered a 15 percent fall, to $92 million, from $109 million for the March 2019 half year. Administrative expenses surged 26 percent, by $38 million to $184 million, well ahead of growth in revenues, negatively affecting the half-year’s profit performance, at the same time administrative expenses rose 29 percent, to $94 million in the quarter.
Selling and distribution expenses rose just 5 percent over both periods, ending at $63 million for the quarter and $129 million for the first six months. Finance costs rose to $3.2 million from $1.7 million for the second quarter in 2019 and rose 15 percent from $4 million to $4.6 million for the six months to March.
Profit before net finance cost and taxation dropped 26 percent from$73 million from the comparative period in 2019 to $54 million for the 2020 quarter and fell 4 percent from $115 million to $111 million for the half-year.

One Honey Bun’s Products.

Earnings per share for the quarter amounted to 9 cents and 20 cents for the six months, with IC Insider.com forecasting 50 cents per share for the full year computing to a PE ratio of 11 times earnings based on the last traded price of the stock on the Junior Market of $5.45.
Over the six months ended in March 2020, there was a 55 percent increase in inventories, to $94 million receivables increased by 92 percent to $119 million and cash and cash equivalents ended the period at $258 million. Current assets stood at $474 million as of March 2020 and Current liabilities stood at $200 million, including $179 million for trade payables. Borrowed funds were relatively low at $30 million and Shareholders’ equity ended at $809 million.
The company paid a dividend of 5 cents per share or $24 million versus 3 cents in 2019.

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Profit soars 103% at Seprod

May 21, 2020 by

Seprod expected their entry into sugar production in 2009 was going to be a lucrative endeavour with their business acumen, strong capital base and vision they would succeed where others failed for decades. According to a Gleaner report in 2010, “the company not only acquired some 820 hectares of lands last year to add to its Golden Grove Sugar Company operations but also upgraded its factory. The strategy of an upgraded factory and “economies of scale” is expected to reap increased revenues for the group, according to Group Chairman Paul Scott.” Shortly after they acquired the business, the directors were told they were undertaking a huge gamble and would have been better off if they had left it alone. Ten years later, with billion-dollar losses, Seprod finally stopped the costly experiment.
Having disposed of the sugar manufacturing operation, the company slashed its sugar losses by 89 percent from $139 million for the first quarter in 2019, to just under $15 million for the quarter just ended. The reduction in the sugar operating losses helped the net profit to soar 103 percent to $633 million, up from $312 million from the first quarter of 2019 that includes net loss from discontinued operations of $139 million. So strong are the first-quarter numbers that the profit amounts to 65 percent of the full year’s profit in 2019. Earnings per share came out at 86 cents for the quarter.
First-quarter revenues increased six percent to $9.14 billion over the $8.6 billion for the comparative period last year. Manufacturing segment revenue was up 17 percent to $5.2 billion compared to March 2019, while distribution revenues increased 14 percent to $6.9 billion. Segment profit for the Manufacturing segment grew from $682 million to $1.14 million and that for the distribution segment increased from $156 million to $418 million. Export sales rose 13 percent over last year’s first quarter, accounting for $405 million in revenue or 4 percent of the total revenue.

Some of Seprod’s products.

The net profit increase for the quarter comes on the heels of an 8 percent decline in profit for the year ended 2019, dropping from $1.1 billion in 2018 to $973 million, although revenue increased for the year by 45 percent to $32.7 billion, resulting from acquisition and mergers mostly from businesses within the Musson Group.
For the quarter, direct expenses rose a modest one percent coming in at $6.4 billion and other operating expenses increased two percent to $1.78 billion year over year and finance costs fell three percent, from $287 million at the end of March 2019 to $280 million at the close of 2020 first quarter.
Seprod raked in $1.1 billion in operating profit for the quarter, a 32 percent increase over the $835 million in the corresponding period to March 2019. Operating profit margin rose 20 percent from 10 percent to 12 percent, year-over-year.
The group generated gross Cash inflows of $1 billion and ended with cash and equivalents of $1.1 billion, down from $1.48 billion at the start of the year. There was a sharp reduction in payables but a big increase in receivables since December 2019 and there was a near billion-dollar drop in inventories. Net current assets ended the period at $7.8 billion, after accounting for current liabilities of $6 billion. At the end of March, shareholders’ equity stood at $15.6 billion, but borrowings totaled $13.5 billion. Seprod paid $366 million in dividends compared to $330 million in the previous year’s first quarter.
The company executives note that COVID-19 had a “minor negative impact” on its first-quarter results and it is expected that the full effect of the pandemic on company operations will be realized in subsequent quarters. Notwithstanding, it is important to note that the Seprod group includes several companies that manufacture or distribute what many consumers deem as essential foods and pharmaceutical items, which should also factor into the company’s ability to withstand this economic shock during this period.
IC Insider.com is forecasting $4 per share for 2020, with the stock trading at $51 on the Jamaica Stock Exchange with a PE ratio of 12.8 times 2020 earnings.

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Q1 profit down 57% at Carib Cement

May 19, 2020 by

Jamaica’s sole cement processing company, Caribbean Cement recorded a modest 2 percent increase in revenues to $4.5 billion for the quarter ending March 2020, over the 2019corresponding period and finished with a 57 percent decline in profit to $483 million, down from last year’s $1.1 billion for the March quarter.  
The quarterly performance followed a weak December 2019 quarter when profit dropped from $1.1 billion in the 2018 December quarter to just $319,276.
Helping to pressure the company’s performance for the latest period was a 16 percent rise in direct production cost that moved from $2.3 billion to $2.6 billion, with repairs and maintenance increasing $100 million and equipment hire moving up by $170 million over the 2019 period with raw materials accounting for most of the balance of the increase. The Directors pointed to the fact that the annual maintenance shutdown occurred in the first quarter this year versus the second quarter in 2019. As a result, operating profit decreased by 23 percent, moving from $1.58 billion to $1.22 billion resulting in profit margin falling from 35.5 percent in the 2019 first quarter to 27 percent in 2020.
Other operating expenses rose 15 percent from $568 million to $651 million in the quarter. Finance cost declined in the quarter, from $236 million to $164 million as the company paid down loans during the past year. Foreign exchange losses rose to $281 million for the quarter, from a surplus of $67 million in the previous year’s corresponding period.
The Directors note that “the full impact of COVID-19 on the company’s operations, particularly in its export market, is yet to be seen.”
The company continues to enjoy a healthy cash flow with the quarter bringing in $1.1 billion, just a few million dollars lower than for the 2019 period. Shareholders’ equity stood at $8.8 billion and total borrowed funds of $12 billion down from $14.8 billion in March 2019. Current assets ended the period at $3.1 billion inclusive of trade accounts receivables of $450 million and cash and bank balances amounting to $348 million. Current liabilities rounded out the quarter at $4.9 billion, including short-term borrowings of $1.7 billion.
Earnings per share came out at 57 cents for the quarter, down from $1.33 in 2019. IC Insider.com is forecasting around $4 per share for the year with the PE currently at 12.5 times 2020 earnings, but a lot will depend on if there are not many dislocations to cement demand from the current economic slowdown. The stock last traded at $51.50 on the Main Market of the Jamaica Stock Exchange.

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Depreciation melts Kremi profit

May 18, 2020 by

A quick look at the audited accounts for Caribbean Cream to February shows another year of disappointing results that cut across the likely outturn the November 2019 results suggested. Closer examination of the data reveals a far better picture of the company’s performance than initially meets the eye.

Caribbean Cream Kremi brand

Profit for 2020 fell sharply, but gross cash flow rose for the year in which revenues rose 10 percent as a sharp rise in depreciation charge knocked net profit down to $55 million from the $89 million reported in 2019 with earnings per share falling to 14 cents, down from 23 cents in 2019.
The depreciation charge more than doubled in the year, with an increase of $63 million, to end at $115 million as fixed assets amounting to $432 million were added during the year and were subject to be depreciated. Leased assets costing $115 million, also incurred depreciation, a different treatment than in the prior year. Although the profit fell sharply by 38.5 percent, increased depreciation resulted in gross cash inflows being $195 million compared to $165 million in 2019.
Revenues rose 10 percent from $1.55 billion to $1.7 billion for the year, with the final quarter growing at a faster pace than the 7.7 up to November. In the last quarter, revenues grew a healthy 16.2 percent to $471 million from $405 million in 2019. Unfortunately, of the $115 million depreciation charge for the year, only $53 million was booked up to November last year, resulting in $62 million booked in the final quarter.
Gross profit margin declined in the year leading to gross profit rising slower than the increase in revenues at 5 percent to $546 million and is due primarily to a 12 percent rise in raw material cost and a 76 percent increase in depreciation charges in the manufacturing operation. Overall, cost rose faster than the increase in revenues for the year with Administrative, selling and distribution expenses 15 percent for the year.
The company is in a healthy financial position at the end of February, with shareholders’ equity stood at $744 million with borrowings of $232 million. Net current assets ended the period at $74 million inclusive of trade and other receivables of $58 million, cash and bank balances of $129 million while Current liabilities closed the period at $232 million.
IC Insider.com is forecasting earning per share of 50 cents for the current fiscal year, assuming only minimal negative impact from Coronavirus. The stock traded at $2.20 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 4.5 times 2021 earnings.

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The top profit performers for 2020

May 17, 2020 by

Its earnings season for Jamaican stocks and usually most companies would have posted first-quarter results already. The Jamaica Stock Exchange has permitted companies to publish results later, due to the Coronavirus outbreak and the disruption caused to businesses.

Caribbean Flavours Derrimon’s subsidiary

Some results have been lower than for last year’s first quarter, but a number of them have posted robust increases. Outstanding results published last week were led by Grace Kennedy with a 50.6 percent spike in profit before tax, to $1.99 billion for the March quarter, while profit after tax attributable to shareholders of the group rose an impressive 47 percent, to $1.32 billion. tTech’s profit for the March quarter climbed 5,375 percent from $758,000 to $4.15 million as revenues rose a healthy 32 percent. Revenues grew 33 percent to $149 million at Caribbean Flavours while profits before tax rose 31 percent to $19 million from $14.4 million, profit after tax rose 19 percent to $14.2 million. The first-quarter profit is 45 percent of the 2019 full-year results.
Revenues at 138 Student Living climbed 29 percent to $278 million for the February quarter and 71 percent to $734 million for the half-year, with profit ending at $87 million, for earnings per share (EPS) of 21 cents for the quarter, up from a loss of $68 million in 2019. Profit for the half-year to February was $270 million, with EPS of 65 cents, up from a loss of $67 million in 2019. Profit at Eppley jumped 541 percent over the 2019 outturn of just $6 million after-tax to $40 million, with EPS of 21 cents.

Kingston Wharves profit rose 22%.

Kingston Wharves results for the quarter ended in March rose two percent to $1.9 billion, over the corresponding period in 2019 while net profit attributable to shareholders increased 22 percent or $101 million over the prior year, to $554 million. Sterling Investments reported a profit of US$4.6 million, versus a loss of US$7.2 million in the March 2019 period as a significant swing around in exchange gains pushed earnings higher for the March 2020 period.
Prior to this past week, Barita Investments reported a 25 percent rise in March quarter profit and 96 percent increase in the half-year results, profit for the first quarter at Derrimon Trading rose 34 percent to 91.6 million from a 5.5 percent rise in sales revenues, a rise of $18 million in other revenue and a drop in finance cost from $58 million to $49 million. iCreate increased revenues by 106 percent to $24.5 million for the three months to March with net Profit of $1.25 million, up from a loss of $1.48 million made in 2019. Pulse Investments profit rose 136 percent for the March quarter profit and 121 percent for the, nine months to March, Seprod profit for the March quarter increased 103 percent and Mailpac Group reported 71 percent increase in first-quarter profit

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GraceKennedy’s blowout quarter

May 15, 2020 by

GraceKennedy reported its best performance in years with substantial gains in revenues and profits for the first quarter ending March this year compared to the similar period in 2019. Still, not all segments of the group perform well in delivering increased profit.

Grace Kennedy new headquarters in downtown Kingston

Group revenues rose 11.3 percent to $28.85 billion, over $25.93 billion over the 2019 period. Profit before tax, jumped an astounding 50.6% for the period to $1.99 billion, while profit after tax attributable to shareholders of the group, rose 47 percent to $1.32 billion. Profit got a boost of $184 million goodwill gained on the acquisition of the majority shares in Key Insurance that was more than offset by impairment losses on financial assets amounting to $248 million.
Earnings per stock unit for the period was $1.33, up from 90 cents in 2019.
Revenues for the Food Trading segment rose 12 percent to $23.45 billion, while profit jumped a robust 60 percent to $1.2 billion from $752 million in 2019.  The improvement came from Jamaica and international sales, Grace indicated.
“Our Jamaican food distribution business experienced growth in both revenue and pre-tax profits, coupled with improved margins. GraceKennedy Foods (USA) LLC continues to show significantly improved performance for the three months when compared to the corresponding period of 2019. For the March quarter, sales for Grace Frozen Patties showed triple-digit growth, closing the first quarter of 2020 with a 68 percent increase in volumes compared to the corresponding period of 2019. Grace Foods UK and Grace Foods Canada also reported increased revenue for the three months when compared to the corresponding period of 2019.”
The banking and Investments segment reported modest growth in revenues to $1.54 billion from $1.49 billion in 2019 with profit falling from $163 million to just $48 million and the
The insurance segment reported an increase in revenue from $1.74 billion to $1.844 billion, with profit evaporating from $125 million to a loss of $858,000. GraceKennedy completed its acquisition of 65% of the issued shares of Key Insurance.
Money Services division saw profit rising 31 percent to $842 million from $644 million.
The company’s stock is trading on the Jamaica Stock Exchange at $58 at a PE ratio of 9.4 times 2020 earnings based on IC Insider.com forecast of $6.20 and well below the average PE of market of 13.6 times 2020 earnings. Grace declared a dividend of 25 cents per share payable 15th June 2020, down from 40 cents in 2019.

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