Derrimon Trading pumps up profit

Derrmn 6-15 Derrimon Trading made major stride in improving performance in the year to June with a big surge in profit of $51 million for the six months, a $49.5 million increase over the corresponding period in 2014, with net profit of just $1.7 million. For the quarter to June, profit came in at $31 million versus a loss of $9.4 million, from revenues of $1.58 billion, 16 percent up from $1.35 billion generated in 2014.
The profit out turn for the quarter is 49.6 percent ahead of the profit generated in the first quarter. Earnings per share amount to 11 cents for the quarter and 19 cents for the half year and should ends up around 40 cents for the full year. For the year to December 2014 the company made profit of $51.6 million or 19 cents per share.
The six months results reflect revenue of $2.88 billion, an increase 6.3 percent to $171.47 million over the $2.707 billion reported for the first six months period in 2014. “The growth in revenue was primarily due to improved sales within the retail segment of the business. Gross profit reported for the period was $360 million or 36.2 percent above the $264 million reported for the same period in 2014, the improvement reported in gross profit is due to improved margins within both the distribution & retail segments of the business,” Derrick Cotterell, Chairman and Chief Executive Officer stated in his report to shareholders. For the June quarter gross profit jumped a strong 59.5 percent to $193 million and is well ahead of the 16 percent growth in revenues for the quarter.
Derr staff Operating expenses for the period was $298 million, which represents an increase of 11.9 percent or $32 million over the $266 million reported for the same period in 2014. For the June quarte, expenses rose 14 percent to $157 million from $137.6 million. “The major factors for this increase were the increase in cost for property rental, staff cost, contracted services such as trucking, and professional fees,” Cotterell stated. Finance charges increased from $21.3 million to $40.4 million or 90 percent in the six months period reported. For the quarter, interest cost amounts to $21.5 million versus $6.4 million. Associated company contributed $12 million in the quarter and $20.5 million for the half year to profit.
Finances| While the profit performance is up strongly, the same cannot be said about the company’s finances. Receivables stood at $495 million at the end of 2014, climbed to $881 million in June and inventories are up to $817 million from $604 million, payables of $1.06 billion moved from $599 million. Loan payments due within twelve months, amount to $338 million. With cash of $137 million on hand and cash flow running around $70 million per annum, the company may have to be going back to the financial market to seek funding to facilitate payment of the loans, but reduction in the amounts due from customers and inventories can deliver the cash to help fund the payments.
IC Insider is placing a Market Watch rating on the stock.

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