Flour pressed into more profit

Profit after tax grew to TT$9.2 million up marginally from $9 million for the March quarter, this year at Trinidad’s National Flour Mills, from declining revenues of $111.2 million compared with $121.5 million in the 2015 quarter.
The company enjoyed earnings per share of 8 cents, compared with 7 cents in the 2015 quarter and 28 cents for the full year, in 2015 and could end up around 32 cents for the 2016 if the current trend continues.
The lower revenues “reflect the contraction in demand locally, and some timing differences with respect to large export orders which the company now pursues vigorously. Cost containment measures continue to provide the cash cushion to execute planned capital projects. Thus, growth in the regional export markets and more local content are priority strategies to improve both our sales revenues and foreign currency position” says Chairman Mike Bazle in his commentary accompanying the company’s quarterly results.
“It is thus important to note that the current economic environment continues to challenge the Company, particularly with respect to the timely supply of foreign exchange which is central to the financing of NFM’s grain purchases. When taken together with the cost implications of declining TT currency values, the company’s intention is to manage these additional costs, as key priorities, in order to ameliorate the impact on our customers,” the Chairman went on to say.
Despite the falling revenue, gross profit rose from $29.8 million to $31 million while Selling and distribution expenses were static at $7.8 million and Administrative expense declined to $10.74 million from $11.85 million.
Borrowing funds jumped to $122.78 million from $94 million compared to shareholders equity of $204 million.
The company is listed on the Trinidad and Tobago Stock Exchange and last traded at $2.20, with a PE around 7 times this year’s earnings and is priced below the average stock on the TTSE market. With recession and devaluation of the Trinidad currency investors are not aggressive in picking up stocks.