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.
[…] Honey Bun, a Junior Market listed company. Increased sales and profit which in slowed down in the first quarter of this year, has slowed even further in the latest quarter to June. Revenues crawled along at just 5 percent […]