One time cost hits Broilers Q2 profit

Jamaica Broilers recorded profits attributable to stockholders of $230 million or 22.42 cents per stock unit for the October 2018 quarter, down sharply by 48 percent from $446 million generated in the same period in 2017.
The major contributor to the decline was as a result of foreign exchange losses of $231 million.
For the half year to October net profit fell moderately to $644 million compared to $658 million for the similar period in 2017. Sales revenue for the quarter amounted to $13.6 billion, an 18 percent increase over the $11.5 billion generated in the corresponding quarter of the previous year and rose 12 percent to $25.7 billion in the six months to October from $23 million in 2017.
Gross profit inched up by just 3 percent for the quarter to $3 billion, compared to $2.96 billion in the previous year and climbed 10 percent from $5.63 billion to $6.22 billion for the six months to October. Gross profit margin collapsed in the quarter to 22.4 percent from 25.7 percent in 2017 while year to date, it came in slightly lower than the 24.5 percent in 2017 at 24.2 percent.
Jamaica Operations reported segment result of $1.35 billion, 28.4 percent above last year’s $1.05 billion. The directors attribute the improvement to increased poultry sales which was up 7 percent to $17.2 billion and enhanced inventory management. Revenue for increased by 24 percent over the prior year to $7.38 billion. “The increase was driven by increased sales of main products – fertile eggs and baby chicks, as well as, feed sales from the acquired feed mill”, Management stated.  US Operations reported a segment result of $666 million, down slightly from $674 million for the 2017. The “decrease

Christopher Levy – Jamaica Broilers President and Chief Executive.

was primarily attributable to one-off staff cost elements and acquisition costs related to the recent feed mill purchase; these cost elements are not expected to recur”, the directors stated. Haitian Operations increased market share of table eggs to 34 percent, compared to 31 percent of the market at the end of the second quarter last year. Revenue for the Haitian Operations increased13.4 percent over the prior year but the segment result drifted down moderately to $85 million from $86 million in 2017.
The Other Caribbean Operations reported segment results of $1.23 billion an increase of $1 billion over the corresponding quarter of 2017, mainly due to the net results of the JBGL Stockholders Nominee, driven by the unrealised fair value gains and eliminated on consolidation of the Group.
Distribution costs, increased 16 percent for the quarter to $482 million and 7 percent for the six months to $918 million. Administrative cost grew by just 5 percent in the quarter to $1.94 billion and 13 percent for the half year to $4.2 billion. The results also include the operating expenses of the new hatchery in Pennsylvania and the costs associated with the formation of the Shareholders’ Trust – these costs were not in last year’s comparative results.
IC Insider.com projects earnings is $2.30 for the current fiscal year to April and $3 for 2020.The stock is listed on the Jamaica Stock Exchange and trades at $29.50 for a PE of 15.6 times current year’s estimated earnings, with a premium of 127 percent net book value per share and seems to be fairly valued, currently.
Shareholders’ equity stands at $12.9 billion with borrowed funds at $12.8 billion and cash and investments of $3.9 billion. Current assets total $20.66 billion verusus current liabilities of $14.45 billion.

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