Paramount’s Q4 profit jumps 108%

Paramount Trading’s profit after tax jumps 108 percent in the May quarter, on a pretax basis, it was up 73 percent while revenues came in at just 5 percent higher, for the quarter.
Profit in the May quarter after tax is $43.6 million compared with $21 million for the similar 2013 period. The improved results for the company’s final fiscal quarter, came from revenues of $199 million versus $189.6 million in 2013. The final quarter numbers are a marked improvement over those for the February quarter, when only $14.6 million in profit was reported form sales of $181 million. For the full year, Revenues amounted to $720 million from $682 million in 2013. The 2013 numbers were boosted by one off income from the amalgamation of the trucking operation – Stamina Trucking and cancelation of related party debt amounting to $21 million, this also swelled the profit by a similar amount. In 2013 the Paramount incurred taxes on profit amounting to $10 million but in 2014 there was a tax credit of $425,000.
Noticeable, was a fall in administrative cost, from $35 million in the February quarter, to only $23 million in the final quarter. Gross profit margin climbed in the three months to May to 50 percent from 49 percent in the February quarter, compared to 47.7 percent for the full 12 months. The improvement in the profit margin is a welcoming development, especially as sales have not been growing at a fast pace.
Profit is projected to come in around $125 million in 2014/15 year or around 80 cents per share from current operations. At the current price of $2.70 the stock would be priced at a PE of only 3.4 making it a buy bearing in mind that that many junior listings have been valued around 8 times earnings.
Financials| The company earned an average rate of return of 29.7 percent, on the equity of $345 million at the end of May. Borrowed funds amounted to only $52 million compared to the level of equity. Cash stands at $56 million while receivables climbed to $172 million from $146 million, a much faster pace than the increase in sales. Inventory is at $203 million and increase form $172 million at May 2013, but payables moved up from $110 million to $128 million over the same period. Inventory levels may be on the high side as a protection against the devaluation of the Jamaican dollar, the same would not be true for the increased receivables.