Fontana reported topline growth of 17.3 percent pushed revenues to $1.3 billion in the September quarter from $1.11 billion in 2020 and drove profit higher by 35 percent for the September quarter, to $61 million from $45 billion in 2020, even as the company suffered a fall in gross profit margin.
Gross profit margin in the quarter declined to 34 percent from 35 percent in 2020 and 38 percent for the fiscal year 2021 and resulted in gross profit rising 11.7 percent as the cost of sales jumped 20.4 percent to $865 million from $719 million in the 2020 quarter. The Christmas quarter is the best for the company, providing increased margins and much higher sales than the other quarters.
Other income rose 7.4 percent to $15 million from $14 million in 2020. The company’s new Kingston store has not reaped the benefits of patronage from Jamaicans and visitors during the Easter period, with Carnival activities, while its Montego Bay and Ocho Rios stores would suffer fall out from patronage for tourists since March last year.
Administrative other expenses rose 14.4 percent to $331 million from $289 million in 2020, while sales expenses declined by 4 percent to $12.6 million from $13 million. Finance cost declined 15.6 percent to $52 million from $61 million in 2020.The company generated gross cash inflows of $121 million, but movements in working capital, addition to fixed assets and loan repayment resulted in a reduction in cash funds of $26 million from the amount at the end of June of $859 million. At the end of September, shareholders’ equity stood at $1.87 billion, with long term borrowings at $1.24 billion and short term at $152 million. Current assets ended the period at $1.99 billion, including inventories amounting to $995 billion, trade and other receivables of $148 million, cash and bank balances of $83 million. Current liabilities ended the period at $810 million, with net current assets at $1.2 billion.
Profit figures are actual before tax, with 2022 projected based on IC forecast.
Earnings per share came out at five cents for the quarter. IC Insider.com forecasts 75 cents per share for the fiscal year ending June 2022, with a PE of 9.7 times the current years’ earnings based on the price of $7.28 the stock traded at on the Jamaica Stock Exchange Junior Market on Friday, that a vast discount to an average of 14.4 for the market.
The company paid a dividend of 8 cents in June this year. Net asset value is $1, with the stock selling at 7.3 times book value.
The company underwent a significant expansion in setting up the Waterloo Square branch that was opened in 2019 and contributed much to its image, revenues and profit. The growth is unlikely to stop there. When the company went public in 2018, it had five locations that grew to 6 in 2019. The next branch is slated for the highly populated area of Portmore that should come on stream in the latter part of 2022. At the time of the public offer, the company stated in its prospectus that “It is also seeking further opportunities to expand its branch network to better serve the customer base, particularly in growing communities such as Montego Bay and Portmore. Accordingly, the company has good management, and investment in the stocks will deliver good gains in the short and long term, the latter as further expansion drives sales and profit. Based on the positive attributes, the stock gets ICInsider.com, the coveted ICBUYRATED seal.
