Profit grows at Jamaican Teas

Jamaican Teas reported profit of $27 million in the June quarter, 35 percent ahead of the March quarter and an 8 percent increase from the similar period in 2014. Nine months’ profit to June was $70 million, an increase of 13 percent over the similar period in the prior year.
Earnings per share came in at 16 cents for the quarter and 42 cents for the nine months should end around 80 cents for the full year if the houses with signed agreements are handed over and would put the PE ratio at 4 times earnings, net asset value is $4.36 per share for a discount to the last traded price of $3.10. Investors should not lose sight of the unrealized gains on investments which stood at $12 million.
The group is enjoying strong export sales since the commencement of its current financial year with an increase of 48 percent from $194 million to $287 million for the nine months with the latest quarter, moving from $76 million to $103 million. This contributed to the overall increase in sales which moved from $300 million to $324 million, an increase of 8 percent over prior year quarter and $936 million for the period to June compared to $834 million in the prior year.
The export performance comes mainly from changes in the distribution channel in the New York area which started in December 2014 and normalization of sales in the Florida area, following a shift from two distributors to one in 2014. Local sales for the manufacturing segment that are up 2.5 percent for the nine months, suffered an 8 percent fall in the June quarter.
Delivery of the vast majority of the 29 houses completed in the group’s real estate development, is expected to start in September, with sales revenue and profit to be booked in the quarter.
According to Jamaican Teas in their report to shareholders, “the month of August commenced with a significant backlog of export orders resulting expected increase export sales for the September quarter over 2014. Our retails sales have also shown a slight upturn ahead of last year and local sales have improved with the first month’s sales being ahead of the prior year”.
Taxation| Jamaican Teas has now marked its fifth year of being listed on the Junior Market of the Jamaica Stock Exchange, accordingly, effective with the September quarter, the Company will be subjected to taxation at 50% of the standard corporate rate, resulting in a tax charge of 12.5 percent.
At June, shareholders equity stood at $723 million and borrowings at $408 million. With the completed sale of the houses borrowings should fall to $200 million.