Profit jumps 220% at Salada but be wary

Helped by a big jump in foreign exchange gains of $11.7 million versus a loss of $1.76 million in 2020 profit at Salada Foods surged 220 percent in the December 2021 quarter to $42 million from $13 million in 2020 from sales revenues that rose 28 percent to $289 million from $226 million in 2020.
The big improvement in results owes a lot to the dislocation the company suffered in the 2020 period resulting in a 22 percent fall in revenues and the small profit shown above.  Salada does not sell to the end users so disruption in sales in one period may only be a shift from one period to the next. So it was not surprising the sales jump 29 in the second quarter last year to $353 million, with a profit of $51 million
The company suffered a reduced profit margin to 31.88 percent from 32.98 percent in the September 2021 quarter, but it is up substantially on the 25.5 percent in the December 2020 quarter.  The September quarter had revenues of $300 million and profit of $41 million as such the improvement in profit margin wade the difference in the December quarter’s performance that had lower sales.
Administrative expenses rose 11 percent to $33.4 million from $30 million. Marketing and sales expenses increased 10 percent to $16 million. Finance income rose to $13 million from $1.25 million in 2020. Taxation on profits jumped from $4.6 million to $14 million.
Gross cash flow brought in $62 million and ended at $116 million after changes in working capital and after paying $57 million in dividends the company ended with $176 million in cash funds. At the end of the quarter, shareholders’ equity stands at $989 million with no borrowed funds used to fund the operations. Current assets ended at $1 billion, including inventories of $578 million. Net current assets ended the period $759 million well over Payables of $254 million.
Earnings per share came out at 4 cents for the quarter. The stock traded that was already highly overvalued at $6.90 was pushed up to an incredible $8.50 on Tuesday after the results were released on Monday on the Main Market of the Jamaica Stock Exchange with an elevated PE ratio of 42.5 times ICInsider.com forecast of 20 cents per share for the 2022 fiscal year’s earnings, well above the market average of 16.5.