Profit more than doubles at Kremi

Profit after taxation at the IC Insider.com BUY RATED Caribbean Cream more than doubled, with a jump of 110 percent for the six months to August and 220 percent in the August quarter, to $74 million from $35 million in 2019 for the half-year and a rise from $14.7 million for the 2019 quarter to $47 million.
Operating revenues rose nine percent for the quarter, to $461 million from $422 million and six percent for the year to date, from $840 million in 2019 to $891 million. For the fiscal year to February, this year, revenues rose by 10 percent to $1.7 billion.
Improvement in profit margin resulted in gross profit rising faster than sales with 15 percent improvement in the first half of the year to $310 million versus $269 million in 2019 and 28 percent in the August quarter with gross profit of $171 from $133 million.
Selling, distribution and administrative expenses declined from $114 million in the 2019 quarter, to $111 million in 2020 and from $221 million in 2019, to $216 million in the six months to August. The decline in cost took place in spite of a sharp increase in depreciation charges in the current year, from $29 million to $59 million. Finance cost increased in the quarter to $6 million from $4 million in 2019 and from $10 million to $9 million for the six months period. Taxation doubled to $10.6 million for the half-year from $5 million in 2019 and moved from $2 million for the quarter to $6.7 million.
Historical results going back to the 2014 fiscal year shows steady annual growth in sales revenue but a more uneven increase in profits. The latter is partially due to the cost associated with expansion and the buying of market share that saw a less aggressive increase in selling prices for its products.
Earnings per share for the quarter came out at 12 cents and 20 cents for the six months.
Gross cash flow brought in $143 million, but growth in inventories, loan repayment offset by loan inflows and reduced payables pushed the cash funds to $152 million at the end of August, up from $58 million at the end of August 2019. With the increased profit for the year to date, shareholders’ equity now stands at $818 million, with borrowings at just $249 million. Net current assets ended the period at $191 million, including trade and other receivables of $63 million, while Current liabilities stood at $162 million.
The company paid 2.49 cents per share as the final dividend for the year ended February 29, 2020, on Friday, October 2. Net asset value is $2.16, with the stock selling at 2.3 times book value.
The results encouraged buying into the stock on Friday, with the price moving from $4.71 it last traded at on Thursday to a high of $5.25. IC Insider.com forecasts earnings of 60 cents per share for the current year that ends in February 2021 and 95 cents for 2022. The PE is currently 8.5 times the current year’s earnings based on the latest price of $5.15, the stock traded at on the Junior Market of the Jamaica Stock Exchange.

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