Q2 profit up at Carreras

Cigarettes are no longer the in-demand and sexy product of former years, nor are stocks of companies involved in the product in strong demand either.
It is against that background that the former highflier and Jamaica Stock Exchange-listed Carreras is to be viewed. But stocks of these companies are sought after by many who see great value in the high dividends paid by them, even if growth in profit is moderate. Years of increased prices on the product, mostly fueled by increased taxation, stymied demand and affected the profitability of the company. For the current year, aftertax profit climbed 11 percent for the September quarter to $911 million from $822 million but dropped 11 percent for the year to date from $1.75 billion to $1.56 billion. Taxation on profits climbed 10 percent in the quarter and the half year to $308 million from $279 million and $531 million from $591 million respectively.
Before tax charges, profit climbed 11 percent for the September quarter to $1.2 billion, up from $1.1 billion in 2019 but dropped 11 percent for the year to date from $2.34 billion to $2.1 billion.
Operating profit climbed by 12 percent for the quarter to $1.2 billion from $1.1 billion but decreased 10 percent for the half year to $2.1 billion from $2.3 billion in the same period in 2019.

Carreras leading brand

Revenue grew 8.5 percent for the quarter to $3.46 billion from $3.2 billion in 2019, with a seven percent drop for the six months to September from $6.64 billion to $6.15 billion. The revenue includes special consumption tax of $2.6 billion, two percent less than the similar period in 2019.
Cost of sales grew nine percent for the quarter from $1.61 billion to $1.76 billion and fell by six percent for the year to date from $3.3 billion to $3.1 billion. Gross profit improved by eight percent for the quarter from $1.58 billion to $1.7 billion but shrunk nine percent for the six month period from $3.3 billion to $3.1 billion. The gross profit margin for the quarter and the six months stood at 49 percent, down a single percentage point from the respective corresponding periods.
Administrative, marketing and distribution expenses fell one percent for the quarter and three percent for the first half of the fiscal year, to $490 million and $999 million, respectively.
The company is in excellent financial health having generated cash inflows from operations of $1.4 billion and after paying $1.6 billion in dividends cash and bank balances stood at $1.8 billion. Current assets ended at $3.53 billion inclusive of accounts receivables of $1.3 billion, with cash funds and inventories making the rest. Current liabilities stood at $2.05 billion. At the end of September, shareholders’ equity stood at $1.8 billion.
Earnings per share came out at 18.76 cents for the quarter and 32.18 cents for the half year. ICInsider.com forecasting 80 cents per share for the fiscal year. The stock last traded at $6.50 on the Main Market of the Jamaica Stock Exchange with a PE ratio of 8.3 times 2021 earnings.
A dividend of 17 cents per share will be paid on December 16, bringing the payments in the year to 64 cents, for a yield of 10 percent on the current price.

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