Sales up 24% in 2019 at Knutsford

One of Knutsford Express buses.

Jamaica’s cross-country luxury bus operators, Knutsford Express, saw strong growth in revenues for the year to May of 24 percent but net profits rose just 6 percent as the company’s new Florida operations took a bite out of local profits.
For the nine months to February, revenues were up 24 percent, with the February quarter showing a healthy increase of 22 percent. Revenues rose 22 percent from $249 million in the 2018 May quarter to end at $304 million, while revenues for the February quarter rose from $232 million to $286 million and for the full year, it rose from $926 million to $1.15 billion.
Profit rose just 6 percent from $178 million for the full year to $188 million for earnings per share of 38 cents. Resulting from the losses in the foreign operations, profit in the final quarter fell from $50 million in the 2018 May quarter, to $30 million in the same period this year. The company generated income of J$21 million and incurred a loss of J$25 million in the Florida operation that commenced in the February quarter. According to Managing director Oliver Townsend, “the Florida operation is a long term investment which we believe will come into its own in the second year of operations.” Townsend was responding to a query by IC as to when this operation would break even.
Knutsford does not break out direct operational expenses, making it difficult to determine the gross profit generated by the company.

Knutsford’s New Kingston depot

In addition, the absence of that critical data makes it impossible for investors to measure the efficiency of the operations. Data extracted suggest it could be in the region of 40 percent. Overall expenses rose 28 percent to $963 million for the year with fuel rising 28 percent and labour cost 30 percent.
The company benefitted from the hub at Sangster Airport resulting in more foreign arrivals utilising the services, especially those journeying to and from Negril, the company reported.
Fixed assets grew to $733 million with additions of $406 million during the year, cash and short-term investments ended at $355 million with borrowings at $215 million and shareholders’ equity of $780 million.
Knutsford trades on the Junior Market and closed at $11.10 on Tuesday, with a PE of 29 based on historical earnings. IC Insider is forecasting profits in the current year to be in the region of 75 cents per share that would result in a PE of 15 and slightly above the Junior Market’s average of 13.

About IC