Sweet sales but Bun’s profit drops

Revenues climbed 12 percent at Honey Bun for the March quarter to $454 million, but rising direct and administrative cost drove profit down 39 percent to $43 million from $71 million for the second quarter last year. 
The deterioration started with a 5 percent decline in gross profit margin for the quarter, from 50 percent to 47 percent. The six months margin remained at 49 percent, year over year, with direct expenses coming in at $239 million for the quarter and $449 million for the half-year.
The half year’s performance, although negatively impacted by the March quarter results had a 13 percent rise in revenues to $876 million from $775 million in 2019, but profit suffered a 15 percent fall, to $92 million, from $109 million for the March 2019 half year. Administrative expenses surged 26 percent, by $38 million to $184 million, well ahead of growth in revenues, negatively affecting the half-year’s profit performance, at the same time administrative expenses rose 29 percent, to $94 million in the quarter.
Selling and distribution expenses rose just 5 percent over both periods, ending at $63 million for the quarter and $129 million for the first six months. Finance costs rose to $3.2 million from $1.7 million for the second quarter in 2019 and rose 15 percent from $4 million to $4.6 million for the six months to March.
Profit before net finance cost and taxation dropped 26 percent from$73 million from the comparative period in 2019 to $54 million for the 2020 quarter and fell 4 percent from $115 million to $111 million for the half-year.

One Honey Bun’s Products.

Earnings per share for the quarter amounted to 9 cents and 20 cents for the six months, with IC Insider.com forecasting 50 cents per share for the full year computing to a PE ratio of 11 times earnings based on the last traded price of the stock on the Junior Market of $5.45.
Over the six months ended in March 2020, there was a 55 percent increase in inventories, to $94 million receivables increased by 92 percent to $119 million and cash and cash equivalents ended the period at $258 million. Current assets stood at $474 million as of March 2020 and Current liabilities stood at $200 million, including $179 million for trade payables. Borrowed funds were relatively low at $30 million and Shareholders’ equity ended at $809 million.
The company paid a dividend of 5 cents per share or $24 million versus 3 cents in 2019.

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