Very moderate market movement

There was very moderate activity on the Jamaica Stock Exchange at the close of the trading week as the prices of 10 stocks rose and 8 declined as only 25 securities traded in a very slow market session resulting in 1,571,377 shares trading valued at a mere $8,273,649.
JSE sum 2-5-14Main Market| Six companies in the main and US dollar markets advanced and 6 declined as the indices moved down moderately with the JSE Market Index inching down by 6.80 points to 74,592.23 and the JSE All Jamaican Composite index shedding just 7.60 points to close at 82,115.83.
Gains| Stocks recording gains at the end of trading in the main market are Kingston Wharves with 9,534 shares to close with a gain of 48 cents at $5.99, National Commercial Bank gained 10 cents to close at $18.10 with 9,100 units changing hands, Proven Investments ordinary share, with 8,570 units to close up 0.02 us cents at 18 US cents, Sagicor Group 18,000 units closing at $9.80 for a 30 cents gain, Salada Foods 5,000 shares to close at $8 as the price gained 50 cents and Scotia Investments with only 700 shares to end at $23.10 for a gain of 10 cents.
Firm| There were only 4 stocks in the main market to close without a change in price as Cable & Wireless with 43,699 shares closed at 40 cents, Carreras with 5,000 units closed at $33.56, Jamaica Money Market Brokers 7.50% preference share traded 500,000 and closed at $2 and Proven Investments 8% preference share with 381,800 units closed at $5.07.
Declines| The stocks declining in the main market are Gleaner with 2,500 shares while falling a cent to close at $1.10, Grace Kennedy lost $1.49 to end at $56.51 with 1,600 shares, Jamaica Broilers exchanged 20,538 units to close down a cent at $4.85. Pan Jamaican Investment 10,529 shares to end 55 cents lower at $49.05, Scotia Group had 110,308 units at $20.50 at the close as the price shed 12 cents and Supreme Ventures 3,800 shares to close with a 5 cents decline at $2.05.
Junior Market| The JSE Junior Market Index declined by 8.14 points to close at 751.34 as 9 stocks traded with 4 advancing and only 2 declining.
Gains| Stocks recording gains at the end of trading in the junior market are AMG Packaging that traded 5,560 units to close at $3.50, up by a cent, Access Financial with 72,600 units to close at $11.50 with a gain of $1.50, Caribbean Cream 3,000 units to close at 79 cents with a 4 cents increase and Caribbean Producers with 90,000 units in closing at $3, up 2 cents.
Firm Trades| The 3 stocks in the junior market traded to close at the same price as the day before are Blue Power with 3,400 shares in closing at $9.01, Lasco Financial 3,000 shares while closing at $1.20 and Medical Disposables 94,700 units, closing at $2.04.
Declines| Stocks declining in the junior market at the end of trading are General Accident with 2,000 units a $1.60, down 10 cents and Lasco Manufacturing with 166,439 shares to end down by 10 cents at $1.10.
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 3 stocks with the bid higher than the last selling price and 4 stocks with offers that were lower.

Market directionless

In Thursday’s trading on the Jamaica Stock Exchange, the market was directionless with advancing stocks numbering just below declining ones and the IC market indicator showing investors in a tussle over the immediate future direction of the market. Prices of 6 stocks rose and 8 declined as 20 securities traded resulting in 3,602,192 shares changing hands valued at $19,621,158 in another lacklustre session.
JSE sum 1-5-14Main Market| All advancing shares in the market was in the main market and all but one stock that declined was also in this market, but the indices moved up slightly, with the JSE Market Index inching up by just 1.23 points to 74,599.03 and the JSE All Jamaican Composite index edging up by only 1.38 points to close at 82,123.43.
Gains| Stocks recording gains at the end of trading in the main market are Berger Paints trading 89,657 unitss to close with a gain of a cent at $1.68, Caribbean Cement gained 21 cents to close at $3.91 with 20,500 units changing hands, Carreras traded 443 shares to close 6 cents higher at $33.56, Ciboney with 50,000 shares by increasing by a cent to close at 12 cents for a new 52 weeks high, Grace Kennedy 7,439 shares with a gain of $1 to close at $58 and Jamaica Money Market Brokers with 451,214 ordinary shares to close up by 4 cents at $7.24.
Firm| There were only 5 stocks in the main market to close without a change in price as Gleaner with 228,484 shares closed at $1.10, Hardware & Lumber traded 3,300 units and closed at $11.70, Mayberry Investments with 3,060 units closed at $1.70, Scotia Group had 59,888 units changing hands to close at $20.62 and Seprod traded 685 shares in closing at $10.84.
Declines| The number of stocks that declined in the main market are Cable & Wireless with 1,500,888 units while losing a cent to end at 40 cents, Desnoes & Geddes with 76,472 shares to end at $4.30 as the price lost 30 cents, Jamaica Broilers with 450,872 shares to close at $4.86, down 4 cents, Jamaica Producers that traded 6,600 units to close at $18.26 while losing 4 cents, National Commercial Bank 571,665 shares as the price closed with a 10 cents lost, at $18, Sagicor Group had 50,529 units changing hands to close with a fall of 71 cents to $9.50 and Salada Foods 2,400 shares to close 45 cents lower, to end at $7.50
Junior Market| The JSE Junior Market Index declined by 0.59 points to close at 743.20 as only 2 junior market stocks traded at the end of the trading session.
Gains| No stock gained at the end of trading in the junior market.
Firm Trades| Lasco Manufacturing was the only stock in the junior market that traded to close at the same price as the previous trading day with 27,096 units to end at $1.20.
Declines| Caribbean Producers was the only stock declining in the junior market at the end of trading as the price fell 9 cents to close at $2.91 as it traded a mere 1,000 units.
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 5 stocks with the bid higher than the last selling price and 6 stocks with offers that were lower.

New year, new dividends

IC Insider’s tracking of the latest announcements on dividends for the New Year to February 28th 2014.

Sagicor Group ups dividend and approved the payment of an interim dividend of 35 per share payable on March 31, 2014 to shareholders on record as at March 21, 2014. The ex-dividend date is March 19, 2014. The company paid a dividend of 21 cents per share on October 31, 2013 and brought dividends paid in 2013 to 40 cents per share with a dividend of 19 cents per share paid on March 28, 2013. In 2012 the company paid two dividends of 28 cents each.

Jamaica Broilers Group has declared an interim dividend of 8 cents per share payable on April 9, 2014 to shareholders on record as at March 13. The ex-dividend date is March 11. The 2013 dividend represents an increase of 33.33 percent on the amount paid in 2012. The company paid an interim dividend of 6 cents per share on March 28, last year and 8 cents per share on December 2.

Pan-Jamaican Investment Trust will pay its first interim dividend for the year 2014 of 60 cents per share on March 31, 2014 to shareholders on record as at March 17, 2014. The ex-dividend date is March 13, 2014. Dividends per share paid in 2013 amounts to 45 cents on September 20, $1.10 in March and 50 cents on December 20.

Scotia Investments approved an interim dividend of 45 cents per stock unit, payable on April 10, 2014, to stockholders on record as at March 20, 2014. The company pays four dividends per annum and have paid 45 cents each for the prior four quarters

Scotia Group approved an interim dividend of 4o cents per stock unit, payable on April 10, 2014, to stockholders on record as at March 20, 2014. The company pays four dividends per annum and have paid 40 cents each for the prior four quarters.

Supreme Ventures declared a dividend of 3 cents per share payable on March 26, 2014 to shareholders on record as at March 12, 2014. The stock traded ex-dividend on March 10, 2014. The company paid a dividend of 3 cents per share on January 8, 2014.  In 2013 dividends per share were paid as follows –  3 cents on September 2, 8 cents on June 17 and 10 cents on March 28.

Eppley Limited declared an ordinary interim dividend of $9 per share payable on February 28, 2014 to shareholders on record as at February 21, 2014. The ex-dividend date is February 19, 2014. This is the first dividend the company is paying on its ordinary shares since listing in 2013.

General Accident Insurance approved an ordinary dividend of 7.64 cents per stock unit payable on April 1, 2014, to shareholders on record as at March 6, 2014. The stock traded ex-dividend on March 3, 2014. General Accident Insurance paid an interim dividend of 8.728 cents per share on October 14, 2013 and also paid an interim dividend of 4.85 cents per share on March 28, 2013. In 2012 they made two payments of 4.85 cents each.

Dolphin ups dividend up 50% | Dolphin Cove has declared an interim dividend of $0.15 per share payable on April 9, 2014 to shareholders on record as at March 21, 2014. The ex-dividend date is March 19, 2014. Interim dividends were paid as follows by the company, 10 cents per share on December 4, 2013, 10 cents per share on September 16, 2013, 10 cents per share on June 6, 2013 and 10 in March 28 last year.

Gleaner Company declared an interim dividend of $0.04 per share payable on March 13, 2014 to shareholders on record as at February 27, 2013. The ex-dividend date is February 25, 2014.

PROVEN declared a dividend of US$0.0015 per ordinary share payable on March 13, 2014 to shareholders on record as at February 26, 2014. The ex-dividend date is February 24, 2014.

Carreras declared an interim dividend of $1.62 per share payable on March 13, 2014 to shareholders on record as at February 20, 2014. The ex-dividend date is February 18, 2014. This is the fourth regular dividend being paid for the year. An interim dividend of $1.30 per share and a special dividend of $0.94 per share were paid on June 20, 2013. Interim dividends of a dollar per share each were paid in August and November last year. A special capital cash distribution of $1.18 was also paid on January 30, 2014.

Cargo Handlers declared a dividend of 50 cents per share payable on March 6, 2014 to shareholders on record at February 18, 2014. The ex-dividend date is February 14, 2014. In 2013 ahead of the change in the tax rate on dividends from 5 percent to 15 percent the company paid a dividend of $1.00 per share on March 28, 2013.

AMG Packaging declared a dividend payment of 20 cents payable on March 28, 2014 to shareholders on record as at February 17, the Ex-dividend date is February 13. At the current stock price of $3.48 the yield is 5.7 percent. This is the first dividend the company has paid since listing in 2011.

The Board of Directors of Kingston Properties Limited has declared its first dividend for the year 2014 in the amount of US$0.0025 per stock unit payable on February 28, 2014 to stockholders on record as at February 10, 2014. The ex-dividend date is February 6, 2014.

Caribbean Producers (Jamaica) Limited | declared an interim dividend of 3 cents per stock unit payable on January 31, 2014 to shareholders on record as at January 16, 2014. The ex-dividend date is January 14, 2014. An interim dividend of 4.5 cents per stock unit was paid on March 28, 2013, previously an interim dividend of five cents per share paid on June 20, 2012.

Barita cuts dividend to 3 cents | Stung with a big drop in reported profits from $255 million in 2012 to only $70 million for the year ended September 2013, Barita Investments’ board approved the payment for an interim dividend of 3 cents per stock unit to be paid on January 27, 2014 to shareholders on record as at January 10, 2014.  The ex-dividend date is January 8, 2014. In January 2013 a dividend of 11.4 cents per share was paid.

Dividends delayed | Sagicor Group has moved the dividend consideration from February 28 to March 6th.

Not announced | The Board of Caribbean Flavours and Fragrances who had indicated that they will consider a dividend declaration at a meeting to be held on February 5, 2014 has not yet reported the decision to the Jamaica Stock exchange nor has Jamaica Broilers who should have met on February 26.

The Board of Directors of Grace Kennedy will consider a resolution for the declaration of an interim dividend at a meeting to be held on Friday, February 28, 2014. Grace last paid an interim dividend of $0.70 per share paid on December 11, 2013, an interim dividend of $0.78 per share paid on September 30, 2013 and an interim dividend of 70 cents per stock unit was paid on March 27, 2013.

Carreras is back

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Profits at Carreras is back on track dollar wise, as revenues hit $3.66 billion in the 2013 December quarter versus $3.745 billion in 2012.

Gross profit is above the 2012 period of $1.69 billion at $1.75 billion in 2013. Selling and administrative expenses declined in the latest quarter, which would have pushed the 2013 results above 2012. Carreras booked interest due on the debt owed by the tax department of $1.8 billion as other income, resulting in profits growing to $2.18 billion after tax, versus $1.17 billion in the prior year. Gross profit is down for the nine months to $3.98 billion from $4.34 billion in 2012. Profit after tax for the year-to-date is $3.1 billion versus $5.1 billion, with both periods having swollen figures due to exceptional income.

CarrerasTobaccoFree280x150Volumes are still down, but not as badly as in the June quarter, when sales were negatively affected by the hike in cigarette prices in March 2013 and the stock piling of inventories by the trade ahead of the price hike, a practise that goes back for several years. The December quarter’s performance is in stark contrast to the June quarter when revenues plummeted from $3.1 billion in June 2012 quarter to just $2.16 billion, a sharp 30 percent drop, but profit after tax fared even worse, dipping by 40 percent.

Expenses rise | Administrative, sales & marketing expenses fell in the latest quarter to $600 million from $710 million in 2012 but is marginally up to $1.655 billion for the nine months compared to $1.58 billion for the same period as of December 2012.

Tax Recovered | The tax now recoverable is down to $980 million from $1.733 billion at the end of March and is expected to be fully recovered over the next 12 months and will most likely be distributed as dividends to shareholders.

Carreras ended up with cash funds of $3.8 billion at the end of December, equity is at $4.7 billion or $9.60 per share.

Earnings appears to be back on track to deliver around $6 per share annualised, which would result in some increase in the quarterly dividend that was cut from $1.50 to $1 last year in light of the drop in profit. Carreras declared $1.62 as the latest dividend to be paid March after paying a special capital cash distribution of $1.18 on January 30, 2014.

Carreras is an IC Insider Buy Rated Stock.

Related posts | D&G, Carreras & C&WJ now Buy RatedCarreras pays out liquidation money | Carreras takes a big hit but tax recovery starts | Carreras grew income

D&G, Carreras & C&WJ now Buy Rated

IC Insider has added Desnoes & Geddes, Carreras and Cable & Wireless Jamaica to the Buy Rated list.

Desnoes & Geddes reported gains of 21 percent for the six months to December, earnings excluding one-off items and is poised to earn 80 cents for the full year ending in 2014. Forecasted earnings for the 2015 year is $1.10.

For Carreras the worse seems to be over with the last set of interim figures showing sales starting to recover from the impact caused by the price increase and the stock piling of cigarettes in the 2012 December and March 2013 quarters. IC Insider’s forecast is for earnings of around $5 per share for the year to March 2014.

Cable & Wireless’ sharp increase in cellular revenues and cost cutting will change the bottom-line markedly going forward.

Berger Paints Jamaica has been added to the market watch list flowing from a revival in earnings for the March 2014 year.

Related posts | D&G elevated to Buy Rated!Carreras is backCWJ loss down with much progress | Berger keeps profit gains

BUY&WATCHFeb12th

Image courtesy of suphakit73/FreeDigitalPhotos.net

Carreras pays out liquidation money

Carreras declared a special interim capital cash distribution of $1.18 per stock unit to be paid out of proceeds received from the liquidation of a subsidiary, pending the granting of a transfer tax exemption pursuant to the Transfer Tax Act.

The special capital cash distribution will be paid on January 30, 2014 to shareholders on record as at January 17, 2014. The ex-dividend date is January 15, 2014.

Carreras liquidated its subsidiary Cigarettes Company of Jamaica but was slapped with an unwarranted tax assessment in the mid 2000’s. The case was appealed up to the Privy Council and the company won, thus permitting it to be entitled to recover nearly $3 billion in taxes wrongfully paid along with interest and legal fees.

The company started to recover the amount in 2013 and should in all likelihood recover all of it before the end of 2014.

Related posts | Carreras down but not out | Carreras takes a big hit but tax recovery starts

Dividends galore coming

It should be a Merry Christmas for investors in the companies listed on the Jamaica Stock Exchange as several companies have either announced dividend payments or have announced plans to make one.

Sagicor Investments Jamaica Limited declared an interim dividend in the amount of 91 cents per stock unit payable on January 28, 2014 to stockholders on record as at January 7, the ex-dividend date of January 3. The company paid an interim dividend of 12 cents per stock unit on October 31, 2013 and 48 cents per stock unit on March 27, 2013. In 2012, Sagicor paid a dividend of 57 cents per stock unit on October 29, 2012 to stockholders and 74.3 cents per stock unit on April 27, 2012.

Jamaica Producers Group Limited has declared an interim dividend of $0.20 per share payable on January 28, 2014 to shareholders on record as at December 31. The ex-dividend date is December 27.

Supreme Ventures Limited has declared a dividend of $0.03 per share payable on January 8, 2014 to shareholders on record as at December 20. The ex-dividend date is December 18.

Jamaica Public Service Company Limited has declared quarterly preference share dividends payable on December 31, 2013 to shareholders on record as at December 13, as follows:

  • JPS 5% “C” – $0.025 per share, JPS 5% “D” – $0.025 per share, JPS 6% “E” – $0.030 per share
  • JPS 7% “B” – $0.035 per share. The ex-dividend date is December 11, 2013.

FirstCaribbean International Bank Limited declared a final dividend for the year ended October 31, 2013 of US$0.015 per share payable on January 30, 2014 to shareholders on record as at December 19. The ex-dividend date is December 17.

Kingston Wharves has declared an interim dividend of 8 cents per share payable on December 20, 2013 to shareholders on record as at December 13. The ex-dividend date is December 11. This brings the payment for 2013 to 16 cents per share compared with 12 cents in 2012. The company paid a final dividend of 2 cents per share in respect of the financial year ended December 2012 and an interim dividend of 8 cents per share in respect of the current year, on Thursday, March 28.  On December 21st last year, a dividend of 10 cents per share was paid.

Hardware & Lumber declared an interim dividend for the year 2013 of 30 cents per stock unit payable on January 17, 2014 to stockholders on record as at December 20. The ex-dividend date is December 18, 2013. The company last paid a dividend of 12.5 cents per stock unit on January 31, 2013.

The Board of Directors of  Scotia Group Jamaica announced a final dividend of 40 cents per stock unit payable on January 13, 2014, to stockholders on record at December 18, 2013. Scotia Investments also declared a final dividend of 45 cents payable on January 13 next year. Both companies have been paying 40 and 45 cents per share from the last quarter of 2012.

Salada Foods Jamaica declared a dividend of 40 cents per share payable on December 19, 2013 to shareholders on record as at December 3. The ex-dividend date is November 29, 2013. The company last paid a dividend of 40 cents per share on January 8, 2013.

Paramount Trading declared an interim dividend of 13.5 cents per share payable on December 10, 2013 to shareholders on record as at November 29. The ex-dividend date is November.

Lasco Distributors is to pay an interim dividend of 2.3 cents per share payable on December 10, 2013 to shareholders on record at November. The ex-dividend date is November 22. The last dividend paid was of $0.25 per share payable on July 31, 2012 based on the number of shares in existence then in June this year the company split the stock into 10 shares for each one already issued..

Jamaica Money Market Brokers declared a 16 cents per share dividend payable on December 18, 2013 to shareholders on record on November 27. The ex-dividend date is November 25. This is a 23% increase over the prior period. The last dividend paid was 10 cents per share on March 28, 2013. Last year December a dividend of 13 cents per ordinary share was paid.

Pan-Jamaican Investment Trust declared a third interim dividend of 50 cents per share payable on December 20, 2013 to shareholders on record as at November 27. The ex-dividend date is November 25. PJAM paid 45 cents on September 20, $1.10 on March 25, and 55 cents on December 20 last year.

Carreras declared an interim dividend of $1.00 per share payable on December 11, 2013 to shareholders on record as at November 20, 2013. The ex-dividend date is November18, 2013. The company last paid a dividend of a similar amount in August. The amounts represent a cut from $1.50 that investors had become accustomed to.  A slide in profits from a drop in sales have resulted in the cut.

Grace Kennedy declared an interim dividend of $0.70 per share payable on December 11, 2013 to shareholders on record as at November 22, 2013. The ex-dividend date is November 20, 2013.

Proven Investments declared a dividend of US$0.0022 per ordinary share payable on December 3, 2013 to shareholders on record at November 19, 2013. The ex-dividend date is November 15, 2013. The also declared a preference share dividend of $0.10 per share payable on December 23, 2013 to shareholders on record as at December 9, 2013. The ex-dividend date is December 5, 2013.

Dolphin Cove declared an interim dividend of $0.10 per share payable on December 4, 2013 to shareholders on record as at November 15, 2013. The ex-dividend date is November 13, 2013.

Dividends for consideration | The Board of Directors of Barita Investments Limited will consider (and if thought fit), recommend the payment of an interim dividend for the financial year ended September 30, 2013 at a meeting to be held on Friday, December 20, 2013.

The Board of Directors of Caribbean Producers Jamaica Limited will consider a dividend payment at a meeting to be held on Monday, December 23, 2013.

AMG Packaging & Paper Company will consider the payment of an interim dividend at a meeting scheduled for Tuesday, January 7, 2014.

New additions to Buy Rated stocks

Monday, 25th November 2013 | There are two additions to the Buy Rated and Market Watch list for the coming week. Added to the Buy Rated stock list is Jamaican Teas due to a 30 percent gain in profits for the year ended in September flowing from a 46 percent jump in export sales, sales of apartments in its first real estate development and expectation of further growth in 2014.

Carreras is added to the Market Watch list based on IC Insider’s assessment for earnings around $5 per share for the current fiscal year and dividend yield above 10 percent. Trading in the mid $30’s, this stock has a very good chance to head back into the mid $40 range.

BUyRatedGRowthNov25Performance tracking | During the past week, a few of the Jamaican stocks made some recovery with JMMB breaking even in Jamaica but has retreated in Trinidad. Access Financial is up 15 percent so far but Lasco Financial and Manufacturing are still off by good margins. The selections in the main market remain mostly under water, but the ideal time to buy may be slipping away as prices seem to be at their bottom. More importantly, there are indicators that a year-end market rally will happen again in December.

While Jamaica has disappointed, the same can’t be said about Trinidad. There are only two losers so far; Guardian Holdings and Scotia Investments. During the past week Neal & Massy, that had declined below the price at the time of selection, has bounced back from its low to be just slightly ahead at the close on Friday.

What seems clear, is that the focus ought to be on longer term performance rather than just short term gains. The Trinidad market performance of slow price movements illustrates this very well. There are also signs in the Jamaican market suggesting the same, the major difference being the Jamaican market is more aggressive with price movements.

Related posts | Exports push Jamaican Teas’ profit | Carreras down but not out |  Jamaican Teas raises over $100m

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Carreras down but not out

Carreras, the dominant cigarette distributor in Jamaica. is reporting lower profit from operations for the September quarter as it did for the June quarter as revenues fell from the 2012 levels even as the company had a price increase earlier this year.

Revenues plummeted by 25 percent for the six months period declining from $5.76 million to $4.4 million and by 16 percent in the second quarter from $2.67 billion in September 2012 quarter to just $2.24 billion; this is a big improvement from the 30 percent decline in the first quarter. The reality is that with a price hike of 17 percent in March, a sharp decline in volume is expected. This has always been the case in the past so there are no reason to think that it would be otherwise this time around. The situation is made worse by the stock piling of cigarettes by the trade in anticipation of the price hike.

Profit after tax was identical in both the June and September quarters at $485 million each; the profit for the six months fell 33 percent excluding the pension refund of approximately $2.5 billion net of tax in 2012.  The interesting development is that gross margin improved to more than 100 percent from 90 in the similar period in 2012 and 86.5 for all of the 2013 fiscal year.

Carreras_tobacco150x150The smoking ban which was announced on June 25, immediately impacted the stock price influencing the pull down from $56 to $52.50 on the next day. Although the price recovered to the $55 level shortly thereafter, it slowly drifted to $50 by the end of July, prior to the results being released for the June quarter. The fall in profit seems to have pushed the stock price down to $35 to better equate the value with the lower profit and dividend payment. At the $35 level, it is gaining some support.

The price increase earlier this year had a negative impact on the company’s consumers took a big bite out of sales, far greater than any impact the smoking ban may be having. Sales enjoyed a big jump in the last half of 2012 up to the March this year suggesting that distributors stocked up on the product in anticipation of price increase and stopped stock piling once the price adjustment was implemented.

Expenses rise | While revenues plummeted, expenses have not, with sales & marketing going up by a third to $207 million from $152 million and rising by a smaller 22 percent for the half year to reach $415 million. Administrative expenses, which increased by 15 percent from to $320 million was up 19 percent to $634 million for the six months period.

Tax Recovered | The tax now recoverable that was down to $1.4 billion at June from $1.733 billion at the end of March, is now at $1.17 billion. If the tax authority continues to allow recovery against current liability then the full amount could be recovered before the end of the 2015 fiscal year and most likely be distributed as dividends to shareholders.

Carreras ended up with cash funds of $3.4 billion at the end of September, equity is at $3 billion or $6.30 per share. Current liabilities are at $2.67 billion which includes tax payable of $1.5 billion against current assets of $4.3 billion. There are no borrowed funds incurred to fund operations.

Carreras cut the quarterly dividend from $150 paid last year to $1 in light of the profit decline.

Outlook | Our forecast is for earnings to hit around $5 per share this current fiscal year, and if so, then the stock would be a reasonable buy around $35, the current price level. With a dividend yield of more than 10 percent before tax, the stock will be an attraction for income seeking investors.

Related Posts | Carreras takes a big hit but tax recovery starts | Dividends galore coming

 Image courtesy of Scottchan/FreeDigitalPhotos.net

Carreras takes a big hit but tax recovery starts

The only good news from Carreras‘ first quarter results is buried in the notes to the end of the quarterly report. Namely, the Tax Authority has made arrangements with the company to offset current tax liabilities against the amount owing and that they have so far recovered $338 million during the latest quarter.

Elsewhere, revenues plummeted from $3.1 billion in June 2012 quarter to just $2.155 billion, a sharp 30 percent drop that is not all coming from the recently announced smoking ban. Profit after tax fared even worse than the fall in revenues dipping by 40 percent. That is not good news for the stock which has been declining ever since the ban on public smoking was announced.

An interesting development is that gross margin improved to 100 percent from 90 in the 2012 similar quarter and 86.5 percent for all of the 2013 fiscal year. The price increase earlier this year has clearly had a negative impact with the company’s customers, which seems to have taken a big bite out of sales. A look at sales in 2012 showed a big jump in the last half of the year coming into the March 2013 quarter, suggesting that distributors were stocking up on the product in anticipation of price increase and stopped stock piling once the price adjustment was implemented. As such, the fall off in sales may not be as bad as it appears on the surface.

Carreras_tobacco150x150Expenses rise | While revenues plummeted, expenses did not. In fact sales & marketing went up by a third to $207 million from $152 million and administrative expenses from $278 million to $320 million, a 15 percent jump.

Tax Recovered | The tax now recoverable is down to $1.4 billion from $1.733 billion at the end of March. If the tax authority allows a full recovery, then the full amount of the current liability could be recovered this fiscal year and most likely be distributed as dividends to shareholders.

Carreras ended up with cash funds of $3 billion at the end of June, equity is at $3 billion or $6.30 per share. Current liabilities are at $2.6 billion which includes tax payable of $1.5 billion against current assets of $4.1 billion.

These are clearly times of uncertainty for the stock with the fall in revenues and the smoking ban that no one really knows what impact the ban will have over the next few months. With the stock not having a great deal of bids in the market currently, it’s anyone guess where the price will settle in the short term.

Carreras cut the latest dividend from $1.50 paid last year August, to $1 to be paid in August this year, an amount that is in line with the latest quarterly profit.

Related Posts | Dividends: Carreras cuts, Grace ups | JSE: Ban hitting investors harder than smokers  |  Carreras grew income