Total revenue rose by 16.6 percent to $27.9 billion at the Jamaican based brewers of the world-renowned Red Stripe beer, Desnoes & Geddes in 2022, up from $23.9 billion in 2021 resulting in profit before tax rising by 11.5 percent to $8.3 billion from $7.2 billion and resulted in a 16 percent rise in after tax profit to $6.6 billion from $5.7 billion in the year to December 2021.
Profit in 2022 was negatively affected by increased input cost relative to revenues at 52.85 percent up from 50.54 percent in 2021 for raw materials, consumables and services.
The principal activities of the company comprise the brewing, bottling and distribution of beers, stouts and spirits. In 2022, the company paid dividends of $2.56 per share amounting to $7.2 billion up from $5.5 billion in 2021.
In 2016, the majority of shares were acquired by Heineken Sweden AB, resulting in Heineken International B.V. having an increased control of 95.78 percent. In May 2016, the ownership was transferred from Heineken Sweden AB to Heineken Beverage Switzerland AG.
Profit climbs at Desnoes & Geddes
Profit jumps 32% in Q2 for Angostura
Profit before tax popped 20 percent for the Trinidad based Angostura Holdings, for the six-month to June 2021, to $74 million, up from $62 million in 2020 comparative period, while profit before tax rose 10 percent to $46 million from $42 million and profit after tax climbed 32 percent to $36.5 million for the quarter from $28 million and moved to 36 percent from $41 million in the half year to $55.6 million in 2021.
Angostura Holdings aged rum.
Revenue rose 6 percent to $218 million from $205 million for the quarter and was up 3 percent to $370 million for the half year from $358 million in 2020.
“Owing to improvement in the efficiency of the wastewater treatment facility, gross profit margins increased to 48 percent from 46 percent over the prior period as distillery alcohol production normalized in 2021 compared to 2020,” Terrence Bharath, chairman, advised shareholders in his report on the results. Cost of goods sold slipped by one percent to $117 million from $118 million in 2020 and for the half year rose at a slower pace than the increase in revenues after rising by just one percent to $194 million from $192 million in 2020. Gross profit popped 16 percent to $102 million from $87 million, while it rose 6 percent to $176 million for the six months to June 2021, from $167 million in 2020.
Angostura Bitters produced by the company.
Heineken offered J$31 per share for D&G in 2015 when the stock was trading at J$8 on the JSE.
Improvement in international markets, in terms of revenue and credit outlook, directly impacted the Expected Credit Loss Model resulting in a significant write back $2.7 million in the June quarter versus a write provision of $8 million in 2020 and write back of $4.2 million for the half year compared to a provision of $8.4 million in 2020.
Investment income rose to $3.5 million in the June quarter from $3 million last year and climbed from $5.5 million to $8 million for the six-month period.
“Revenue growth over the prior year was mainly driven by recovery in sale of bitters in the markets of Australasia, North America, Europe and the UK and rum in Europe, but faced more severe revenue challenges in the local Trinidad market,” the chairman informed shareholders.
Selling and marketing expenses rose sharply by 64 percent to $36.3 million in the June quarter and 15 percent for the half year to $67.5 million while Administrative expenses rose 20 percent to $25 million for the June quarter to $25 million and 7 percent for the six months to June to $44.6 million.
Current assets Net cash from operating activities delivered $71 million, but investing activities utilized $79 million, leaving negative funds flow of $10 million and $14 million in 2020.
Taxation slipped to $9.8 million from $14.2 million in the quarter and ended at $18. 4 million for the half year from $39 million in 2020.
Current assets amount to $1.08 billion and Current liabilities $104 million. Investments ended at $568 million and cash and equivalents closed the period at $51 million. Shareholders’ equity stood at $1.3 billion.
Earnings per share came in at 18 cents, up from 13 cents in 2020 for the June quarter and 27 cents for the half year versus 20 cents in 2020 and should end the year around 90 cents and would put the PE ratio at 18 times 2021 earnings at the last traded price of $16.48 on the Trinidad and Tobago Stock Exchange.
The Board of Directors approved an interim dividend of 9 cents per share to be paid on October 25.
The stock may be fully valued currently, based on PE ratio, but it possesses a good brand and products that could become attractive to international spirit companies that may well be prepared to pay a nice premium for it, as was done in Jamaica for Desnoes and Geddes brewers of the world famed Red Stripe beer and Lascelles Demercado producers of the Appleton brand of rums.
2020 another big year for JSE
It has been boom times at the Jamaica Stock Exchange these days with rising prices and increasing listings. That is in stark contrast only a few years ago when the Jamaica Stock Exchange suffered a contraction in listings when some companies that were acquired or merged.
The market lost companies such as Cable and Wireless, Lascelles de Mercado, Courts, Capital and Credit Merchant Bank, Scotia Investments, Desnoes and Geddes, First Life and Pan Caribbean Bank. In addition to these local companies, a few Trinidad and Barbados companies delisted. The advent of the Junior Market saved the day for the exchange in bringing new listings but, more importantly, telegraphed that listing on the market could raise good money for the companies and was not harmful to management as many thought to be the case in the past. In short, there has been a considerable revolution in the concept of going to market, especially with the younger cadre’ of management now running businesses.
The change in the thinking of the business sector is leading to two significant years for listings with the JSE expecting 18 new listings of ordinary shares in 2020. Managing Director of the JSE, Marlene Street-Forrest confirmed the projections with the IC Insider.com. “The 2020 listings are compiled from feedback the exchange obtained from brokers. The list is split equally between Main Market and Junior Market stocks,” Street Forrest confirmed to this publication.
At the start of this year, the JSE projected to have 20 new listings, so far they have listed 12, but Street-Forrest expects new listings to hit 19 or 20 by the end of the year including a listing of a Canadian company that will come to the market by way of an introduction. By contrast, the exchange is said to have had just eight (8) new listings in 2018. The new listings for 2019 include MailPac Group that the exchange said is set to list on Wednesday. Lumber Depot could start trading before the end of the week word reaching IC Insider.com suggests. In addition to the above two, Sagicor Select Fund is expected to list before the end of the year. For 2019 to date, there are eight (8) new Main Market and four (4) new Junior Market listings, including one preference share and Margaritaville share that was listed in the regular market, in addition to being previously quoted in the US dollar market. The recent IPOS will lift the total to 15 for the year. Some of the 2020 listings should include First Rock Capital Holdings with its prospectus said to be at the Financial Services Commission, TransJamaica Highway, Jamaica Mortgage Bank and Jamaica Public Service Company.
While the new listings will provide more choices for investors, it is also expected to add to the Stock Exchange revenues and profit in 2020 and beyond.
Jamaica’s company taxes jump 23%
Corporate taxes continue to be a star performer for Jamaica government revenues, having increased their input by a strong 23 percent over forecast, to February.
According to the government fiscal report, businesses paid $34 billion in corporate taxes to February or just over $6 billion more than projected. In spite of that level of performance, PAYE contributed more in taxes, at $48 billion even as government raised the threshold to $1.5 billion for individuals and cutting around $25 billion in the individual tax bill.
Corporations will be making big payments in March that should hike the amount they will pay for the fiscal year to be well ahead of the February figure. The forecast at the start of the fiscal year, was for a total take of $50.6 billion compared to $46 billion for 2016. The forecast for 2018/19 is for an intake of $63.9 billion or an increase of 26 percent over the 2018 forecast. If the trend for the just concluded fiscal year holds to March, the projected increase for the new fiscal would be just around $3 billion.
Scotia Group to contribute most to 2017/18 corporate taxes
Other areas performing well above budget projections include, Travel taxes up by 12.5% to $17.5 billion, GCT on local goods and services 4.8 percent to $83 billion, Education taxes up 6 percent to $24 billion and special consumption taxes on local goods up 10 percent to $26 billion.
Listed companies will contribute around $21 billion to the corporate tax take for the just concluded fiscal year according to data taken from financial statements. The bulk of the listed companies’ contribution will come from Scotia Group with $5.7 billion, NCB Financial $5 billion, Sagicor Group $2.9 billion, Carreras just over $1 billion, Grace Kennedy around $1 billion, JPSCo and JMMB Group just under $1 billion. Other billion dollar contributors should include Desnoes and Geddes and Wray and Nephew.
D&G new production line to push exports
Desnoes and Geddes producers of the world renown Red Stripe beer, is set to expand its export capabilities with the introduction of a new production line with the capacity to produce 40,000 bottles per hour and 26,000 cases of beer per day exclusively for its growing global markets, release from the company disclosed.
The new line will result in the brewery producing up to 1 million bottles of the Jamaican beer for the domestic and international markets. “Our 2020 Vision is a call to action to boost our target volume and we’ve invested close to US$18 million in this project. We firmly believe in the power of our brand and its appeal, so we are making a stronger push into international markets,” said Ricardo Nuncio, Managing Director, Desnoes and Geddes.
The company’s top export markets are the United States and Canada with two million and 700,000 cases in annual shipments, respectively the company stated. As at July 2017, there has been 15 percent growth in focus cities of Miami, Tampa, Orlando and Atlanta. Nuncio adds, “In early 2016, Red Stripe entered Australia, Dubai and Brazil and there’s robust brand building in those countries. We’re also moving to put down roots in Africa and Russia, following successful testing.”
The brewery’s new production line, referred to as ‘Line 8’, comes as the company adopted the use of liquefied natural gas (LNG) to power its operations. The brewer is now the first commercial company in Jamaica to be fully LNG-powered. Nuncio explained that the addition of Line 8 dovetails with the company’s mission to streamline its operation throughout the supply chain. Nuncio noted, “The Red Stripe team is guided by the growing importance of sustainability and the need to lessen the adverse environmental impact of our operation. By using LNG, we welcome estimated savings of US$336,000 annually.”
Line 8 now frees up the existing production line to focus solely on domestic volumes. The new line is specially designed for one-way or new Red Stripe bottles, but it is also able to produce new Red Stripe Local and Dragon Stout in six-pack cartons. The project, which took 12 months to complete, involved infrastructure changes and extensive training for employees to achieve a greater level of efficiency.
Stinking Berger behaviour
There are some strange and shocking developments regarding the offer by Ansa Coatings International to purchase the minority shares in Berger Paints Jamaica.
First the directors in recommending that shareholders accept the offer made critical claims that are not back up by facts and they offer no information to support same. Secondly, the shares have been suspended in questionable manner and without adequate reasons.
The directors in recommending that shareholders accept the offer said,” in your directors view, it is highly likely that acceptance of the offer will take the aggregate holdings of ACI beyond 80 percent. Under the rules of the Jamaica Stock Exchange, where one shareholder either individually or collectively with concert parties holds more than 80 percent of the listed shares of a company, the stock exchange has the right to de-list such company. In fact the offeror has made it clear its intention to delist the Berger Shares.” The directors’ recommendation goes on to quote ACI statement that they will seek delisting if they acquire an additional 29 percent of the shares. “It is therefore clear that Berger Jamaica shares will in all probability be delisted from the JSE,” the directors’ statement concluded.
According to the directors, Ansa Coatings International controls 51.01 percent of the issued Berger Jamaica’s shares and as a result of this Offer, its holding will most likely exceed 75 percent.
It seems that for the recommendation to shareholders to be substantially based on the “highly likely that acceptance” taking the holdings of ACI beyond 80 percent and most likely exceed 75 percent, is highly flawed. Where did the directors get that information from and why did they not disclose the source in the recommendation. Why they did not think it appropriate to disclose the interim results figures up to August in the report?
At $10.88 per share, Berger is priced at 5 times the current years’ earnings against more than 13 for the main market, on what basis could it be regarded as a fair price?
The situation gets more curious and raises a huge question, is someone is trying to manipulate shareholders in giving away their shares at less than a fair price? That is the only conclusion to be arrived at, when without notice, the shares of Berger were without notice, suspended by the Jamaica Stock Exchange on Thursday, October 5, 2017 and is to remain suspended to Friday, October 13, 2017. According to a release late on Thursday, “this is to facilitate the processing of the transaction in respect to shareholders of the Company who have agreed to sell their shares to Asna Coating, as a part of their Takeover Bid of Berger.” That of course is a load of crap. Trading shares of Desnoes and Geddes a much bigger company was never suspended when Heineken acquired the minority shares in 2016, Hardware and Lumber shares were never suspended either, nor was Scotia Investments’ in Scotia Group’s recent acquisition of the minority shares. Why is there a need to prevent Berger shareholders who want to trade the shares if they so desire? Worse why is there need to suspend it beyond Monday?
The capital market cannot prosper as well as it should if the above abuses continue to take place without corrective action being taken. The Jamaica Stock Exchange and the Financial Services Commission should have intervened when the directors’ recommendation included information that was not backed up by facts and should have intervened and prevented the unwarranted suspension of trading in the company’s shares.
D&G & HEART sign traning agreement
Noel DaCosta, Chairman, D&G Foundation congratulates, Antonette Richman on completion of level 2 of the Skills initiative as classmates look on.
D&G Foundation through a partnership with the HEART Trust NTA, 2500 young Jamaicans will be trained under the Foundation’s Learning For Life Project Employability Programme.
With the targeted number of trainees this year, project employability is poised to help the Foundation deliver on its ambition of training 15,000 young apprentices by 2018, a release from the foundation states. Approximately 12,000 Jamaicans have already benefited from training programmes under the Learning For Life Programme since its inception in 2008. Funding for the programme is provided by the D&G Foundation which is the charitable arm of Jamaica’s beer producer Desnoes and Geddes.
Full tuition support for qualified students enrolled in the various modules at HEART in the first phase of the programme is covered by the Foundation. The project started on June 5, also includes courses in Social Media Management, Small Business Management.
$190m JSE dividends for 2016
The Jamaica Stock Exchange announced the payment a final dividend for 2016 of 3.56 cents per share in May, bringing the for 2016 profits and $190.2 million, Mrs. Marlene Street-Forrest, newly promoted Managing Director of Stock Exchange informed IC Insider.com.
In 2015 we paid $140.2 million, representing 80 percent of consolidated profit and $190.2 million of the 2016 profits a total of 85 percent of group profits Street-Forrest stated. The payments over the last two years is in contrast with the stated dividend policy is no less 20 percent of profits to be paid in each year.
The payment was approved at a Special Meeting of the Board of Directors held on April 25 and is payable on May 31, 2017 to shareholders of record on May 11. The stock will start trading ex-dividend on May 9, 2017.
Last year, the JSE paid a dividend of 12.96 cents per share in December and a dividend of 53 cents per share, on May 6, 2016 based on number of shares in issue at the time. The JSE later in the year split their issued shares into 5 for each one.
The JSE will need to enjoy another big break in 2017, if they are to beat the results of $224 million made in 2016 from revenues of $921 million. In the first quarter of 2016, the JSE earned one off income estimated by IC Insider.com around $110 million from the sales of the Desnoes and Geddes shares to Heineken after the latter acquired majority shares in the local company.
The TOP 10 no brainer investing
Caribbean Cement highly rated in TOP 10
Investors would be well advised to leave emotions out of investment decision making and get and stick to facts. Investors who bought Jamaica Stock Exchange at $14 now and now seeing it trading at $7 after just a few weeks, can attest to that. Even investors at current prices may find that the price could fall further when the company post its first quarter results. Those results will not enjoy the big income generated in the first quarter of 2016, estimated at $110 million, from the transfer of the shares in Desnoes and Geddes and should result in a big fall in profit for the 2017 quarter.
Investors also pushed Jamaica Producers to dizzying heights, only to see a marked decline in the share price after, from $22 down to the $16 level and may have cause to worry with 2016 earnings from continuing operations not supporting the high valuation placed on it.The market appears to be consolidating with a number of 2016 results not sending strong buy signals currently.
Prices of Access Finance, Dolphin Cove and Jetcon Corporation rose during the past week and exited the IC Insider.com’s Top 10 junior market list. These stocks are still within striking distance for the top tier listing but market activity in the coming week could change all of that.
Jetcon rose 22 percent during the week and 522 percent since it was listed in March last year. Entering the top list are Lasco Distributors, the expectations are that the company will benefit from the claim for damages, with much of the funds retained for income generation purposes,Lasco Manufacturing and AMG Packaging as the prices of all three slipped during the week. AMG Packaging approved 5 for 1 stock split, is to be effected on March 10, after much delay.
In the main market of teh Jamaica Stock Exchange, Cable & Wireless reported larger losses than expected in the nine months to December, as a result IC Insider.com revised the forecast for 2017 down to just 10 cents on the assumption of continued strong growth in revenues. The stock fell out of the top list as a result of the earnings down grade. The move by Cable & Wireless let Jamaica Broilers into the list with the stock prices falling to $14.54 on Friday.
Main Event IPO within 2 weeks
With revenues posited to be in the range of $1 billion to $1.5 billion for 2015, Main Event Entertainment should be coming to the public within two weeks subject to Financial Securities Commission effectively signing off on the prospectus.
The company is expected to raise between $100 million to $200 million at a price between $1.50 and $3.50, stockbroker for the deal, Gary Peart of Mayberry Investments told investors at a briefing today. IC Insider gathers that the amount to be raised, is likely to be $150 million, putting the PE ratio in the 10-12 range.
According to Peart, the valuation for the company is in the range of $500 million – $700 million. Between 20 to 40 percent of the shares will be offered in the IPO. Proceeds of the issue will be used to expand services particularly to Montego Bay where Solomon Sharp, Chief Executive says has a big market for his products and services. Funds will also be put into new equipment to meet increasing demand. According to Sharp, demand is such that they have had to turn away business. The additional equipment will allow for more business to be undertaken simultaneously.
Main Event Entertainment Group, a unique company that is in the business of management of event as well as producing their own production. The company provides event management, production, audio, video, lighting, staging, roofing, power supply, digital signage and management, concept development, creative development, infrastructural build-outs.
Three of the company’s directors
The principals include Solomon Sharpe, CEO and formerly of Desnoes and Geddes, Richard Bair, Chief Operating Officer, formerly employed at Porter Brothers and Donna Waithe, Director HR and Administration with 23 years of experience in the aviation sector at Air Jamaica. The company was established 2004 and employs between 51 and 200 full time and part time employees.
The Board of directors include Hugh Graham, Solomon Sharpe, Donna Waithe, Richard Bair, Tania Waldron-Gooden, Harriat Maragh, chairman and Dr. Ian Blair.
The company have as its clients many blue chip Jamaican companies, including Scotia Group, National Commercial Bank, Flow, Desnoes and Geddes to name a few.
