Profits fell slightly at AMG Packaging, producers of carton boxes, in the 2023 fiscal year to August to $94 million, but a close look shows the 2023 performance to be better than that for 2022, with the current year’s figures including a one off charge, plus vastly increased taxation than in the previous year.

AMG Packaging

Profit after tax declined from $105 million in the previous year, but this is after taxation climbed from $18 million to $39 million in the current year and a one off charge of $11 million, with revenues coming out at $1 billion in the current year, up from $996 million in 2022. Revenues for the fourth quarter were $230 million, down 12 percent from $257 million, management indicated that the reduction represented reduced production for one month—profit after tax ended at $19 million, down from $25 million in the previous year. The 2023 profit was declined by the abovementioned charge related to credit taken from 2017 to 2021 for payroll taxes not allowed for Junior Market companies. Had this not been the case, profit would have been higher than in the prior year, ending at $30 million instead of the lower figure reported.
In addition, taxation for the quarter was $11 million versus $5 million in the prior year, even as profit was lower. Pretax profit of $30.5 million in the final quarter would have been $41 million, excluding the one off charge versus $29.5 million, reflecting a solid 39 percent improvement and the full year $144 million compared with $123 million for an increase of 17 percent.
The company benefitted from the reversal of impairment losses and foreign exchange gains amounting to $4.5 million in the fourth quarter and $3 million for the twelve months, this compares with a loss of $5.4 million in 2022 for both the final quarter and the full year.
Even as revenues fell in the final quarter, gross profit rose to $79 million from $75 million in the previous year as the cost of sales declined 17 percent in the period from $183 million to $152 million. Gross profit jumped to $312 million from $273 million for the year to August, with cost of sales falling just 3 percent from $723 million to $700 million. Management Discussion and Analysis report stated that the reduction in manufacturing cost “was due mainly to the increase in efficiencies in our production processes.” From all indications, the new machine, installed before the start of the 2023 fiscal year, resulted in improved performance, with lower labour costs that flowed from operating one shift instead of two and reduced overtime. Working one shift would also reduce energy costs in using the machines.

New addition to the factory

Administrative costs were well contained at $27 million for the quarter, which was similar to that of 2022, but it grew 17 percent to $111 million for the year from $95 million in the previous year. Finance cost was relatively stable, coming in just around $2 million for the quarter and $8 million for the full year versus $8.7 million in the previous year. Depreciation climbed to $11 million from $8.4 for the quarter and $43 million from $30 million last year.
The operations generated Gross cash flow of $176 million and ended with increased funds for the year at $174 million after significant changes in working capital primarily relating to a reduction in amounts tied up in inventories and paying down amounts due to creditors.
Current assets ended the period at $590 million compared with $639 million in 2022. Trade and other receivables amount to $137 million, inventories amount to $156 million, down from $394 million in 2022 and cash and bank balances ended at $297 million. Current liabilities ended the period at $120 million. Net current assets ended the period at $469 million.
At the end of the year, shareholders’ equity amounts to $1.28 billion, up from $1.18 billion in 2022, with long term borrowings at $77 million, down from $81 million in 2022 and short term at $14 million, which is similar to the amount due at the end of 2022 fiscal year.
Earnings per share for the quarter was 4 cents and 18 cents for the year. IC Insider.com computation projects earnings of 40 cents per share for the fiscal year ending August 2024, with a PE of 6 times current year’s earnings based on the price of $2.35 the stock traded at on the Jamaica Stock Exchange Junior Market on Monday. Net asset value ended the period at $2.50, with the stock selling at a slight discount to book value.