Michelle Chong

Honey Bun Sales up 17% in Q2

High riding Junior Market listing, Honey Bun enjoyed a huge bounce in profit in the year to August 2016, but in 2017 it not only failed to repeat that performance but ended up with reduced profit in its latest half year results.
A fall in gross profit margin and slow growth in revenues were the major contributing factors for the decline. Gross margin, fell to 43 percent of sales down from 46 percent in 2016 for the first quarter and 43.6 percent for the six months from 46.7 percent for the half year in 2016.
Profit before tax for the March quarter fell 12 percent to $45 million and for the six months the company best known for its pastries suffered an 11 percent decline in profits to $91 million from the prior year.
Profit after tax for the quarter chipped in $40 million versus $49 million in 2016 and for year to date March $77 million compared with $95 million for the same period last year. Earnings per share ended at 8 cents for the quarter and 16 cents for the half year.
In the second quarter of financial year 2017 sales increased by $53 million or 17 percent over the corresponding period in 2016, to reached $368 million with the pace of growth coming well ahead of the 7 percent increase for the year to date. Revenues for the half year rose $73 million to end at $680 million.

One Honey Bun’s Products.

form a major part of sales during Easter and the timing of the important Christian season, can result in big sales shift. Importantly, while all Easter sales would have been included in the 2016 half year results, with Easter falling towards the end of March 2016. For 2017, with Easter falling in mid-April, would have resulted in a shift in some revenues coming in the June quarter. The 17 percent sales increase in the second quarter is therefore far more impressive than it appears on the surface.
“Administrative, selling and distribution costs combined increased by 20 percent mainly due to the investment in capacity building programmes to facilitate business growth” Michelle Chong, the company’s CEO stated in her report to shareholders. Honey Bun’s corporate income tax incentive was reduced from 100 percent to 50 percent.
Honey Bun declared an interim dividend of two cents per share payable on June 1, to shareholders on record as at May 17. The stock will start trading ex-dividend, on May 15, 2017. The company last paid a dividend of 2 cents on January 9, in June 2016 a dividend of 3 cents per share was paid.

Profit jumps 129% at Honey Bun

Profit jumped 129 percent over the June 2014 quarter, after taxes for Honey Bun to $17 million for the June 2015 quarter and growth for the nine months period to $64 million versus $41 million, an increase of 58 percent, and cash flow from operation of $98 million from increased sales of 17.5 percent, to $672 million.
For the quarter sales grew 20 percent to $218 million from $181 million in 2014, whilst gross profit was up by a larger 24 percent. The company attributes the increase in sales to a strategic restructuring of the sales department. Gross profit margin increased to 45.5 percent up from 44 percent in the June quarter of 2015 versus 2014 and 44.9 percent for the nine months in 2015.
Export sales increased by 48 percent year to date. “The major increase in exports is as a result of our placement in ASDA stores in the UK” Michelle Chong, Chief Executive Officer said, in response to IC Insider.com enquiry, and is in keeping with the Company’s objective of increasing exports.
The problem in the past has been the last quarter with a tendency for lower sales and losses, is the company over this? “The company services a lot of schools and so the summer months are normally reduced due to the holiday season for July and August. We will always have this challenge but we have somewhat overcome a significant portion of it by way of the development of new products that are not directly geared for schools and by targeting other markets also. This has made a significant impact,” Chong stated in response to questions posed to her by IC Insider.com.
Last year there were problems and added cost in the distribution department, it appears that the company is over that for 2015 fiscal. “We have outsourced over 50 of the distribution that was costing us excessively very successfully and last year we were also suffering from 2 of our major distribution vehicles being out of service and so we had to pay a lot for other vehicles to service the deliveries. These critical vehicles are now back in service” Chong said.
Honey Bun would have enjoyed savings in electricity and flour cost with the reduction of prices of oil and wheat on the world market. Chong agrees and indicated, “yes but besides the reduced rates we have also undertaken significant energy conservation on our own. We have also commenced the first phase of a large solar energy project”.
Receivables remained static at $56 million over June 2014 figure while Inventories fell to $45 million from $51 for the same period while payables were up to $59 million from $55 million. The company ended the quarter with $72 million in cash and investments, borrowed funds of $38 million and equity of $363 million. During the fiscal year a dividend totalling $11 million was paid more than twice the $4.7 million paid in the prior fiscal year.
IC Insider’s project a slight loss in the final quarter ending September this year with earnings for the full year to end at 66 cents versus 68 cents reported for the three quarters to June and 43 cents for the fiscal year to September 2014.