Montego Bay Ice Company shed two major loss making operations last year and the move is paying off with a small operating profit in the first quarter to March. However, it was the slippage in the exchange rate for the Jamaican dollar that had a profound effect on profits. The Montego Bay based company, while reporting reduced income of $4.188 million compared to $7.7 million in 2012, recorded $3.8 million in profits before tax after picking up a nice $3.77 million in foreign exchange gains.
After taxation of $310,000, the company is reporting after tax profits of $3.49 million, well up on a loss of $372,000 in 2012. After accounting for profit that is due to minority interest in a subsidiary, the shareholders of Montego Bay Ice ended up with $2.4 million. The group principal activity is now the rental of properties and cold storage facilities as they discontinued the retailing of ice and the sale of bottled spring water in July and November 2012 respectively.
The group still has work to do to radically transform its profitability. Ignoring the gains from foreign exchange holdings, revenues were just able to cover expenses leaving less than $60,000 as surplus from what can be regarded to be normal ongoing profits.
The company has improved its cash position, now having $64.8 million in liquid funds amounting to around ten dollars per share. Hopefully, management will manage these funds well to help improve profits and not necessarily hold the bulk of it in US dollars hoping for a further Jamaica dollar slippage. Liabilities are not much, at less than $4 million and receivables are even less at $1 million.
Stock outlook | Montego Bay Ice needs to find the right business to move into to return to regular and predictable profitability so that investors can reap the benefit from their investment in the company.
The company’s shares have not traded since November 2011 and it traded $18.00 which is around book value. The real value may be twice this amount if the properties it owns were factored in at market value.
