National Commercial Bank pushed provision for loan losses to $988 million in the September quarter, well up from $357 million in the June quarter and $283 million for September 2013, to reach $2.2 billion for the year, compared to $2.07 billion.
Despite the losses in this area NCB reported profit after tax of $2.9 billion, for the September quarter and $11.6 billion for the fiscal year.
Non-performing loans totalled $8.7 billion as at September 2014 versus $7 billion at September, 2013, representing 5.4 percent of the gross loans compared to 4.8 percent as at September 2013. The total provision for the year amounts to a high 8 percent of total interest income, for the segments that lend and would be much higher as a percentage of loan income.
After the provision for credit losses, loans and advances, totaled $157.6 billion at September this year and grew by 12 percent, or $16.5 billion, compared to the loan portfolio, at September 2013.
NCB books $1B loan loss in Q4
Sugar helps Seprod hike profit
Seprod reported a hike in profit of 14 percent for the six months to June this year, slower than the 34 percent increase in the first quarter. The company posted profit of $698 million for the half year, up from $614 million in 2013 and $298 million in the quarter versus $317 million in the 2013 quarter.
Seprod, involved in the manufacturing and processing of food products, oils, sugar, milk as well as a food product distribution business, enjoyed an 8 percent rise in revenues to $8 billion from $7.4 billion and 12 percent to $4.17 billion in the second quarter from $3.7 billion in the 2013 June quarter. While revenues climbed, Seprod suffered a reversal in the positive gains in investment income in 2013 with a fall of $110 million in the quarter and $118 million in the half year.
Gross profit grew a very strong 53 percent in the June quarter and a much lower 32.8 percent for the six months over the same period in 2013. Gross profit margins climbed to 29.70 percent in the June 2014 quarter, up from only 18.8 percent in 2013, for the six months 29.7 percent and 22.7 percent, respectively. These are good signs of an improving performance of the group. A major part of the improved performance, is the contribution the sugar manufacturing segment made.
Segment results show operating profit for the half year rising 61 percent, against revenues climbing only 11.4 percent, Distribution segment’s operating profit, fell from $99 million to $68 million. The group’s sugar operations made a loss of $15 million in the June quarter for the group net of minority interest and $30 million for the six months, a big improvement over the $166 million lost for the June quarter last year, and $200 million for the six months to June, 2013.
The group is now in the last six months of the year, when little income will be generated from the sugar operation at Golden Grove Sugar Factory in St Thomas. The cost associated with this operation will be absorbed and will dent profits in other areas. For the second half of 2013 the group picked up $322 million in losses from the sugar operation. Much progress has been made in reducing losses in the sugar operation but there is still some way to go to move to a profitable business. A lot will depend on increasing significantly, the amount of canes to be milled by the factory and by extension the sugar to be produced. They now need to produce around 3,000 to 4,000 tonnes more sugar, to break even.
Expenses| Selling expenses rose sharply by 43 percent in the quarter to $142 million compared with $100 million in 2013 and 22 percent for the six months to $241 million from $198 million. Administrative cost rose 25 percent to $428 million in the quarter versus $373 million in 2013. For the six months period, it rose only 7 percent from $784 million to $839 million.
Finances| Seprod has $4 billion in cash and investments. Borrowing stood at $2.55 billion up from $2.26 billion at June 2013, current assets are well in excess of current liabilities by more than 2 to 1 and equity stands at a strong $10 billion.
Longer term| For 2015 and beyond, a lot is predicated on the fortunes of the sugar operations in St Thomas, where the target is for the processing of 300,000 tonnes of canes and to produce around 25,000 tonnes of sugar. In 2013, Management indicated that the cane farms are already planted and increased production should be coming in from the 2014 crop. For the 2014 crop the factory, reached its highest-ever production levels, with 19,300 tonnes of sugar.
the group produced profits of $907 million last year and is expected to better this in 2014 by some. The stock remains buy rated.
Profit up strongly at D&G, more expected
Desnoes & Geddes brewers of the world renowned Red Stripe Beer, reported impressive results for the year to June 2014, with pretax profit jumping 96 percent, including a gain on sale of shares, in two overseas breweries in the Caribbean. Excluding this one off gain, profit before tax would have been up by a still respectable 45 percent to $2.7 billion, instead of the $3.68 billion reported.
Profit after tax ended at $3.15 billion, but excluding the gain from the shares, it would have been $2.2 billion or 80 percent up, instead of the 160 percent increase the net result shows. Net profit benefited from a reduction in the tax rate from 30 percent in 2013 to 25 percent in 2014, in addition, other income that was negative in 2013 at $130 million, was a positive $232 million in 2014, a swing of $360 million. Profit before tax amounted $928 million for the June quarter versus just $371 million in June 2013 quarter and after tax credit, $1 billion, compared with only $161 million in 2013.
Gross profit margin improved slightly from 50.13 percent in 2013 to end at 50.38 in 2014. In 2012 gross profit margin was at 44.86 percent. The 2014 performance is still well off the 60 percent achieved in 2006. During the 2014 financial year staff cost was cut due to redundancies, from $2.25 billion in 2013 to $1.74 billion for 2014, a reduction of $500 million, in addition the company spent $311 million in making staff redundant in 2013. These two items resulted in more than $800 million cost reduction in 2014 versus 2013.
Revenue for the year climbed 10.6 percent to $14 billion and in the final quarter it grew by a stronger 17 percent, to $3.84 billion, from $3.3 billion in 2013. Foreign sales declined by 7 percent for the year to June, to end at $1.8 billion while local sales climbed 13.75 percent to $12.3 billion. The US market declined the most, falling from $566 million to $300 million. Royalties earned declined during the year to $525 million, from $556 million.
While earnings per share in the audited accounts is $1.12, earnings from ongoing operations is 77.6 cents for 2014. IC Insider forecast earnings of 90 cents per share for the current year ending June 2015, with the stock price under $5, the potential exists for investors to make a nice capital gain down the road and collect tidy dividend payments while they wait.
D&G has embarked on a brewery consolidation “project which will configure the brewery and process layout to ensure more cost effective production. By closing down the cellars and moving from horizontal to vertical processing vessels, we will reduce operating cost” management said in a report to shareholders. The company in April commissioned a combined heat and power plant which is expected to reduce energy cost.
At year end cash funds stood at $1.79 billion, current assets amounted to $4.6 billion and current liabilities at $2.6 billion, there were no loans on the books as of June.
The stock which was placed on the Buy Rated list months ago, remains there.
Medical Disposables revenue up 26%, profit 13%
Winston Boothe – Chairman Medical Disposables & Supplies
Profit after tax is up 55 percent as there was no tax charge in the June 2014 quarter, but tax ate up $4 million of the 2013 profit. “The main reason for the growth in revenue is the strategic focus on new and wider product offerings and greater market penetration”, Kurt Boothe, General Manager stated in his report to shareholders.
Gross profit grew 27 percent to $65.6 million from $51.66 million and gross margin moved to 36.24 percent in the quarter, from 33.78 percent in the 2013 June quarter but down from 42.15 percent in the March 2014 quarter. “This improvement was due to the product sales mix, increases in sales of products with higher margins and consistent review of our pricing structure to maintain the gross margin efficiency” Boothe stated. The audited accounts showed Gross profit margin of 35 percent for 2013-14 fiscal year.
Operating expenses climbed 49.7 percent in the June quarter over the 2013 quarter and “was driven mainly by staff related expenses, professional fees and special bank charges. Staff related expenses, in particular, were driven by the strategic decision to realign the staff complement and compensation to sustain the current growth, development and expansion of the business,” the general manager stated.
Earnings per share for the June quarter was 6 cents per share with the full year set to come in around 25 to 30 cents per share based on existing operations. At a stock price around $2 there is not much room for the price to make any major moves in the short term, unless the stock market becomes bullish.
Medical Disposables was listed on the junior market of the Jamaica Stock Exchange in December 2013, when it sold 63,157,895 Shares at $1.83 each and raised $113.7 million in its IPO.
Year over year current assets climbed from $370 million to $514 million due mainly to the IPO funds raised, while current liabilities stood almost static at $221 million. Shareholders’ equity jumped to $369 million from $163 million in March 2013 while borrowed funds are down from $147 million to $128 million, or just under two years’ cash flow.