Cost control boost Purity’s profit

Consolidated Bakeries (Purity) recovering from 2017 loss

Cost fell and profit margin rose at Consolidated Bakeries in the June quarter, this year, as the company put in a vastly better performance in the quarter than for the similar period in 2017.
For the half year, administrative, selling and distribution cost rose just 2 percent to $166 million but declined 6 percent to $79 million in the June quarter. While sales revenue grew 10 percent for the six months to $493 million and less than one percent to $221.5 million in the latest quarter. Input cost climbed just 3 percent for the half year, compared to 2017 and fell 4 percent for the quarter, giving rise to increased profit margin in the first half of the year to 38 percent, from 34 percent in 2017 and in the June quarter, to 35 percent from 31 percent in the year ago period.
Profit rose from a loss of $8.5 million in 2017, for the six months to June, to a profit of $22.6 million this year and earnings per share of 9 cents, but the company is reporting a loss of just $891,000 after tax credit of $128,000, a big improvement over the loss in the prior year’s quarter of $14 million. Full year’s profit should end at around 17 cents per share. If achieved, it would be the first time since the year it listed that profit has been this high.
Administrative expenses fell 13 percent to $42 million in the quarter and increased marginally in the six months period to $92 million from $91.6 million. Distribution and sales expenses declined 4 percent to $33 million. Finance cost rose in the quarter, to $3.6 million from $812,000 in 2017 and from $2.5 million to $6.8 million for the half year.

Consolidated Bakeries Miss Birdie Easter bun.

Gross cash flow brought in $38 million but growth in receivables, inventories, addition to fixed assets of $35 million offset by loan inflows and increased payables position ended at a negative $3 million. At the end of June, shareholders’ equity stood at $736 million with borrowings at just $115 million. Net current assets ended the period at $100 million inclusive of trade and other receivables of $96 million, cash and bank balances of $99 million. Current liabilities ended the period at $140 million.
The stock traded at $2.17 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 12 times 2018 earnings. Net asset value is $3.31 with the stock selling at just 66 percent of book value. The company is the only Junior Market stock to be selling at a discount to net asset value. This means management has a lot of work to do to break even and much more to reach the average of the market of a premium of more 400 percent.

Purity can turn around 2017 loss this year

Consolidated Bakeries (Purity) make a loss in 2017 but could return to profit in 2018.

Profit melted away at Consolidated Bakeries for 2017 with a loss of $40 million down from a profit of $10 million in 2016 from sale revenues that slipped from $880 million to $863 million.
The company continued the loss right through to the year with a loss of $9 million before differed tax charge in the final quarter but the 2017 loss was lower than the loss of $20 million in the same period in 2016. Closer examination of the results show hope for the company going forward, into 2018
While revenues for the year fell 2 percent it rose 10 percent in the December quarter and helped to improve gross profit to 39 percent from just 31 percent in 2016 quarter. The 2017 final quarter was also much higher than the 35 percent for the full year.
Cost appeared mixed, with marketing and sales expenses rising 31 percent to $55 million and 17 percent to $158 million as this category of cost out stripped revenues by a big margin.
Administrative expenses fell 41 percent to $23 million in the quarter and fell 3 percent for the year to $158 million. Finance cost jumped in the quarter, to $16 million from $7 million, in 2016 and from $12 million to $19 million for the year.

Consolidated Bakeries Miss Birdie Easter bun.

Revaluation of the Jamaican dollar cost the company $4 in the final quarter and resulted in reduction in other income ending with a negative $2.5 million versus $5.5 in 2016 and just 875,000 for the full year versus $9 million, while the big jump in Finance cost in the December quarter seems to be one off, as such without these two items the company would have reported a profit for the quarter and augurs well for the 2018 results.
Gross cash flow was negative $7 million but growth in receivables, inventories, addition to fixed assets and drawn down on investments was offset by net loan inflows and increased payables and increased in bank overdraft ended at $74 million. At the end of December, shareholders’ equity stands at $716 million which was boosted by gain on revaluation of land and building by $206 million. Borrowings at just $135 million. Net current assets ended the period $92 million well over payables of $77 million.
Earnings per share was negative for the quarter and the fiscal year. The stock traded at $2 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 12 times 2018 estimated earnings of 17 cents. Earnings could be more if revenues were to increase above 10 percent for 2018.

Bun sales shift hit Consolidated

Consolidated Bakeries (Purity) closed down form record high of $4.50 in 2017 to $2.40 on Friday.

Consolidated Bakeries suffered a reversal in fortunes in their first quarter results to March this year, with Easter falling in mid-April compared to the end of March last year, resulting in revenues falling to $228 million from $261 million last year and profit falling from $22.8 million down to $5.8 million in the latest quarter.
Earnings per share end at 3 cents in 2017 and 10 cents in 2016, for the fiscal year ending December last year the company reported just 5 cents per share in earnings. In the December quarter the company doubled Selling and Distribution cost resulting in a rise of $22 million while revenues rose by just $3 million pulling a profit of $30 million at the third quarter down to just $10 million. For the March quarter, cost in this area came in at $33 million closer to the quarterly spend for 2016 but for December quarter with spend of $43 million.
Administrative, Selling and Distribution cost were effectively flat during the quarter, at $76 versus $73 million in the 2016 period. Gross profit margin declined to just over 36 percent compared to 37 percent in 2016, but gross profit fell $14 million to $82.4 million.
In the 2016 June quarter, revenues were just $210 million and generated $4.3 million in profit. With Easter bun sales taking place mostly in April, the company should see revenues popping around $60 million and profits by around $20 million for the current quarter.
Consolidated ended with cash funds of $148 million and borrowings of just $128 million with shareholders’ equity standing at $553 million. The company has current assets of $271 million and current liabilities of $159 million.
The stock is listed on the Junior Market of the Jamaica Stock Exchange and last traded on Friday at $2.40 and is down from a high of $4.50 earlier this year.

Junior stocks surge in early trading – Tuesday

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The junior market of the Jamaica Stock Exchange surged sharply on Tuesday morning, putting the years’ gains to 5.7 percent, as three juniors stocks traded at new highs. The main market fell appreciably with the All Jamaica composite index falling by nearly 1,000 points, with the other major indices declining as well.
Market activity has been moderate so far and resulted in 33 securities traded at 10:45 am, compared to 31 on Monday. A total of 13 securities advanced and 9 declined, resulting in a volume of 1,528,996 shares changing hands, carrying a value of $12,730,951, compared of 842,68 shares changing hands, carrying a value of $7,961,875 on Monday. The average number of shares traded, amount to 46,333 units versus 27,183 units on Monday.
Market activity was helped by Cargo Handlers trading at a new high of $20 with 27,765 units changing hands, Consolidated Bakeries traded 193,390 at a new high of $2.60 and Derrimon Trading had just 2,500 units trading at a new high of $6.
The all Jamaica Composite Index lost 851.92 points to 212,380.07, the Jamaica Stock Exchange Market Index fell 761.78 points 194,280.11 the Jamaica Stock Exchange combined index dipped 562.69 points to 208,112.16 and the junior market index rose 33.74 points to 2,739.37.

Lasco Distributors hits junior index – Wednesday

Lasco Distributors fell initially to $6.55 and headed back to $7.40 and helped hit the junior market index down by 41 points, but main market stocks also slipped but marginally.JSE intra 28-07-16 The fall in the Lasco share price was in reaction to the company’s first quarter profit after tax of $175.4 million, or 33% more than the same period in 2015.
The market saw Scotia Investments trading 100,000 units at $25.01, JMMB Group 7.50% preference share traded 90,000 units at $1.10, Pan Jamaican Investment had 74,764 shares changing hands at $24.50 and Consolidated Bakeries traded 185,000 units at $2.15.
The all Jamaica Composite Index fell 29.18 points to 176,604.86 the Jamaica Stock Exchange Market Index is down 26.10 points to 158,957.91, the Jamaica Stock Exchange combined index declined 409.09 point to close at 169,565.09 points andthe junior market index dropped 37.51 points to 2,155.92.
Trading at 10:45 am resulted in only 22 securities changing hands, accounting for a volume of 663,102 shares, with 7 securities rising and 7 falling. The average number of shares traded amounts to 30,141 units.

Juniors moved higher – Friday

Honey Bun dropped sharply by $1.62 on Friday to hit $5.25 at the close.

Honey Bun dropped sharply by $1.62 on Friday to hit $.525 at the close.

Trading in the junior market ended on Friday with increased participation of securities, with 16 being active, leading to 8 advancing and 4 declining. In spite of the increased participation, the junior index climbed 19.61 points to 2,234.65. At the close 2,704,040 shares, valued at $10,558,176 changed hands.
The bids for 9 stocks closed higher than their last selling prices and 3 ended with lower offers.
At the end of trading, Access Financial Services traded 4,500 units at $17, AMG Packaging rose 40 cents in trading 1,823 shares at $12.40, Caribbean Cream gained 30 cents to end at $4.45, after trading 12,400 shares. JM sum 10-6-16rCaribbean Flavours gained 65 cents and ended with 33,853 shares changing hands at $7.50, Caribbean Producers traded 5,500 shares to close at $4.10, Consolidated Bakeries traded 10,000 shares to close at $2, C2W Music traded 20,000 shares to end at 43 cents. Derrimon Trading fell 55 cents to $3.30, with 3,000 shares changing hands, General Accident Insurance gained 2 cents while trading 2,000 shares at $2.32, Honey Bun dropped sharply from its recent all-time high of $7.50 by 14 percent, by slashing $1.62 in trading on Friday with 243,212 units changing hands, to end at $5.25.JM Trdng Sht-10-6-16 A director sold 2 million units of Jamaican Teas shares with the price falling 10 cents as a total of 2,020,886 shares were traded to close at $3.10, Jetcon Corporation had 280,878 units changing hands at $2.65 after falling 5 cents. Lasco Distributors rose 34 cents in trading 2,800 units to end at $7.99, Lasco Financial closed at $3.20 with 38,500 shares changing hands to gain 4 cents, while Lasco Manufacturing closed at $5.05 with 20,688 shares trading with the price rising 5 cents and Medical Disposables traded 4,000 units at $3.53.

Juniors move up on Tuesday

Honey Bun closed at a new high of $19.50 on Tuesday.

Honey Bun closed at a new high of $19.50 on Tuesday.

The junior market inched forward at the close on Tuesday, with 1,364,688 shares valued at $9,672,342 changing hands. The market index added 11.24 points to end at 2,168.15 as a total of 15 securities traded, with 7 advancing and 3 declining.
The junior market ended with bids for 5 stocks closing higher than their last selling prices and 3 ended with lower offers.
At the end of trading, Caribbean Cream traded 68,300 units and gained 20 cents to end at $5, Consolidated Bakeries ended with 7,500 shares changing hands at $1.23, Dolphin Cove had only 162 units trading with a gain of 20 cents to end at $12.75. General Accident Insurance gained 5 cents while trading 432,078 units to close at $2.65, Honey Bun closed at a new 52 weeks’ high of $19.50, after rising $1.50, with 49,201 shares trading. Jamaican Teas traded 20,896 shares to end at $3.90 after it traded earlier at $3.80. Jetcon Corporation closed at $3 while 8,000 units traded, KLE Group fell 20 cents in trading 57,164 shares and closed at $1.40, JM Trdng Sht-10-5-16Knutsford Express had 19,430 shares trading, but lost $1.90 to end at $17, Lasco Distributors closed with 112,755 units trading at $7.55, Lasco Financial closed at $3.49 with 13,000 shares changing hands. Lasco Manufacturing closed at $4.60 with 69,460 shares trading, to gain 10 cents, Paramount Trading ended with 500,000 shares changing hands at $10.99, after rising 19 cents, Derrimon Trading 11.75% preference share closed with 1,742 units trading at $2.13, to add 1 cent and Eppley cumulative redeemable preference share eased 1 cent with 5,000 units changing hands at $6.09.

Eppley jumps $76 on Monday

Eppley jumps sharply to close at a new high of $580.76

Eppley jumps sharply to close at a new high of $580.76

Trading on the junior market was dominated by Eppley with a 15 percent jump in the price, resulting in a gain of $75.76 to close at $580.76 for a new 52 weeks’ high with 100 shares changing hands. The rise in Eppley and recovery of $1.05 in the price of Lasco Manufacturing resulted in the junior market index rising a sharp 94.48 points, to end at 2,159.33.
At the close, there were two 52 weeks’ highs with 14 active securities trading, with 8 advancing and 3 declining. Volume traded is just 534,047 shares valued at $3,394,975, while 4 stocks closed with bids higher than the last selling prices and 3 ended with lower offers.
At the end of trading in a market, Caribbean Cream traded 19,811 units and fell 15 cents to end at $4.20, Caribbean Flavours had 104,812 shares changing hands at $8.50, Consolidated Bakeries gained 10 cents in trading 40,000 shares to close at $1.35, Dolphin Cove had 16,144 shares changing hands at $12.50. Honey Bun rose 75 cents to end at a 52 weeks’ high of $17.95 with 500 shares trading. JM Trdng Sht-02-5-16Iron Rock Insurance traded at $3.40 at the close while 4,000 shares changed hands, with a gain of 5 cents, Jamaican Teas traded 1,817 shares and gained 1 cent to end at $4, Jetcon Corporation ended at $2.90 while 66,153 units traded. Key Insurance traded 5,300 shares but gained 30 cents to end at $2.80, Lasco Distributors fell 10 cents and ended at $7.50 with 213,679 shares trading, Lasco Financial gained 25 cents to close at $3.40 with 25,585 shares changing hands. Lasco Manufacturing rose $1.05 to close at $4.60 with 27,458 shares trading and tTech ended with 8,688 units changing hands to end with a loss of 30 cents at $4.15.

Trading falls for juniors – Thursday

Lasco Financial traded the largest volume of 1,397,376 units on Thursday.

Lasco Financial traded the largest volume of 1,397,376 units on Thursday.

Trading on the junior market was more sedate than on Wednesday, with just over half the numbers of securities trading compared to 20 yesterday. At the close, the junior market index eased just 6.50 points to end at 2,103.40. There were 11 active securities trading, with 8 advancing and 2 declining. .
At the close, 7 stocks closed with bids higher than the last selling prices and 3 ended with lower offers. Volume traded is 3,938,670 shares valued at $14,970,710.
At the end of trading in a market, AMG Packaging traded 1,848 shares at $13, Caribbean Cream traded 133,566 units to gain 20 cents and end at $4.20, Consolidated Bakeries rose 8 cents in trading 18,782 shares to close at $1.25, Honey Bun rose $1.20 to end at $17 with 4,000 shares trading. JM Trdng Sht 28-4-16Iron Rock Insurance traded at $3.30 while 9,786 shares changed hands with a gain of 20 cents, ISP Finance had 50,000 shares changing hands and rose 29 cents to close at $2.74, Jamaican Teas traded 5,000 shares and gained 30 cents to end at $4, Jetcon Corporation fell 15 cents to end at $2.70 while 880, 327 units traded. Lasco Distributors rose 5 cents and ended at $7.25 with 272,349 shares trading. Lasco Financial lost 10 cents to close at $3 with 1,397,376 shares changing hands, Lasco Manufacturing rose 15 cents to close at $4.85 with 1,213,474 shares trading and tTech ended with 2,162 units changing hands to end with a gain of 3 cents at $4.18.

Purity hopes for a better 2016

Consolidated Bakeries with their Purity brand.

Consolidated Bakeries with their Purity brand.

Consolidated Bakeries ended last year with lousy results with profit of $5 million down sharply from $19 million in 2014. The company reported a small profit of $372,000 in the final quarter down from $7.8 million in the final quarter of 2014. The final quarter although disappointing, was nevertheless better than the $10 million loss incurred in the September 2015 quarter.
Importantly, the final quarter delivered 11 percent more revenues than in 2014 to reach $200 million up from $180 million. Profit margin slipped in the December quarter, to 32.93 percent from 33.94 percent in the September quarter, helping to depress profit. Finance cost of $888,000 in the September quarter jumped to $3.6 million in the December quarter while selling and distribution cost fell in the quarter by $7.5 million compared to the September quarter but administrative cost rose by $2 million over the above period.
Based on the improved revenue gain in the December quarter and the fact that 2015 had some one-off cost, IC Insider is forecasting 18 cents per share for 2016. The stock last traded on the Jamaica Stock Exchange at $1.21 and would place the PE based on IC Insider’s 2016 estimate at 6.7.
Responding to the results Management released detailed report on developments that led to the 2015 performance, we are “pleased to report that increased marketing efforts, company reorganization and our decision to strategically focus on products with growth potential have yielded encouraging results.”
“Our process began in earnest in 2013, resulting in a considerable growth in sales, despite having been met with strong competition. Our activities over the last few years were focused on strengthening our positions and building sustainable growth, which were substantiated by the growth we witnessed of 30 percent and 9 percent in 2013 over 2012 and 2014 over 2013, respectively. Continuing the growth incline, in 2015, the company registered an overall growth of 3 percent, but witnessed double digit growth in some key product areas. Furthermore, during the last quarter of 2015, sales grew by 11 percent over the same period in 2014.”
Easter buns should lift sales and profit in the March 2016 quarter.

Easter buns should lift sales and profit in the March 2016 quarter.

“In the year under review, we decided to centre our attention on market spaces, in which we made gains. In order to effectively execute on such a strategy, we discontinued several products which we deemed to have the least growth potential with the end goal being to maximize our returns, while placing the organization on a more competitive growth path. Furthermore, in certain product categories, the company chose not to respond to certain competitive price discounts and other activities.”
“The deletion of certain SKUs from our system came with a one-off cost of $21m to revenues. The addition of technical personnel, reorganization of staff and increased sales staff to service our accounts aggressively positioned our brand in the market place, but resulted in additional staff costs. We also doubled our spending on advertising and promotions from $8.5m to $16.8m, which in 2015, was a strategy utilized to strengthen the brand platform for future growth. Additionally, we continued to spend on fleet and trucks, spending $19 million on motor vehicles. These additions, plus the cost associated with machinery acquisitions accounted for most of the increased cost for travelling and motor vehicle expenses. Delays in new equipment installation and in the introduction of new products also impacted our revenues and cost of goods sold.”
“Although profits declined for the above stated reasons, our capital base remains strong with total equity of $533 million as at December 31, 2015. Our current assets exceed our current liabilities by $128 million, or by more than 140 percent. Our cash and investment position stood at $118 million at the end of 2015. We continued to maintain 38 percent of those cash and cash equivalents in US currency to hedge against depreciation of the Jamaican dollar, particularly as we continue to roll out more capital expansion. Last year, our capital expenditure totalled $52 million, up from $32 million the year before. Our strong cash position also enables us to easily cover debt payments, such as the $22 million portion of long-term debt due in 2016. Additionally, the company’s gross margin improved from 34.2 percent in 2014 to 35 percent last year.”