Consolidated Bakeries profit falters

Purity bunProfit in the June quarter dipped to $881,000 compared with $4.3 million in 2014 for Consolidated Bakeries. For the six months profit was up to $14.8 million from $8.9 million as revenues climbed just 2 percent to $398 million. For the quarter revenues fell 11 percent to $171 million as there was a shift in sales relating to Easter occurring in first quarter in 2015 versus the second quarter in 2014.
“Furthermore in our efforts to streamline the company we initiated product rationalization this quarter, thus reducing non profitable items thereby contributing to gross profit increases. This initiative slowed sales growth, which we intend to grow in the coming months,” management stated in a report to shareholders accompanying the interim Financials.
“During the second quarter gross profit increased to $68 million compared to $61 million for the same period in 2014. It should also be noted that increased expenses impacted profit from operations. The majority of these expenses can be attributed to our increased marketing activities. We deliberately planned these activities to aggressively reposition our brands against other major players in the market. Our merchandising and promotional purity logoteams were expanded to support this new thrust. We believe these expenses are worthwhile for the long-term growth of the business”, the management’s report went on to state.
The improvement in gross profit in spite of the decline in sales is a big positive going forward as it will help to boost the bottom-line at a faster pace than before, if sales increase. Administrative cost rose 18 percent, well ahead of the growth in gross profit of 12 percent, to $41.5 million in the quarter and for the half year by 11 percent to $$79.8 million. Selling and distribution expenses rose 21 percent for the quarter to $26.4 million and for the six months grew 24 percent to $50 million.
Earnings per share came in at 7 cents for the half year but only 0.04 cents in the quarter, the full year results seems set to be around 10 cents.
The company added $20 million to fixed assets, had borrowings of $57 million and cash and investments of $122 million.

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