Date: August 15, 2019
For the period ended June 30, 2019, Caribbean Flavours & Fragrances Limited’s (CFF) revenue increased by 8% to $226.33 million relative to $209.43 million for the comparable period in 2018. For the quarter, the Company generated revenue of $113.75 million (2018: $120.71 million), a 6% decrease year over year. CFF noted that, “this was driven by seasonal purchases based on manufacturers demand but we expect to see improvements in sales in the upcoming two quarters of this financial year.”
Cost of sales also increased for the period to $141.83 million, this compares to the prior year’s figure of $125.37 million, representing an increase of 13%. Gross profit increased slightly to $84.50 million for the period in review and compares to the prior year’s amount of $84.06 million. For the quarter, gross profit closed at $47.21 million (2018: $49.37 million). Management stated, “fluctuations in the foreign exchange rate as well as increased logistics costs negatively impacted our gross profit for the reporting quarter.”
The company had an 8% year over year increase in total expenses to $49.74 million, up from $46 million in 2018. There was a 77% decrease in selling & distribution expenses to $694,000 (2018: $2.98 million). Whereas, Administrative Expense for the period climbed to $49.04 million versus the prior year’s corresponding total of $43.02 million.
Consequently, Profit from Operations for the period decreased to $34.76 million versus $38.06 million booked for the period ended June 30, 2019. While for the quarter, there was a 4% decline from $24.55 million to $23.61 million in 2019. The company reported a 18% decrease in net finance income from $6.68 million in 2018 to $5.48 million in 2019.
Following taxation of $5.02 million (2018: mil), net profit for the period amounted to $35.22 million representing a 21% decrease from the comparable period’s figure of $44.74 million, while for the quarter, net profit also decreased by 21% from $29.32 million to $23.29 million in 2019. “The marginal reduction in profit is expected given the additional costs incurred which are aligned to the future growth prospects of the Company, CFF stated.
The earnings per share for the period months amounted to $0.39 (2018: $0.50). While, the EPS for the quarter amounted at $0.26 (2018: $0.33). The twelve months trailing EPS is $0.71. The number of shares used in this calculation was 89,920,033 units. As at August 14, 2019 the stock traded at $19.90.
CFF mentioned that, “sales continue to be heading in the right direction despite lower than anticipated sales of some new products during the quarter and we anticipate that our sugar reduction solution will continue to be accepted in the market and this will positively improve both future sales and profitability. In addition, we will continue with the refinement of our strategies and the improvement to our various cost structures in order to drive the desired efficiency whilst improving our cost of sales and gross profit.”
Additionally, the Company highlighted, “we seek to explore and gain more acceptance in new markets such as Cuba as well as deepening our presence in many of the local and overseas markets.”
Balance Sheet Highlights:
The company, as at June 30, 2019, recorded total assets of $513.33 million, an increase of 14% when compared to $452.17 million for the prior year. This increase was as a result of increases in ‘Short term investments’ and ‘Inventories’ which closed at $216.94 million (2018: $145.39 million) and $171.26 million (2018: $134.92 million), respectively.
Total Stockholders’ equity as at June 30, 2019 closed at $462.38 million, an improvement of 11% from $417.78 million last year. This resulted in a book value per share of $5.14 compared to a book value of $4.65 for the last year.
Analyst Certification -This research report is for information purposes only and should not be construed as a recommendation. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.