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SALF reports 36% decrease in year end net profit

December 03, 2019

Salada Foods Jamaica Limited (SALF), for the year ended September  30, 2019 recorded a 7% increase in turnover to close at $1.11 billion (2018: $1.04 billion). The movement occurred, “despite a challenging first quarter as operations were impacted due to a boiler accident,” as noted by the SALF. For the fourth quarter, revenue amounted to $344.01 million (2018: $292.79 million), a 17% rise year over year. SALF also noted that, “Exports also performed well, growing by 10% above prior year. Domestic sales grew by 6% above prior year to $739 million.”

Cost of sales for the year increased by 17% to close the period at $752.09 million relative to $641.54 million in 2018. As such, gross profit amounted to $361.57 million, a 10% decline year over year from the $399.96 million booked in the prior year. Gross profit for the quarter posted an 11% decrease to close at $94.90 million relative to $107.16 million booked for the comparable quarter in 2018.

Administrative expenses rose by 63% to $138.80 million (2018: $84.98 million). Also, selling and promotional expenses increased by 39% from $44.90 million in 2018 to $62.46 million. Management noted that the increase in expenses was, “due to people and marketing costs.”

Consequently, this resulted in an operating profit before other income, net finance cost and taxation of $164.25 million, down 39% compared with the $270.07 million reported for the prior year.

The company reported other income of $5.73 million (2018: nil) and net finance income of $2.46 million for the period compared to the net finance income of $20.64 million for 2018.

Profit before taxation decreased by 42% to $167.51 million versus $290.71 million booked for the previous year.

Net profit declined by 36%, from $219.18 million in 2018 to $141.37 million following taxation of $26.15 million (2018: $71.53 million). Net profit for the quarter fell to $27.22 million in 2019 relative to $82.32 million in 2018. Management noted, “This reduction is attributed to the cess imposed by Jamaica Agricultural Commodities Regulatory Authority (JACRA) from April 2018. In fiscal year 2017/2018, the Group paid cess of $21.09 million in imported green beans used in the manufacturing of instant coffee.”

Net profit attributable to shareholders amounted to $141.92 million relative to $219.68 million booked twelve months earlier. Total comprehensive income for the year amounted to $183.84 million versus $240.69 million in 2018.

Earnings per stock for the year amounted to $1.37 (2018: $2.11). The EPS for the quarter was $0.27 (2017: $0.79). SALF stock price closed the trading period on December 02, 2019 at a price of $31.50.

SALF noted, “In support of local coffee farmers, we invested $180 million to purchase and process Blue Mountain coffee cherries, which has provided adequate inventory of local coffee for manufacturing and development of new products.”

Balance Sheet at a Glance:

As at September 30, 2019, total assets rose by 8% or $90.18 million to $1.20 billion (2018: $1.11 billion). This increase was primarily driven by inventories which amounted to $447.09 million (2018: $224.21 million). This was mainly tempered by a decrease in investments by 53% to $142.60 million compared to the previous  year’s total of $303.20 million.

Shareholders equity as at September 30,2019, amounted to $1.01 million (2018: $938.86 million) resulting in a book value per share of $9.77 (2018: $9.04).

Disclaimer: Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. 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.

2019-12-03T13:17:43-05:00