CAR Reports 12% Increase in Three Months Net Profit

Date: August 9, 2019

Carreras Limited, for the three months ended June 30, 2019, reported Operating Revenue of $3.46 billion, 10% increase relative to $3.15 billion booked in 2018. The company highlighted that, “This positive outturn over the prior period is underpinned by the positive volume trend from current market dynamics and benefits being derived from investment in new route to market structure which was implemented on April 1, 2019. As the business continues to focus on recovery of volumes from the expansion of distribution coverage across the island and providing value to consumers, the Company is encouraged by its positive first quarter performance.”

CAR also noted that, “On April, 2019, we successfully implemented a new route to market structure which included the reorganisation of the sales force and distribution routes a focus on increasing our distribution coverage. In doing so, the sales team was upgraded and changes were made to the distribution structure and strategies. We are happy to report that the Company has begun to reap the benefits from this reorganisation which has contributed to the increased profitability in this quarter compared to prior period.”

Management stated, “the quarter was also marked by the continued investment in our core brands, particularly, the evolution of the Matterhorn Family. In keeping with our efforts to reinforce the brand proposition value and to excite our consumers, Matterhorn, the menthol authority in Jamaica, is being upgraded, to include a sleek, modern and attractive design. There has also been an upgrade to the product.” The Company upgraded the Matterhorn to “include a capsule which allows the consumer to boost freshness. The Matterhorn Click & On has been upgraded to a double capsule. This double capsule not only boosts freshness but allows the consumer to switch experience a citrus flavour. The island-wide launch which began with a teaser campaign in June 2019, will be completed in the second quarter of the financial year.”

Cost of Operating Revenue also climbed year over year by 10%, amounting to $1.73 billion from $1.57 billion. As such, Gross Operating Profit rose by 9% to total $1.73 billion relative to the $1.58 billion in 2018. Other Operating Income rose by 26% moving from $23.15 million in 2018 to $29.23 million.

Administrative, distribution and marketing expenses increased 10% to total $537.58 million (2018: $489.42 million). Management noted that, “this is due mainly to heightened investments in our brands as well as increased route to market costs. The Company remains committed to containing costs and pursing cost cutting initiatives wherever this is feasible.”

Profit before Income Tax closed the quarter at $1.23 billion relative to $1.13 billion in 2018. Taxation of $311.41 million was incurred for the period (2018: $308.23 million).

Consequently, Net Profit for the three months increased 12% to $923.29 million relative to $821.09 million booked in 2018.

The Earnings per share (EPS) for the period was $0.19 as compared to $0.17 for the corresponding period of last year. The twelve-month trailing EPS amounted to $0.72 ( 2018:0.73). The number of shares used in the computations amounted to 4,854,400,000 units. CAR’s stock price last traded on August 8, 2019 at $7.98.

Based on the improved performance for the quarter, the company states, “we remain cautiously optimistic that this trend will continue into the rest of the financial year. This positive trend along with the investments in our brands, our talented and dedicated team and our continued thrust to satisfy consumer moments, auger well for the long-term sustainability of the business.”

Balance Sheet at a glance:

Total Assets amounted to $4.12 billion as at June 30, 2019, up $163.71 million from $3.95 billion reported in 2018. This was mainly due to an increase in Property, plant and equipment totalling $516.55 million, a 61% increase year over year.

Shareholders’ Equity attributable to stockholders of parent amounted $1.58 billion (2018: $1.87 billion) with book value per share of $0.33 (2018: $0.38).

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