Date: November 15, 2018
Carreras Limited (CAR) for the six months ended September 30, 2018 reported operating revenue of $6.31 billion, 4% more than the $6.03 billion booked in 2017. Revenue for the quarter however declined by 3% compared to the corresponding quarter in 2017 moving from $3.25 billion in 2017 to $3.16 billion in 2017. Management noted, “the effective management of the cost base and to a lesser extent the recovery in volumes, which were evident in the first quarter, have continued into the second quarter.”
Cost of operating revenue increased year over year by 5%, amounting to $3.16 billion from $3.00 billion. As such, gross operating profit increased by 3% to total $3.15 billion relative to the $3.06 billion in 2017. Other operating income declined 52% moving from $162.04 million in 2017 to $77.26 million.
Administrative, distribution and marketing expenses declined 8% to total $906.90 million (2017: $989.68 million). Management indicated, “this 8% decline in overheads versus the similar period last year, is as a result of continued cost management and cost reduction initiatives implemented to achieve significant savings in the short term.”
Profit before Income tax was recorded at $2.32 billion relative to $2.23 billion in 2017. Taxation of $579.80 million was incurred for the period (2017: $558.22 million).
Net profit for the six months increased 4% to $1.74 billion relative to $1.67 billion booked in 2017. Net Profit for the second quarter saw a 1% increase to $921.54 million compared to the $914.39 million reported in the second quarter 2017 period. Total comprehensive income attributable to shareholders for the period closed at $1.76 billion compared to $1.67 billion reported for the corresponding quarter in 2017. Total Comprehensive Income attributable to shareholders for the quarter totalled $921.54 million (2017:$914.01 million)
Profit attributable to shareholders amounted to $1.74 billion (2017: $1.67 billion), while for the quarter CAR booked 921.53 million for the second quarter relative to $914.36 million for the comparable quarter of 2017.
The Earnings per share (EPS) for the period was $0.36 as compared to $0.34 for the corresponding period of last year, while EPS for the quarter, the EPS amounted to $0.19 (2017: $0.19). The twelve month trailing EPS amounted to $0.73. The number of shares used in the computations amounted to 4,854,400,000 units. CAR closed the trading period on November 15, 2018 at a price of $8.86.
CAR noted, “results for the first half of the financial year continue to show improvement over same period last year and we remain cautiously optimistic that this trend will continue for the second half of the financial year. We continue to invest in our core brands, Craven “A” and Matterhorn and aim to ensure that we exceed the expectations of all stakeholders.”
Additionally, CAR stated, “Our financial results are tempered by the continued presence and growth in the illicit trade in cigarettes which gain momentum after the 21.4% excise increase on March 13, 2017 and result in an erosion of the legal volume base. Additionally, we have noted that sales volumes have been negatively impacted in our entertainment channel as heightened security measures are employed by the Government. For the areas of the island where States of Public Emergency and Zones of Special Operation are in effect, bar, restaurant, cafes and other establishments are mandated to close their businesses at an earlier time. This earlier closure restricts consumption moments.” “Notwithstanding, it is expected that the anticipated volume decline will be somewhat mitigated provided that the Government’s initiatives to reduce crime and their continuation of effort to vigorously pursue measures towards stemming the influx and growth of illicit cigarettes in the market are successful. We reiterate the point that there is a direct relationship between high taxes and its impact on legal volumes, Government’s revenues and the rise of the illicit trade.”
Balance Sheet at a glance:
Total Assets amounted to $3.54 billion as at September 30, 2018, down $695.57 million or 16% from $4.24 billion reported in 2017. This was mainly due to a 35% decline in ‘Cash and Cash Equivalents’ to $1.74 billion (2017:$2.68 billion).
Shareholders’ Equity attributable to stockholders of parent amounted $1.45 billion (2017: $2.05 billion) with book value per share of $0.30 (2017: $0.42).
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