CHL posts 14% decline in six months net profit

May 08, 2019


Cargo Handlers Limited (CHL) For the six months ended March 31, 2019, reported revenue of $216.32 million, 15% higher than the $187.96 million booked in 2018. Revenue for the second quarter rose 10% to $111.45 million (2018: $101.39 million) due to, “baggage handling and provisioning activities associated with home-porting cruise vessels resulting in a 6.74% (9.5M) improvement this period.

Cost of sales for six month period closed at $8.20 million relative to nil in for the corresponding period of 2018. As such, CHL recorded gross profit of $208.12 million, 11% more than the $187.96 million booked in 2018. Gross profit for the quarter improved  5% to $106.55 million relative to $101.39 million booked for the similar quarter of 2018.

Other income for the period amounted to $400,000 (2018: nil). Loss on foreign exchange amounted to $15.17 million versus a gain of $2.31 million reported in 2018.

Administrative expenses increased 29% to close at $16.12 million (2018: $12.47 million), while other operating expenses increased by 15%, closing at $92.05 million for the period relative to $80.12 million in 2018. Total expense for the period amounted to $122.94 million compared to $90.27 million for the corresponding period in 2018. Total expense for the quarter climbed 14% to $58.49 million relative to $51.44 million for the quarter ended March 31, 2018. According to management, “this movement in costs was a direct result of additional manning in relation to the increased activities and a one-off restructuring costs.”

As such, operating profit fell by 13% from $97.69 million in 2018 to $85.18 million. Operating profit for the second quarter advanced 10% to $56.99 million (2018: $51.72 million). Finance costs rose 21% to close the period at $1.08 million (2018: $897,589), while interest income declined by 14% to $737,661 on from $858,530 in 2018.

Profit before taxation declined by 13% to close the period at $84.83 million (2018: $97.65 million). Taxes of $10.72 million (2018: $11.67 million) were accrued during the period, thus net profit amounted to $74.11 million (2018: $85.98 million). Net profit for the quarter closed at $49.66 million, 9% above the $45.65 million booked for the same quarter of 2018.

Consequently, earnings per share (EPS) for the quarter amounted to $0.12 compared with $0.11 for the corresponding period of last year. EPS for the six months totaled $0.18 relative to $0.21 recorded for the first six months of 2018. The trailing EPS amounted to $0.37. The numbers of shares used in the calculations are 416,250,000 units. The stock price closed the trading period on May 8, 2019 at a price of $10.95.

CHL stated, “At the end of the quarter, the home-porting cruise lines wrapped up another successful season of operational activities utilizing Montego Bay as their hub. Cargo Handlers Limited received a commendation for our stevedores’ professional approach to the execution of their duties throughout the recently concluded cruise home-porting season.”

CHL further acknowledged, “the Port of Montego Bay’s cargo through-put continues to be sustained by the activities of the hospitality and retail sectors in Western Jamaica. The growth of the local industry is also being fueled by steady flow of building materials supporting the construction of additional hotel rooms along the North Coast.” “Industry-wide consolidation of cargo vessels will continue to affect supply-chain operations globally wherein we will see more vessel-sharing agreements between carriers as was seen a few months ago with two shipping lines opting to share one vessel into Montego Bay. This leads to greater efficiencies for both the Company and the carriers involved. However, we do not anticipate any major merger in 2019 although it is likely a full merger between carriers could take place in the near future.”


Balance Sheet at a glance:-

Assets totaled $551.61 million relative to $470.05 million as at March 31, 2018. The increase in total assets was largely due to an increase in ‘Cash’ by $23.77 million to total $341.37 million (2018: $317.60 million).

Equity attributable to stockholders of parent amounted to $452.66 million (2018: $392.96 million) with book value per share amounting to $1.09 (2017: $0.94).


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.