CHL reports 18% decline in year end net profit

December 28, 2020

Audited Financials for the year ended September 30, 2020:-

For the year ended September 30, 2020, Cargo Handlers Limited (CHL) revenue for the year reduced by 23% year over year to $283.46 million versus $366.44 million booked for 2019. Revenue for the quarter contracted 23% to $54.31 million versus $70.59 million booked for the same quarter of 2019. CHL noted, “The result this period is attributed to a 33% decline in containerized cargo handled as domestic commercial activities, particularly within the hospitality sector, continues to be negatively influenced by the COVID-19 pandemic.”

Cost of sales for year amounted to $5.74 million, in contrast to $8.20 million booked the prior year. As such, CHL recorded gross profit of $277.72 million (2019: $358.24 million). As for the quarter gross profit amounted to $54.31 million (2019: $70.59 million).

Other income for the year amounted to $27.28 million relative to $19.65 million booked twelve months earlier.

Administrative expenses recorded a 19% decrease to $25.15 million (2019: $31.06 million), while other operating expenses reflected a decrease of 23% to $148.66 million (2019: $193.40 million). The Company stated that, “this is indicative of the reduction in manning throughout the period consistent with the less than optimal containerized loads presently being carried on the vessels.”

Consequently, CHL recorded an operating profit of $131.18 million, down 15% compared with $153.44 million reported for the previous year end. Operating profit for the fourth quarter closed at $23.99 million (2019: $35.06 million).

The company reported finance cost of $1.83 million for the period; this compares to the finance cost of $2.47 million for the same period in 2019. Interest income for the year amounted to $1.20 million (2019: $1.27 million).

Profit before taxation decreased to $130.55 million versus $152.24 million booked in 2019. While for the quarter, pre-tax profits closed at $23.94 million (2019: $34.71 million).

Year-end net profit fell by 18% to $107.64 million (2019: $130.86 million) following taxation of $22.91 million (2019: $21.38 million). Net Profit for the quarter decreased by 47% to $15.20 million in 2020 relative to $28.46 million in 2019.

Earnings per stock unit for the year amounted to $0.26 (2019: $0.31). The EPS for the fourth quarter was $0.04 (2019: $0.07). CHL stock price closed the trading period on December 24, 2020 at a price of $6.80 with a corresponding P/E ratio of 26.30 times.

CHL stated, “Our expectations are that the current flow of bulk and containerized cargoes as well as our equipment leasing segment will continue to drive revenues for at least the ensuring three quarters; this as homeporting cruise ships are not expected to return to pre-Covid-19 levels before the end of calendar year 2021 based on global economic outlook. Despite the slowdown of the tourism sector, infrastructure upgrading is in the works for Montego Bay’s airport and the GOJ’s recently announced hotel construction projects slated for the North Coast are anticipated to still go forward. These projects will serve to boost activities across the port over the near to medium term.”

Balance Sheet at a Glance:

As at September 30, 2020 ‘Total assets’ rose by 5% or $26.29 million to $571.52 million (2019: $545.22 million). This increase was primarily driven by ‘Property, Plant & Equipment’ which amounted to $163.63 million (2019: $64.40 million). However, offset be a decline in ‘Receivables’ from $127.95 million in 2019 to $60.92 million.

Shareholders equity as at September 30, 2020 amounted to $508.39 million (2019: $464.44 million) resulting in a book value per share of $1.22 (2019: $1.12).


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