May 18, 2020
Derrimon Trading Limited (DTL), for the three months ended March 31, 2020, reported trading income of $3.32 billion compared to the $3.15 billion booked for the prior year’s comparable period, a 5% increase. DTL indicated, “The distribution and retail arms of the business for the three (3) months recorded revenue of $3.01 billion which was $131.99 million or 4.58% above the $2.88 billion reported for the corresponding period last year. An aggressive and focused approach was taken during this quarter with the emphasis on ensuring that the pillars of efficiency, product availability, service delivery and customer service remain central to the financial performance. Despite the initial impact of Covid-19, both segments of the business continue to execute on its business plan and the results presented are encouraging.”
Cost of sales increased by 4% to $2.71 billion for the period (2019: $2.60 billion). As a result, Gross profit amounted to $612.71 million relative to $552.12 million for the prior comparable period, an increase of 11% year over year. Management stated, “The emphasis on attracting categories of products that generate specific hurdle returns has been the focus for the distribution business. The growth in Gross Profit continues to reflect improvements in margins arising from strategies employed within both the distribution and retail segments of the business from procurement to sales.”
Other income for the period under review rose 360% to close the quarter at $22.65 million relative to $4.92 million booked in the prior comparable period.
Total operating expenses totalled $473.38 million for the period under review, representing a growth of 14% on the $414.20 million recorded in the prior year’s corresponding quarter. Of this, Administrative expenses amounted to $373.18 million, 16% higher when compared to the $320.68 million in 2019. Selling and distribution expenses recorded a 7% increase for the quarter, totalling $100.21 million (2019: $93.52 million). DTL noted, “This increase was driven by the increases in lease payments, the depreciation of the Jamaican Dollar to the United States Dollars, trucking and delivery charges, cost associated with the new warehouse and utilities.”
For the quarter, finance cost closed at $49.30 million versus $58.28 million in the 2019, a 15% decline year over year. Management noted, “The realignment of our debt portfolio from short term to long term amortized facilities continues to have a positive effect on the Group by way of lower interest cost.”
Consequently, profit before taxation grew to $112.67 million compared to $84.57 million in 2019. After incurring tax charges of $13.85 million (2019: $10.57 million), net profit amounted to $98.82 million, a 34% growth when compared to $74 million reported for the first quarter of 2019. Net profit attributable to shareholders amounted to $91.62 million compared to $68.51 million recorded in 2019.
Earnings per share (EPS) for the quarter closed the period at $0.034 (2019: $0.025), The twelve months trailing earnings per share amounted to $0.12. The total number of shares used in the computation amounted to 2,733,360,670 units. Notably, DTL closed the trading period on May 18, 2020 at a price of $1.81.
Balance Sheet Highlights:
As at March 31, 2020, the Company’s assets totaled $5.85 billion (2019: $4.36 billion), 34% more than its value as at March 31, 2019. This was due to largely to increases in ‘Inventories’ and ‘Investment’ contributed to this increase amounting to $1.98 billion (2019: $1.16 billion) and $245.57 million (2019: $168.31 million), respectively. However, this was partially tempered by a decline in ‘Receivables and Prepayments’ which closed at $1.43 billion (2019: $1.69 billion).
Total Shareholders’ Equity totalled $1.43 billion (2019: $1.29 billion), which translated to a book value of $0.52 per share (2019: $0.46).
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