August 14, 2020
Derrimon Trading Limited (DTL), for six months ended June 30, 2020, reported trading income of $6.30 billion compared to the $6.29 billion booked for the prior year’s comparable period. DTL indicated, “The impact of the slow-down in economic activities and demand by consumers and manufacturers as a result of the Covid-19 pandemic were the main reason for the negligible growth experienced at the Group level. We were however, encouraged by the continued growth that was reported by the retail segment of our business and by Caribbean Flavours and Fragrances Limited which speaks to the diversity of the Derrimon Group of Companies. As the economy continues to reopen, we remain encouraged that other areas will benefit from the increased expected increase in economic activities.” Revenue for the quarter fell 5% to $2.98 billion compared to $3.14 billion reported in 2019.
Management also noted, “Despite the Covoid-19 pandemic ,the Group continues to strategically execute on the revised Business Plan which has resulted in significant growth in some areas of the business during the six (6) months period. We experienced steady growth in our revenue in the retail segment and Caribbean Flavours and Fragrances Limited whilst the distribution segment remained flat . Our subsidiary Woodcats international saw a reduction in business during the reporting period but we expect to see a rebound based on the reopening of many segments of the manufacturing sector in July 2020.”
Cost of sales decreased by 2% to $5.10 billion for the period (2019: $5.19 billion). As a result, Gross profit amounted to $1.20 billion relative to $1.09 billion for the prior comparable period, an increase of 10% 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.” Gross profit for the three months ended June 30, 2020 rose 8% year over year to $586.86 million (2019: $542.07 million).
Other income for the period under review rose 241% to $41.46 million relative to $12.15 million booked in the prior comparable period.
Total operating expenses totaled $965.76 million for the period under review, representing a growth of 17% on the $824.21 million recorded in the prior year’s corresponding period. Of this, Administrative expenses amounted to $776.84 million, 23% higher when compared to the $631.17 million in 2019. Selling and distribution expenses recorded a 2% decrease for the period, totaling $188.93 million (2019: $193.04 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, costs associated with the new warehouse and utilities.” Total expenses for the quarter posted a 20% increase from $408.99 million in 2019 to $492.38 million for the three months ended June 30, 2020.
For the quarter, finance cost closed at $67.79 million versus $95.69 million in the 2019, a 29% 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 $207.47 million compared to $186.45 million in 2019. After incurring tax charges of $23.59 million (2019: $18.82 million), net profit amounted to $183.89 million, a 10% growth when compared to $167.63 million reported for the first six months of 2019. Net profit attributable to shareholders amounted to $160.66 million compared to $154.25 million recorded in 2019. Net profit attributable to shareholders for the quarter closed at $69.04 million relative to $85.74 million documented for the second quarter of 2019.
Earnings per share (EPS) for the quarter closed the period at $0.03 (2019: $0.03), while EPS year to date amounted to $$0.059 (2019: $0.056). The twelve months trailing earnings per share amounted to $0.11. The total number of shares used in the computation amounted to 2,733,360,670 units. Notably, DTL closed the trading period on August 14, 2020 at a price of $2.60.
DTL noted, “The results for the first six (6) months of 2020 are very encouraging for our business as a whole despite the global pandemic which has resulted in an economic slowdown and has negatively impacted some aspects of our business. We will continue to monitor and manage each element of risk, whilst adopting all the safety measures being initiated by the government. Despite the many challenges, we remain confident that we have the right talents and leadership to deliver on our plans for the ensuing periods.”
Balance Sheet Highlights:
As at June 30, 2020, the Company’s assets totaled $5.77 billion (2019: $4.34 billion), 33% more than its value as at June 30, 2019. This was due to largely to increases in ‘Inventories’ and ‘Investment’ which closed at $1.48 billion (2019: $1.38 billion) and $396.99 million (2019: $233.89 million), respectively. ‘Cash and Bank’ also contributed to the increase in the asset base, moving from $115.95 million as at June 30, 2019 to $252.41 million.
Total Shareholders’ Equity totaled $1.51 billion (2019: $1.39 billion), which translated to a book value of $0.55 per share (2019: $0.51).
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