August 12, 2022
Derrimon Trading Limited (DTL), for six months ended June 30, 2022, reported trading income of $8.86 billion compared to the $8.05 billion booked for the prior year’s comparable period. DTL indicated, “The improved performance reported is a result of our growth strategy being achieved through our companies and business segments. The period saw a full quarter of consolidation for Spicy Hill Farms Limited and Arosa Limited which were acquired at the start of the second quarter. Caribbean Flavours and Fragrances Limited (CFF) and Woodcats International Limited maintained adequate sales despite the continued negative impact from the elevated inflation, raw material shortages and delays from our overseas supplies.”
Cost of sales increased by 7% to $6.97 billion for the period (2021: $6.51 billion). Despite the uptick, Gross profit amounted rose to $1.90 billion relative to $1.54 billion for the prior comparable period, an increase of 23% year over year. Gross profit for the three months ended June 30, 2022, rose 39% year over year to $1.09 billion (2021: $787.14 million).
Other income for the period under review rose 517% to $260.62 million relative to $42.25 million booked in the prior comparable period. DTL noted, “Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds with the carrying amount and are recognized in other income in the statement of other comprehensive income.”
Total operating expenses totaled $1.65 billion for the period under review, representing a growth of 36% on the $1.21 billion recorded in the prior year’s corresponding period. Of this, administrative expenses amounted to $1.40 billion, 41% higher when compared to the $995.26 million in 2021. Selling and distribution expenses recorded a 14% increase for the period, totaling $248.81 million (2021: $218.04 million). Total expenses for the quarter posted a 56% increase to $995.85 million in 20212 from $638.53 million for the three months ended June 30, 2021.
For the six months period, finance cost closed at $175.02 million versus the $46.41 million posted in the 2021, a 277% increase year over year. According to DTL this was as a result of, “the Group borrowing additional capital to fund the $932 million acquisition of Arosa . Also impacting the result is the recognition of IFRS 16 on a monthly basis, this represents a change in our accounting policy. This was compounded by the appreciation of the Jamaican Dollar against the United States Dollar which resulted in foreign exchange losses for the period.”
Consequently, profit before taxation grew to $329.11 million compared to $321.42 million in 2021. After incurring tax charges of $43.05 million (2021: $35.61 million), net profit amounted to $286.06 million, a marginal 0.1% increase when compared to $285.81 million reported for the first six months of 2021. Net profit attributable to shareholders amounted to $270.41 million compared to $271.39 million recorded in 2021. Net profit attributable to shareholders for the quarter closed at $103.83 million relative to the $116 million documented for the second quarter of 2021.
Earnings per share (EPS) for the quarter closed the period at $0.023 (2021: $0.026), while EPS year to date amounted to $0.060 (2021: $0.060). The twelve months trailing earnings per share amounted to $0.088. The total number of shares used in the computation amounted to 4,533,360,670 units. Notably, DTL closed the trading period on August 12, 2022 at a price of $2.34 with a corresponding P/E of 26.59 times.
DTL noted, “Notable events during the period included the temporary disruption to our Marnock Retail LLC subsidiary which underwent a store reset. This was also compounded by supply chain disruptions and inflation during the period. Spicy Hill’s factory was relocated from its Trelawny location to Marcus Garvey Drive and underwent factory upgrade and modernisation in the process. Our retail business profitability improved significantly when compared to the prior period and was positively influenced by our constant focus on the optimization of the portfolio as well as our aim of making the business efficient.”
Balance Sheet Highlights:
As at June 30, 2022, the Company’s assets totaled $12.99 billion (2021: $10.32 billion), 26% more than its value as at June 30, 2021. This was due largely to increases in ‘Fixed Assets’ and ‘Intangible Assets’ which closed at $3.21 billion (2021: $802.03 million) and $1.65 billion (2021: $438.64 million), respectively.
Total Shareholders’ Equity totaled $5.82 billion (2021: $5.42 billion), which translated to a book value of $2.13 (2021: $1.98)
Disclaimer:
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 affect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.
