HONBUN Reported 15% Decrease in Nine Months Net Profits

Date: August 08, 2018

Honey Bun (1982) Limited (HONBUN), for the nine months ended June 30, 2018, Revenue grew by 4% amounting to $1.01 billion, up from $969.42 million reported a year ago. The Company had a 0.3% increase in Cost of Sales to $551.66 million (2017: $550.16 million) and consequently, Gross Profit increased by 8% or $35.54 million year-to-date to $454.81 million (2017: $419.26 million). For the quarter, Revenue climbed by 15% to total $331.73 million relative to the $289.08 reported the prior year’s corresponding quarter. The company highlighted that, “This has been as a result of continued investment in production capacity and restructuring of distribution.” Additionally, management noted, “In April of this year Honey Bun launched its new Buccaneer Jamaica pocket size rum cakes in 3 flavors at the Jamaica Expo. We have entered two new markets with further interest from other buyers in existing markets.” Gross profit for the third quarter improved 19% to $146.16 million compared to $122.56 million booked for the third quarter of 2017.

The Company incurred Other Losses totaling $4.43 million relative to Gains of $283,563 for the similar period in 2017. HONBUN however reported Other Gains of $915,952 for the third quarter relative to $382,555 for the same quarter of 2017. Finance Income totaled $625,481 a 44% decrease compared to $1.11 million reported twelve months earlier.

Administrative Expenses has rose 1% to $202.08 million (2017: $199.97 million) while Selling, Distribution & Promotion Expenses increased by 37% to $164.13 million (2017: $120.04 million). Total Expenses for the nine months amounted to $366.21 million, 14% above the $320.01 million recorded for the same period of 2017. For the quarter, Total Expenses increased by 21% to $136.62 million.

The increased expenses resulted in Profit from Operations contracting by 16% from $100.65 million in 2017 to $84.79 million for the period in review. Finance Costs rose by 13% to $4.39 million (2017: $3.90 million). As such, Profit before Taxation has declined 17% or $16.35 million to $80.40 million compared to $96.75 million booked in 2017. Profit before Taxation for the third quarter amounted to $9.02 million (2017: $8.56 million).

Taxation for the nine months amounted to $8.29 million (2017: $12.10 million). Thus, Net Profit after Taxation amounted to $72.10 million, a 15% decrease relative to the $84.66 million reported for the prior year’s corresponding period. For the quarter, Net Profit after Taxation increased by 29% to $9.71 million compared to $7.55 million in 2017.

Consequently, earnings per share (EPS) amounted to $0.15 (2017: $0.18) year to date, while for the quarter the EPS amounted to $0.02 (2017: $0.02). The trailing twelve months EPS is $0.17. The number of shares used in this calculation was 471,266,950 shares. HONBUN last traded on August 07, 2018 at $4.50.

Balance Sheet at a Glance:

Total Assets increased by $22.39 million or 3% to close at $731.52 million as at June 30, 2018 (2017: $709.14 million). The increase in total assets was largely due to a 20% increase in property, plant and equipment that closed the period at $441.20 million. Intangible Assets also increased significantly by 117% from $1.22 million to $2.64 million. The company noted that, “The Company’s asset base has grown as a result of the investment in the expanded facilities. This investment will allow the company to take advantage of the strong market demand for our products.”

Shareholder’s equity totaled $599.56 million compared to the $537.08 million quoted as at June 30, 2017. This resulted in a book value of $1.27 relative to $1.14 the prior year.

 

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 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.

2018-08-08T20:31:44+00:00