HONBUN reports 12% increase in six months net profit

May 13, 2021

Honey Bun (1982) Limited for the six months ended March 31, 2021 period reported revenues of $988.72 million, 13% up from $875.98 million reported a year ago. HONBUN stated that, “easter bun sales performed well, in particular, Easter bun exports grew 48% over prior year.” For the quarter, revenues grew by 16% to $527.40 million (2020: $453.50 million).

The Company had a 15% increase in cost of sales to close at $516.94 million (2020: $​449.98 million). As such, gross profit went up 11% or $45.79 million year-to-date to $471.78 million relative to $425.99 million reported in the prior corresponding period. Gross profit for the quarter amounted $253.72 million (2020: $214.37 million).

According to HONBUN, “the gross profit ratio was 47.7% compared to 48.6% in the prior year. The decline was due to increased cost of raw materials and other manufacturing inputs that occurred mainly in the first quarter.”

The Company documented other gain for the six months ended March 31, 2021 totaling $3.84 million relative to gains of $5.37 million for the similar period in 2020. HONBUN reported other gain of $4.85 million for the quarter relative to gains of $5.19 million for the same quarter of 2020. Profit before operating expenses for the six months amounted $475.62 million (2020: ​$431.37 million) a 10% increase when compared to the same period in previous year.

Administrative expenses rose 18% to $216.41 million (2020: $183.70 million) for the six months, while selling, distribution and promotional expenses decreased slightly by 1% to $128.11 million (2020: $129.21 million). Total expenses for the six months amounted to $344.52 million, 10% above the $312.91 million recorded for the same period of 2020. For the quarter, total expenses increased by 7% to $168.48 million (2020: $157.86 million).

The increased expenses resulted in an 11% climb in profit from operations from $118.46 million in 2020 to $131.10 million for the period under review.

Finance income totalled $59,165 (2020: $792,799), while for the quarter, finance income closed at $33,602 (2020: $67,540). The six months finance costs declined by 20% to $3.64 million (2020: $4.57 million). As for the quarter, the finance cost decreased 41% to close at $1.85 million (2020: $3.14 million).

As such, profit before taxation closed the period at $127.53 million versus $114.68 million booked in the same period last year. Pretax profit for the quarter amounted to $88.28 million (2020: $58.63 million).

Taxation for the six months amounted to $16.18 million (2020: $15.13 million), thus resulting in net profit after taxation of $111.35 million (2020: $99.54 million). For the quarter, net profit increased to $77.09 million compared to $50.43 million reported in the previous comparable quarter. HONBUN noted, “The improvement was attributable to a number of factors, including the introduction of new products such as the Hot Dog roll and Cinnamon loaf.”

Consequently, earnings per share (EPS) amounted to $0.24 (2020: $0.21) year to date, while for the quarter the EPS amounted to $0.16 (2020: $0.11). The trailing twelve months EPS is $0.38. The number of shares used in this calculation was 471,266,950 shares. HONBUN last traded on May 13, 2021 at $5.95 with a corresponding P/E of 15.70 times.

HONBUN highlighted, “During the quarter, the company launched its new sliced bun, which has been well received by customers for its added convenience. The staff wellness and counselling program introduced in November continues to be invaluable in helping team members cope with the psychosocial effects of the pandemic.” Furthermore, “The Honey Bun foundation launched an app (GAPP APP – The Honey Bun Foundation) available on Google Play, Apple app store and www.thehoneybunfoundation.com, which is a business tool diagnostic that identifies weakness in SME businesses processes. The tool comes with recommendations about the appropriate Business Service Organization (BSO) that provides support in the areas identified.”

Balance Sheet at a Glance:

As at March 31, 2021, total assets increased by 9% to close at $1.17 billion (2020: $1.07 billion). The increase was largely due to increases in ‘Cash and Cash Equivalents’ and ‘Property, plant and equipment’ which closed at $347.59 million (2020: $258.05 million) and $588.09 million (2020: $522.03 million), respectively. It was noted, “The company invested $69.3m in capital expenditure in the period, mainly to upgrade vehicle fleet to service new routes, and to acquire additional manufacturing equipment.”

Shareholders’ equity totalled $938.73 million compared to the $809.37 million quoted as at March 31, 2020. This resulted in a book value of $1.99 relative to $1.72 the prior year.


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