JAMT reports 20% increase in three months net profit

Date: February 14, 2019

Jamaican Teas Limited (JAMT) reported a 17% decline in revenues to total $378.23 million (2017: $456.15 million). JAMT stated that, “this was primarily due to a stock reduction exercise by the main distributer in the USA. Export sales fell by almost 40 percent overall but domestic sales improved by almost 16 percent.”

JAMT further indicated that, “the reduction in our export shipments is viewed as a temporary situation as the end customer sales of our export distributers, continue to increase on a monthly basis.”

Cost of sales fell 17% to $286.46 million (2017: $347.17 million), in which gross profit went down 16% to close at $91.78 million (2017: $108.98 million).

Other income increased grossly closing the period at $32.92 million versus $6.87 million in the prior corresponding year. The Company highlighted that, “Other income increased significantly primarily due to the recognition in the profit and loss account of $26.7 million of fair value gains on the Group’s listed equity securities required under the new IFRS 9 Accounting Standard. In 2017 such gains were included as part of Other Comprehensive Income and not included in the profit and loss.”

Administrative expenses fell 4% to $41.44 million for the three months ended December 2018 relative to $42.95 million for the same period of 2017. Sales and Marketing costs went up 10% totaling $10.57 million (2017: $9.58 million).

Finance cost for the period under review amounted to $5.23 million relative to $4.49 million reported in 2017.

Pretax profits climbed 15%, increasing from $58.83 million in 2017 to $67.45 million in 2018. Management stated that, “this was primarily due to the first time inclusion of certain fair value gains on the group’s listed equity investments.” JAMT incurred tax expenses of $5.73 million compared to $7.53 million during 2017 comparable period.

Net profit for the period rose by 20% to $61.72 million relative to $51.30 million recorded twelve months earlier. While, net profit attributable to shareholders closed the period  at $49.80 million compared to $51.88 million in the prior comparable quarter.

Consequently, earnings per share totaled $0.073 compared to $0.076 for the period ended December 2018. The trailing earnings per share amounted to $0.29. The numbers of shares used in the calculations are 686,033,460 units. JAMT last traded on February 13, 2019 at $4.00.

JAMT stated that, “The Company intends to transfer ownership of its supermarket operations from its wholly owned subsidiary JRG Shoppers Delite Enterprise Limited to its joint venture company, Bay City Foods Limited. This transfer will be made in the second quarter and will not have a material impact on the results of the Group. We had previously indicated that this transaction would have resulted in a non-recurring gain of approximately $150 million; since that report the parties decided to modify certain aspects of the transfer terms resulting in the previously estimated gain being reduced to an immaterial amount.”

Balance Sheet at a glance:

As at December 2018, the Company total assets amounted to $1.77 billion, an increase of 10% when compared to the $1.61 billion reported as at December 2017. This increase was driven primarily by 42% growth in ‘Investments’ from $319.22 million in 2017 to $454.45 million for the period under review.

Shareholders’ Equity totalled $1.27 billion as at December 31, 2018 (2017: $1.11 billion), resulting in a book value per share of $1.84 (2017: $1.62).


Analyst Certification -This research report is for information purposes only and should not be construed as a recommendation. 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.