JAMT reports 61% decrease in net profit attributable to shareholders

August 12, 2020

Jamaican Teas Limited (JAMT), for the nine months ended June 30, 2020, reported a 40% increase in revenues to total $1.41 billion (2019: $1.01 billion). For the quarter, revenues amounted to $505.96 million compared to $316.67 million in the previous corresponding quarter. Notably, Management stated that, “$117 million of this increase arose because in the year ago quarter, our supermarket was operated by Bay City Foods Ltd, which at that time was only 50% owned by the Group and accordingly was not consolidated. The remaining $72 million increase in sales reflects the increases in export and domestic sales in the manufacturing business referred to above. The jump in exports reflects in part, a reversal of the temporary customer de-stocking that took place last year, and in part strong sales increases to our final consumers, particularly in the USA.” Furthermore, JAMT highlighted that, “For the nine months, the 40% increase in sales reflected a 42% increase in export sales, a 4% increase in domestic sales and the inclusion of nine months’ supermarket sales compared with four months in 2018/19.”

Management also mentioned that, “our manufacturing operations had good results during the quarter with sales improving by 33% to $386 Million. The main contributor to this was the increase in our export sales which saw an increase of 56% over the prior year. However, our domestic sales were essentially flat compared with the prior year, increasing by only 4%. Exports accounted for 68% of total sales in the quarter. We believe that this positive trend in exports will continue through to the end of our financial year.”

Cost of sales rose 40% to $1.02 billion (2019: $730.17 million), in which gross profit went up 41% to close at $392.09 million (2019: $278.96 million). Gross profit for the quarter closed at $139.38 million (2019: $87.34 million).

Other losses closed the period at $475.22 million compared to other gains which closed the nine months ended June 2019 at $206.92 million in the prior corresponding period. Other income for the quarter closed at $135.18 million compared to $141.93 million documented in the same period last year.

Administrative expenses rose by 16% to $163.85 million for the nine months ended June 2020 relative to $140.93 million for the same period of 2019. For the quarter, administrative expenses closed at $49.05 million (2019: $52.97 million).  Notably, “the decrease in administration expenses for the quarter primarily reflects reduced expenses at all member companies including QWI partly offset by the inclusion of three months’ supermarket operations this quarter. For the nine months the increase in administration costs is mainly a result of the inclusion of the supermarket for nine months vs four months in the year ago period,” as per JAMT.

Sales and marketing costs went up by 4% totalling $41.82 million (2019: $40.07 million). For the quarter, sales and marketing costs closed at $15.29 million (2019: $11.63 million). It was noted that, “the increase in marketing expenses for the quarter resulted from the inclusion of three months marketing expenses for the supermarket versus no inclusion in the year ago quarter. For the nine months the increase in marketing costs is a result of the inclusion of the supermarket for nine months vs four months in the year ago period.”

Finance cost for the period under review amounted to $23.97 million (2019: $15.83 million), while for the quarter finance costs closed at $5.15 million versus $7.13 million in the prior corresponding quarter. JAMT also stated that, “the decrease in interest expense is primarily the result of lower interest rates on Jamaican Teas loans and lower borrowings at QWI. For the nine months the increase in interest costs is mainly a result of higher borrowings at QWI in the first half of this period compared with the year ago first half.”

Pre-tax loss amounted to $312.77 million in 2020 compared to pre-tax profit of $289.42 million booked in the previous year. While, for the quarter, pre-tax profits closed at $205.08 million (2019: $157.60 million).

There was a taxation credit for the period which closed at $49.60 million relative to a taxation charge of $21.67 million in 2019. Net loss for the period amounted to $263.18 million in the period under review relative to a profit of $267.75 million recorded twelve months earlier. For the quarter, net profit closed at $193.14 million (2019: $151.63 million).

Net profit attributable to shareholders amounted to $84.93 million (2019: $220.13 million) for the nine months ended June 2020. Whereas for the quarter, net profit attributable to shareholders amounted to $107.54 million (2019: $118.14 million). Management noted that, “this profit decline arose from the unrealized investment losses experienced by QWI in the first half of the year offset in part by strong profits growth at the manufacturing operations.”

Consequently, earnings per share totaled $0.12 compared to $0.32 for the period ended June 2019. For the quarter, EPS closed at $0.15 (2019: $0.17). The twelve months trailing earnings per share amounted to $0.37. The numbers of shares used in the calculations are 686,033,460 units. JAMT last traded on August 12, 2020 at $5.00.

JAMT highlighted that, “We completed our real estate project in Manor Park and have signed sale agreements for 15 of the 18 units. The proceeds and profits from these sales will start to be realized in the fourth quarter.”

Management noted that, “at the supermarket, sales have since April 2020 have declined over 2019 as a result of the restrictions placed on our operating hours from the varying curfew hours in Kingston. The rate of sales decline has declined as the curfew restrictions have been loosened. The real estate business should contribute significantly later in the year from proceeds from the sale of apartments and revaluation gains on the investment properties owned.”

Balance Sheet at a glance:

As at June 2020, the Company total assets amounted to $3.27 billion, an increase of 55% when compared to the $2.11 billion reported as at June 2019. This increase was driven primarily by an upward trajectory in ‘Investment’ and ‘Receivables’ which closed the period at $1.40 billion (2019: $732.30 million) and $498.02 million (2019: $230.24 million), respectively.

Shareholders’ Equity totalled $1.66 billion as at June 2020 (2019: $1.45 billion), resulting in a book value per share of $2.39 (2019: $2.08).

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