MDS reports 35% decrease in six months net profit

November 11, 2019

Medical Disposables & Supplies Limited, for the six months ended September 2019 reported Revenue amounting  $1.12 billion, an increase of 8%, relative to $1.04 billion booked the previous year. For the second quarter revenues totalled $565.04 million up 13% year over year (2018: $500.85 million). MDS noted, “This positive performance arose mainly from growth in sales in the pharmaceutical and medical segments with the new product lines showing encouraging results to the consumer segment.”

Cost of sales went up 6% to close the period at $847.99 million relative to the $800.44 million reported for the same period last year. This resulted in gross profit which increased 14% to a total of $274.29 million relative to the $241.52 million for the corresponding period in 2018. Gross profit for the second quarter amounted to $133.11 million, a 7% improvement compared to the $124.59 million reported in 2018.

Total operating cost closed the period at $207.44 million, up 23% (2018: $169.24 million). Of this, selling and promotional costs went up 34% to $86.95 million (2018: $64.79 million). In addition, administrative expenses increased by 13% to $109.38 million from $96.76 million last year. Notably, the company booked other operating income of $2.87 million for the period ended September 30, 2019 relative an income of $2.68 million of the same period in 2018. The company highlighted that, “as part of its growth strategy, the Company continues to focus on expanding its product range, primarily in the Consumer and Medical Divisions.  This initiative has been accompanied by increases in the staff compliment and increased selling and distribution costs which are required to support the growth in business activity.” Depreciation for the first six month amounted to $14.38 million, 18% more than the $12.23 million reported in 2018.

The company’s loss on foreign exchange was reported at $19.91 million compared a loss of $20.11 million in 2018 which according to management, “resulted from better management of the effects of the devaluing Jamaican dollar during the quarter.” Finance cost increased by 25% to total $21.74 million (2018: $17.37 million). Furthermore, Gain on disposal of property, plant and equipment was $1.15 million (2018: nil).

As a result, MDS reported profit before tax of $26.37 million, a 24% decrease relative to the $34.80 million in 2018.

Consequently, net profit for the period amounted to $22.64 million relative to $34.77 million in 2018, a 35% increase year over year, after a tax charge of $3.74 million for the period. Net profit for the quarter amounted to $6.55 million (2018: $15.68 million).

Earnings per share for the period amounted $0.086 (2018: $0.13). EPS for the quarter amounted to $0.025 relative to $0.06 in 2018. The trailing twelve-month EPS amounted to $0.38. The number of shares used in the calculations is 263,157,895. MDS last traded on November 11, 2019 at $ 7.20.

Also, MDS mentioned, “as the company is poised to maximise increase in shareholder value from opportunities in the market; we will continue to value our customers, shareholders and MDS family for their confidence and continued support over the years.”

Balance Sheet at a glance:

As at September 2019, total assets amounted to $1.63 billion 6% more than $1.54 billion the year prior. This was primarily due to a 7% increase in ‘Inventories’ and a 35% increase in ‘Prepayments’ which amounted to $601.94 million (2018: $565.03 million) and $125.29 million (2018: $92.67 million) respectively.

Shareholders’ Equity totalled $752.90 million (2018: $680.53 million) resulting in a book value per share of $2.86 (2018: $2.59).

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