SALF reports 36% decrease in year end net profit

December 03, 2019

Salada Foods Jamaica Limited (SALF), for the year ended September  30, 2019 recorded a 7% increase in turnover to close at $1.11 billion (2018: $1.04 billion). The movement occurred, “despite a challenging first quarter as operations were impacted due to a boiler accident,” as noted by the SALF. For the fourth quarter, revenue amounted to $344.01 million (2018: $292.79 million), a 17% rise year over year. SALF also noted that, “Exports also performed well, growing by 10% above prior year. Domestic sales grew by 6% above prior year to $739 million.”

Cost of sales for the year increased by 17% to close the period at $752.09 million relative to $641.54 million in 2018. As such, gross profit amounted to $361.57 million, a 10% decline year over year from the $399.96 million booked in the prior year. Gross profit for the quarter posted an 11% decrease to close at $94.90 million relative to $107.16 million booked for the comparable quarter in 2018.

Administrative expenses rose by 63% to $138.80 million (2018: $84.98 million). Also, selling and promotional expenses increased by 39% from $44.90 million in 2018 to $62.46 million. Management noted that the increase in expenses was, “due to people and marketing costs.”

Consequently, this resulted in an operating profit before other income, net finance cost and taxation of $164.25 million, down 39% compared with the $270.07 million reported for the prior year.

The company reported other income of $5.73 million (2018: nil) and net finance income of $2.46 million for the period compared to the net finance income of $20.64 million for 2018.

Profit before taxation decreased by 42% to $167.51 million versus $290.71 million booked for the previous year.

Net profit declined by 36%, from $219.18 million in 2018 to $141.37 million following taxation of $26.15 million (2018: $71.53 million). Net profit for the quarter fell to $27.22 million in 2019 relative to $82.32 million in 2018. Management noted, “This reduction is attributed to the cess imposed by Jamaica Agricultural Commodities Regulatory Authority (JACRA) from April 2018. In fiscal year 2017/2018, the Group paid cess of $21.09 million in imported green beans used in the manufacturing of instant coffee.”

Net profit attributable to shareholders amounted to $141.92 million relative to $219.68 million booked twelve months earlier. Total comprehensive income for the year amounted to $183.84 million versus $240.69 million in 2018.

Earnings per stock for the year amounted to $1.37 (2018: $2.11). The EPS for the quarter was $0.27 (2017: $0.79). SALF stock price closed the trading period on December 02, 2019 at a price of $31.50.

SALF noted, “In support of local coffee farmers, we invested $180 million to purchase and process Blue Mountain coffee cherries, which has provided adequate inventory of local coffee for manufacturing and development of new products.”

Balance Sheet at a Glance:

As at September 30, 2019, total assets rose by 8% or $90.18 million to $1.20 billion (2018: $1.11 billion). This increase was primarily driven by inventories which amounted to $447.09 million (2018: $224.21 million). This was mainly tempered by a decrease in investments by 53% to $142.60 million compared to the previous  year’s total of $303.20 million.

Shareholders equity as at September 30,2019, amounted to $1.01 million (2018: $938.86 million) resulting in a book value per share of $9.77 (2018: $9.04).

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