August 12, 2020
Salada Foods Jamaica Limited (SALF), for the nine months ended June 30, 2020 recorded a 6% increase in turnover to close at $819.55 million (2019: $769.64 million). Management stated, “despite the pandemic, our exports and contract manufacturing business segments continue to perform well and are the growth drivers.” As for the third quarter, revenue amounted to $256.77 million (2019: $275.14 million), a 7% decline year over year.
Cost of sales for the period under review increased by 17% to close at $588.23 million relative to $502.98 million in 2019. As such, gross profit amounted to $231.32 million, a 13% decline year over year from the $266.66 million booked in the prior year’s corresponding period. Gross profit for the third quarter declined 20% to close at $79.17 million (2019: $98.99 million). SALF noted, “higher local green bean prices used in the manufacture of instant coffee in earlier quarters continue to impact the business although there has been some amount of recovery since the last reporting period which is expected to continue.”
Other operating income for the nine months amounted to $679,000 relative to $4.92 million in 2019.
Administrative expenses fell by 9% to $97.51 million for the nine months ended June 30, 2020 (2019: 107.31 million). Also, selling and promotional expenses inched up 8% from $43.29 million in 2019 to $46.74 million for the nine months ended June 30, 2020.
Consequently, this resulted in an operating profit of $87.76 million, a 27% decline when compared with the $120.98 million reported for the corresponding nine months in the prior year. Operating profit for the quarter recorded a 17% decrease to $35.49 million (2019: $42.65 million). SALF highlighted that, “the fall in operating profit is attributed to the use of higher priced Jamaica Blue Mountain green beans in the manufacturing of instant coffee. We expect manufacturing cost will normalize going forward.”
The Company reported net finance loss of $39.74 million for the period, this compares to net finance income of $24.36 million for the same period in 2019. While, for the quarter, net finance loss closed at $3.63 million versus net finance income of $34.59 million reported for the same quarter in 2019.
Profit before taxation fell by 67% to $48.02 million versus $145.34 million booked in 2019. For the quarter, profit before taxation fell 59% to close at $31.86 million (2019: $77.23 million).
Taxation expense for the six months was $12.50 million (2019: $31.19 million).
Consequently, net profit year to date declined 69%, from $114.15 million in 2019 to $35.52 million in 2020. The Company states that the decline was, “impacted by the lower operating profit and movement in the exchange rate.” As for the quarter, net profit declined 61% from $60.38 million booked in 2019 to $23.82 million in 2019.
Net profit attributable to shareholders for the period end June 30, 2020, amounted to $35.79 million relative to $114.39 million twelve months earlier. Profit attributable to shareholders for the quarter amounted to $23.92 million (2019: $60.41 million).
Earnings per share for the nine months amounted to $0.34 (2019: $1.10). The EPS for the third quarter was $0.23 (2019: $0.58). The trailing twelve-month EPS amounted to $0.61. The number of shares used in our calculations are 103,883,290 units. SALF stock price closed the trading period on August 12, 2020 at a price of $27.15.
SALF highlighted, “there remains great uncertainty but as we pivot, we continue to look for new opportunities to improve shareholder value. We remain optimistic that exports will continue to perform and that with easing of restrictions locally, the domestic market will rebound.”
Balance Sheet at a Glance:
As at June 30, 2020, total assets decreased by 7% or $81.51 million to $1.10 billion (2019: $1.18 billion). Notably, Investments declined 24% to close at $100.87 million (2019: $132.16 million), while Receivables fell 40% to $181.99 million (2019: $302.73 million). However, cash and cash equivalents closed at $99.80 million (2019: $46.48 million), while inventories rose 6% to $469.05 million (2019: $442.72 million).
Shareholders equity as at June 30, 2020 amounted to $926.01 million (2019: $949.34 million) resulting in a book value per share of $8.91 (2019: $9.14).
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