SALF reports 78% decline in six months net profit attributable to shareholders

May 13, 2020

Salada Foods Jamaica Limited (SALF), recorded a 14% increase in turnover for the six months to close at $562.78 million (2019: $494.50 million). Managers stated, “this is attributed to increase sales in both export and contract manufacturing business segments.” As for the second quarter, revenue amounted to $274.32 million (2019: $322.17 million), a 15% declined.

Cost of sales for the period under review increased by 26% to close at $410.63 million relative to $326.83 million in 2019. As such, gross profit amounted to $152.15 million, a 9% decline year over year from the $167.67 million booked in the prior corresponding period. Gross profit for the second quarter declined 35% to close at $86.87 million (2019: $133.66 million).

Other operating income for the six months amounted to $606,000 relative to $4.46 million in 2019.

Administrative expenses fell by 2% to $67.17 million for the six months ended March 31, 2020 (2019: $68.66 million). Also, selling and promotional expenses inched up 33% from $25.13 million in 2019 to $33.32 million for the six months ended March 31, 2020.

Consequently, this resulted in an operating profit of $52.27 million, 33% decline when compared with the $78.34 million reported for the corresponding six months in the prior year. Operating profit for the quarter recorded a 64% decrease to $33.52 million (2019: $94.07 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 $36.11 million for the period, this compares to net finance loss of $10.23 for the same period in 2019. While, for the quarter, net finance loss closed at $24.59 million versus net finance cost of $6.60 million reported in the prior comparable period.

Profit before taxation fell by 76% to $16.16 million versus $68.11 booked for the previous year’s corresponding period. For the quarter, profit before taxation fell 90% to close at $8.93 million (2019: $87.47 million).

Taxation expense for the six months was $4.45 million (2019: $14.34 million).

Consequently, net profit for the six months declined 78%, from $53.77 million in 2019 to $11.70 million in 2020.  The Company states that this decline is due to the, “impact by the lower operating profit and movement in the exchange rate.” As for the quarter net profit declined 92% from $76.85 million booked in 2019 to $6.28 million in year to date.

Net profit attributable to shareholders for the six months ended March 31, 2020, amounted to $11.87 million relative to $53.98 million twelve months earlier. Profit attributable to shareholders for the quarter amounted to $6.38 million (2019: $76.96 million).

Earnings per share for the six months amounted to $0.11 (2019: $0.52). The EPS for the second quarter was $0.06 (2019: $0.74). The trailing twelve-month EPS amounted to $0.96. The number of shares used in our calculations are 103,883,290 units. SALF stock price closed the trading period on May 13, 2020 at a price of $31.44.

Balance Sheet at a Glance:

As at March 31, 2020, total assets decreased by 0.19% or $2.13 million to $1.145 billion (2019: $1.147 billion). Notably, receivables declined 47% to close at $172.52 million (2019: $326.52 million), while investments fell 50% to $99.53 million (2019: $197.61 million). However, cash and cash equivalents closed at $157.62 million (2019: $19.58 million), while inventories rose 37% to $468.56 million (2019: $341.42 million).

Shareholders equity as at March 31, 2020 amounted to $954.04 million (2019: $935.70 million) resulting in a book value per share of $9.18 (2019: $9.01).


Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer(s) or securities as at the date of this report. 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 effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.