November 5, 2021

For the nine months ended September 30, 2021:

• Seprod Limited (SEP), for the nine months ended September 30, 2021, revenue totalled $31.15 billion compared to the $28.66 billion recorded for the same period of the prior financial year; this represents a 9% increase year over year. Revenue for the quarter totalled $11.32 billion, reflecting a 13% increase relative to $10.05 billion booked the prior year.
• Cost of sales rose 28% from $18.06 billion in 2020 to $23.03 billion for the nine months ended September 30, 2021. Consequently, gross profit decreased 23% to close at $8.12 billion (2020: $10.60 billion), while the third quarter gross profit decreased by 35% to $2.68 billion (2020: $4.08 billion). SEP noted, “the deficit at the beginning of the year has been progressively reduced through realignment of the cost structure and the partial pass through of higher commodity and logistics cost via price increases. The cost of goods has climbed considerably driven by global supply chain challenges and have remained stubbornly high.”
• Furthermore, “it is important to note that, while the cost of goods has risen by approximately 20%, the company has decided to hold strain by absorbing some of the higher cost as we seek to support our consumers and customers through this challenging period,” as per SEP.
• Seprod reported $155.78 million for other operating income for the period under review, relative to $235.43 million for the corresponding period, a 34% decline year over year. Other operating expenses decreased by 30% to close the nine months period at $5.47 billion compared to $7.78 billion booked twelve months earlier.
• Operating profit declined 26% to $2.80 billion (2020: $3.81 billion) for the nine months ended September 2021. While for the quarter, operating profit contracted by 49% to $804.45 million (2020: $1.59 billion).
• Finance costs totalled $732.87 million (2020: $866.09 million), reflecting a 15% decline when compared to the same period last year. The company reported share of results of Joint Venture amounting to $85.11 million relative to a loss of $14.26 million reported in 2020.
• As a result pre-tax profits fell 26% to $2.16 billion in comparison to profit of $2.93 billion booked in the same period last year. While for the quarter, pre-tax profit went down by 52% to $625.48 million (2020: $1.30 billion).
• Taxation of $395.32 million was reported for the nine months period relative to $401.17 million booked in 2020. Consequently, SEP, for the period under review, booked net profit from continuing operation of $1.76 billion (2020: $2.53 billion) and net loss from discontinued operations closed at $59.76 million (2020: loss of $47.30 million). As a result, overall net profit was $1.70 billion (2020: $2.48 billion) for the period under review, while for the quarter, net profit closed at $494.52 million (2020: $1.18 billion).
• The comprehensive income for the nine months amounted to $1.83 billion (2020: $2.61 billion.) For the third quarter, comprehensive income amounted to $540.05 million (2020: $1.21 billion).
• Earnings per share for the nine months ended September 30, 2021, amounted to $2.32 relative to $3.38 for the corresponding period in 2020. The EPS for the third quarter was reported at $0.67 relative to $1.61 reported in 2020. The twelve months trailing EPS is $2.85. The number of shares used in our calculations is 733,546,855. SEP closed the trading period on November 4, 2021, at $63.90 with a corresponding P/E of 22.42 times.
• Management noted that, “With regard to COVID management, the company has incurred significant cost as we strive to create an environment that is safe for our employees, contractors, and other stakeholders We have expended resources to educate, incentivize and facilitate our employees as we seek to convince them to get vaccinated. At this stage, 52% of the workforce is vaccinated, still below our target of 75%.”

Balance Sheet at a Glance:

• As at September 30, 2021, the Company’s total assets decreased by 2% to $37.43 billion from $38.06 billion a year ago. The slight downward movement was influenced by decreases in ‘Cash and Bank Balances’ by 52% to $1.51 billion (2020: $3.12 billion). The movement was however offset by an increase in ‘Inventories’ by 20% to $7.43 billion (2020: $6.20 billion)
• Shareholders’ equity for the period grew 10% to $18.13 billion from $16.54 billion last year.  Consequently, book value per share amounted to $24.72 relative to $22.55 in 2020

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