SOS reports 55% increase in nine months net profit

Date: November 14, 2018

Stationery and Office Supplies Limited (SOS) for the nine months period reported revenues of $801.44 million relative to $664.87 million in 2017, a 21% increase. For the third quarter, revenues grew by the same 21% but closed the quarter at $281.51 million (2017: $233.09 million).

The Company’s cost of sales totaled $395.33 million, up 14% relative to the $346.35 million reported in 2017. Cost of sales for the quarter rose by 11% to $135.71 million (2017: $122.75 million). As a result, gross profit grew by 28% for the nine months amounting to $406.12 million relative to $318.52 million booked in 2017, while gross profit for the quarter totaled $145.81 million (2017: $110.33 million).

Administrative expenses totaled $219.27 million up $170.59 million booked in 2017, while selling and promotion expenses grew by 18% closing the period at $64.58 million relative to the $54.68 million reported in 2017. For the quarter, Administrative expenses went up by 21% to $76.90 million (2017: $63.35 million), while selling and promotion expenses closed at $20.13 million (2017: $19.96 million). SOS indicated that, “the increase in expenses was mainly due to the increase of 30 additional staff members as well as the initial setup costs of the SEEK Manufacturing Plant.”

The Company’s depreciation cost amounted to $19.92 million, an increase of 32% relative to the $15.09 million incurred in 2017, while finance cost closed at $9.17 million (2017: $7.30 million).

Profit before taxes grew by 32% amounting to $91.64 million relative to the $69.21 million earned in 2017. For the quarter, there was an 89% growth to $35.47 million (2017: $18.80 million).

After income tax expenses of $60,000 (2017: $10.09 million), Net profit for the period totaled $91.58 million, an increase of 55% relative to the $59.11 million reported in 2017. Net profit for the quarter amounted to $35.47 million, up grossly by 103% from the $17.46 million earned in the previous corresponding quarter.

Earnings per share for the period amounted to $0.37 (2017: $0.24), while EPS for the quarter totaled $0.14 (2017: $0.07). The twelve-month trailing EPS amounted to $0.46. As at November 14, 2018, the stock traded at $9.24.

The Company stated that, “SOS began to benefit from the sales of SEEK products that were first manufactured during the second quarter of 2018. Furthermore, at the end of September, the Company also launched 4 new products that are being manufactured under the SEEK brand name.”

Balance Sheet at a glance:

Total Assets increased by 37% to close at $839.92 million as at September 30, 2018 from $613.56 million twelve months earlier. The increase in total assets was primarily driven by an increase in ‘Non-current Assets’ by 51% to $405.77 million (2017: $269.56 million). This growth stemmed from a 48% growth in ‘Property, Plant & Equipment’ to total $389.44 million (2017: $263.90 million). ‘Inventories’ also contributed to the increase with a 43% growth to $206.90 million relative to $144.35 million recorded twelve months earlier.

Equity attributable to stockholders of the Company as at September 30, 2018 stood at $495.33 million (2017: $389.90 million). This translated in a book value per share of $1.98 (2017: $1.56).

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