SOS reports 76% decrease in six months net profits

August 18, 2020

SOS reported six months revenue of $472.12 million relative to $638.55 million in 2019, a 26% decrease year over year, while for the second quarter revenues amounted to $135.21 million down 54% compared to the $295.08 million reported in the corresponding quarter of 2019.

The Company’s cost of sales totalled $244.36 million down 23% relative to the $316.39 million reported in 2019. As a result, gross profit fell by 29% for the six months amounting to $227.76 million relative to the $322.16 million booked in 2019, while gross profit for the quarter totalled $62.55 million (2019: $153.73 million).

SOS stated that, “the gross profit percentage fell by 2% year on year as the Jamaican dollar continued to devalue and we were forced to give larger discounts on products to help customers manage through difficult times.”

Administrative expenses totalled $140.90 million down 11% compared to the $157.61 million booked in 2019, while selling and promotion expenses fell by 22% closing the period at $37.93 million relative to the $48.33 million reported in 2019. For the quarter, administrative expenses went down by 32% to $54.84 million (2019: $80.42 million), while selling and promotion expenses closed at $14.62 million (2019: $25.26 million), a 42% decline year over year. Management noted that, “expenses decreased primarily due to the drop in salaries and wages due to the COVID-19 virus and employees’ working hours being reduced significantly as a result of a rotation schedule allowing them to get an average of 2.5 work-days per week.”

The Company’s depreciation cost for the six months ended June 30, 2020, amounted to $17.76 million, an increase of 5% relative to the $16.95 million incurred in 2019, while finance cost closed at $6.85 million (2019: $7.75 million). Loss on foreign exchange amounted to $4.77 million (2019: $1.24 million). Profit on disposal of property plant and equipment totalled $3.34 million for the six months ended June 30, 2020 (2019: $150,000). Furthermore, loss on investment amounted to $1.19 million for the period under review relative to a gain on investment of $297,340 reported for the corresponding six months in 2019.

There was no taxation booked for the six months ended June 30, 2020. As such, net profit declined by 76% amounting to $21.83 million relative to the $91.65 million earned in 2019. For the quarter, there was a net loss of $21.97 million relative to a net profit of $34.12 million in 2019.

Earnings per share for the period amounted to $0.09 (2019 EPS: $0.37), while LPS for the quarter totalled $0.09 (2019 EPS: $0.14). The twelve-month trailing EPS amounted to $0.26. As at August 17, 2020, the stock traded at $5.60.

SOS noted that, “during April SOS tried to minimize losses by rotating staff, conserving electricity usage and other expenses, and reducing management and other salaries.” Management also noted that the Company, “ began to sell and distribute protective gear and equipment including custom built acrylic screens.”

Balance Sheet at a glance:

Total Assets increased by 2% to close at $889.56 million as at June 30, 2020 from $876.05 million the year prior. The growth stemmed from 30% growth in ‘Inventories’ to $268.11 million (2019: $206.71 million). ‘Bank and cash’ also contributed to the increase to close at $95.97 million relative to $76.77 million recorded twelve months earlier.

Equity attributable to stockholders of the company as at June 30, 2020 stood at $618.48 million (2019: $573.74 million). This resulted in a book value per share of $2.47 (2019: $2.29).

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