Wisynco reports 12% decrease in six months net profit

February 05, 2021

Wisynco Group Limited (WISYNCO), for the six months ended December 31, 2020, reported total revenue of $16.04 billion, a 6% decrease when compared with the $17.11 billion reported for the same period in 2019. Total revenues for the quarter amounted to $7.98 billion reflecting a decrease of 6% relative to the $8.49 billion achieved in the corresponding quarter of the previous year. Management noted, “the COVID-19 pandemic continues to depress activity specifically in areas such as Tourism, Bars and Entertainment, Restaurants and Schools which have been unable to return to any normalcy. In fact, just recently the USA, UK and Canada have added travel restrictions to/from their countries, and we expect this to continue affecting these channels in the near term. As a result, our Revenues from these channels will continue to be impacted and we expect this to continue into Q3 and Q4. Additionally, due to the depressed activity and shrinking wallets, Revenues from some of our higher margin products have also slowed while some of our lower margin products have increased.”

Cost of sales for the six months period amounted to $10.49 billion, down 4% relative to $10.92 billion reported in 2019. Consequently, gross profit fell 10% to close at $5.55 billion compared to the $6.19 billion for the same period a year earlier. WISYNCO noted that this was, “due primarily to changes in sales mix, impacted by Covid, which has caused consumers to change their spending habits and to essentially stay at home.”

Total expenses for the six months fell 12% to close at $3.73 billion (2019: $4.24 billion). Of total expenses, selling and distribution expenses declined 14% to total $3.04 billion (2019: $3.55 billion), while administrative expenses increased 1% to $690.66 million (2019: $685.63 million). Total expenses for the second quarter fell 17% to $1.82 billion (2019: $2.19 billion). According to WISYNCO, “Management has been laser focused on controlling our costs from before the start of this pandemic and we applaud the team for their efforts. Our SD&A expenses to sales ratio was 22.7% for the quarter, compared to 25.85% in the prior year with the current quarter having a lower Revenue base than the prior year.”

Other income for the six months rose 24% to $78.11 million (2019: $62.75 million).

As such, WISYNCO reported a 6% decrease in operating profit to $1.90 billion (2019: $2.02 billion). Operating profit for the quarter closed at $875.92 million (2019: $956.32 million).

Finance income for the period amounted to $86.63 million, up 15% from the $75.27 million reported for the corresponding period in 2019. Finance costs increased 19% to $96.68 million for the period from $81.33 million for 2019.

Share of loss from associates for the six months amounted to $22.88 million relative to share of profit from associate in 2019 of $3.22 million.

Profit before taxation amounted to $1.86 billion, relative to the $2.01 billion reported in 2019, a 7% decrease year over year. Taxation for the period amounted to $324.48 million (2019: $421.52 million). Profit from continuing operations amounted to $1.54 billion relative to $1.59 billion booked for the comparable period in 2019.  There was no profit from discontinued operations for the six months ended December 2020 relative to profit from discontinued operations of $165.38 million in 2019.

As such, net profit of $1.54 billion (2019: $1.76 billion) was posted for the six months ended December 2020, representing a 12% decrease year over year. Net profit for the second quarter amounted to $688.43 million relative to $582.50 million in 2019.

Management noted, “our team is equally motivated and intent on growing our Revenues and not just on controlling costs. We continue to focus on key areas such as our export channel, which for the 6-month period ended December 31, 2020 grew by 23% and our Full Service Model route to market while focusing on our customers.”

Total comprehensive income for the six months amounted to $1.56 billion (2019: $1.80 million) and for the quarter, total comprehensive income amounted to $689.60 million (2019: $606.36 million).

Net profit attributable to shareholders for the six months totalled $1.54 billion (2019: $1.76 billion) and for the quarter, net profit attributable to shareholders amounted to $688.43 million (2019: $582.50 million).

Earnings per share (EPS) for the quarter amounted to $0.18 (2019: $0.16), while the EPS for the six months amounted to $0.41 (2019: $0.47). The twelve-month trailing EPS amounted to $0.69. The number of shares used in our calculations is 3,750,000,000. Notably, WISYNCO’s stock price closed the trading period on February 04, 2021 at $16.53 with a corresponding trailing P/E of 23.98 times.

Balance Sheet at a Glance:

As December 31, 2020, WISYNCO’s assets totalled $21.03 billion, 8% more than the $19.40 billion recorded last year for the same period.  The increase in total assets was largely due to increases in ‘cash and short-term deposits’ by $2.45 billion to close at $6.80 billion (2019: $4.35 billion).

Shareholder’s equity closed at $14.58 billion (2019: $12.51 billion).  As such, the book value per share was $3.89 (2019: $3.34).


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