Home' Trinidad and Tobago Guardian : December 14th 2014 Contents DECEMBER 14 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
This week, we turn our attention
to the third quarter results for
three companies involved in the
food related business: Angostura
Holdings Ltd, National Flour
Mills Ltd and Flavorite Foods
Angostura Holdings Ltd
A look at AHL s third quarter results revel
some interesting shifts in the contributions
from its two major lines: alcohol and non-alco-
Sales of alcohol products declined from
$125.27 million in the third quarter of 2013 to
$107.66 million in the same period in 2014.
This performance led to a decline in segment
profit by $10.5 million to $23.05 million.
More likely than not, the somewhat seasonal
nature of its business along with competitive
and even non-market factors largely accounted
for this decline. However, the disproportionate
contraction in its profit margins from 26.8 per
cent to 21.4 per cent, suggests that non-pre-
mium brands made up a greater percentage of
sales during the current period.
In the case of its non-alcohol business, the
quarterly contraction in sales was much less
pronounced, moving to $38.3 million in the
current quarter from $41.57 million in the 2013
session. Despite this 7.9 per cent fall, operating
profits rose by almost 3.0 per cent to $21.6
Perhaps, this is a result from the cachet of
Angostura® Bitters and its various line exten-
This profit shift may also reflect the higher
profitability from the recent commissioning
of its dedicated bitters production line?
On a year-to-date basis, revenues for the
2014 period registered at $437.8 million versus
$459.8 million in 2013. As shown in the table,
non-alcohol sales and profit continued to
improve. In 2014, this division accounted for
23.3 per cent of revenues while contributing
a robust 41.1 per cent to operating profit.
In the 2013 period profits were boosted by
several one-off items relating to the sale of
associates and the settlement of international
and local debts. This accounts for a reduction
in the EPS to $0.45 from 2013 s $1.15.
Perhaps, the results for the last quarter of
2014 might also be boosted by the final set-
tlement of the $984.6 million receivable from
its parent company, CL Financial?
In the fourth quarter and in the spirit of the
Christmas season, sales of premium products
are more vibrant.
In this regard, the recent developments, such
as the recent launch of a new premium rum
(Siegert s 190), a line extension of bitters range
(Amaro di Angostura liqueur) and the relocation
of its retail outlet (now called "Solera") to
Woodbrook should give both revenues and
profits an added boost.
When considered together, these factors,
along with the increased likelihood that the
majority shares in the company, currently
owned by CL Financial and Clico interests,
could be sold sometime in the near future seem
to provide reasonable justification for keeping
the share price edging closer to the $13.00
Readers who follow this share may recall
that, over the period October 22 to 28, 2013,
115,757 shares in AHL traded at $13.50. Since
then, that price has not been attained. In late
January 2014, the share could be bought for
as little as $10.75.
National Flour Mills Ltd
NFM s share price started 2014 at $0.95 and
peaked at $1.31 in early October; the share is
regularly traded and was recently quoted at
Sales for the third quarter 2014 rose by 8.4
per cent to $122.3 million from last year s $112.9
million. Even so, gross profit declined by almost
18 per cent to reach $18.1 million from last
year s $22.06 million.
During this quarter, "other income" increased
by 100 per cent to $5.4 million from last year s
$2.7 million. This improvement, along with a
modest decline in administrative expenses and
a 7.6 per cent fall in selling and distribution
costs, helped operating profits to register at
$9.18 million; this represented a 5.8 per cent
decline from the $9.74 million reported for the
The 51 per cent contraction in financial
expenses to $0.98 million from the previous
level of $2.02 million helped NFM deliver a
pre-tax profit of $8.19 million; this represented
a 6 per cent improvement over the $7.73 million
earned for the third quarter in 2013.
At the after-tax level, the 2014 result was
$7.83 million versus $7.39 million in 2013; these
figures reflect quarterly EPS of $0.065 and
For the nine months ended September 2014,
sales were marginally lower at $335.5 million
from the 2013 level of $337.7 million. Gross
profit was also lower at $56.7 million versus
$58.4 million in the comparative 2013 period.
Three main factors helped NFM produce
better results for the 2014 period. Other oper-
ating income moved from $5.9 million in the
2013 period to $7.70 million in the current ses-
Financial expenses declined to $5.14 million
from $8.08 million previously. Finally, taxes
fell to $756k from $1.01 million in 2013.
On the basis of these changes, net profit
improved to $14.17 million from $12.07 million
in the comparative 2013 period. These results
translated to EPS of $0.118 in 2014 versus $0.10
For the last quarter, the company is expecting
that lower commodity prices combined with
improvements in operational efficiencies would
help it deliver an improved performance for
the current quarter and the full year 2014.
The chairman reported, without giving fig-
ures, that all "gifts to the nation" discounts
up to September 30, 2014 have been settled
by the GORTT.
A more thorough statement might have
affirmed that: "As at September 30, 2014, the
cost of discounting selected products to con-
sumers, as per GORTT directives, was $X mil-
lion; the full amount was repaid by GORTT on
September XX, 2014."
Such a statement is more complete and, as
the legal fraternity likes to say, is characterised
by its avoidance of any doubt.
Perhaps, a similar discounting exercise is
scheduled for the Christmas season?
Flavorite Foods Ltd
Flavorite Foods Ltd (FFL) continues to con-
solidate its operations by closing its unprofitable
segments while concentrating on building its
more viable units. In this quarter, we see the
effects of the closure of its St Lucia operations,
which consumed almost $820k.
In 2013, the closure of the Barbados operations
together with other one-time adjustments cost
the company $1.134 million up to September
2013 and $1.499 million for the full year.
The company uses distributors in order to
maintain representation in those markets.
These streamlining initiatives are expected
to bear fruit as the company concentrates on
its profitable ice cream business in Trinidad
and sees a great future in continuing to build
its new subsidiary, Romike Ltd.
For the third quarter, sales declined marginally
to $39.4 million from $40.8 million in the same
period in 2013. Much of this falloff could be
attributed to the closure of the St Lucia operation
in the third quarter of this year.
Lower pre-tax profits would also have been
influenced by the rise in both materials and
labour costs. However, the favourable tax adjust-
ment of $242k was largely responsible for lifting
after-tax profits up to $601.1k for the quarter.
At the year-to-date period, sales were 2.4
per cent greater than for the comparative 2013
period. Also, the loss from discontinued oper-
ations was more than $300k lower in the current
period. In addition, taxes were almost $858
lower than in the 2013 period.
These beneficial changes helped FFL report
an after-tax profit of $1.46 million for the nine
months to September 2014; this compares
favourably with the profit of $486k for the
same period in 2013.
These results translate into EPS of $0.19 for
2014 versus $0.06 for the 2013 period.
Assuming that it continues to hold the line
on major cost increases, FFL should be able to
report a reasonable profit for the full-year 2014.
As at September 2014, total assets were $124.6
million; this reflects a decline of $4.6 million
from the December 2013 figure of $129.2 million.
This decline mainly reflects the closure of the
St Lucia operations.
Based on a 2013 dividend of $0.10, the current
share price of $4.80 gives investors a yield of
2.08 per cent.
(This company was once controlled by CL
Financial. Majority ownership (80.57 per cent)
now rests with Stone Street Capital Ltd (The
Monteil Family) with the T Geddes Grant Pen-
sion Fund Plan, which owns 5.5 per cent (427,777
shares) of the outstanding shares, being the
other major stockholder.)
3Q results for
• Angostura Holdings
• National Flour Mills
• Flavorite Foods
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