Durrant Pate/Contributor

Pharmaceutical chain Fontana Limited is reporting another record-breaking quarter in which net profit closed on an all-time high for the period ended December 31, 2023

Net profit closed the quarter at J$341 million, surpassing the $323.8 million earned last year, breaking another record for Fontana. This represented $0.27 earnings per share versus $0.26 for the prior corresponding quarter.

For the half-year, net profit was J$402 million, down 2.0 per cent from the same prior period. Revenues for the quarter under review was a record J$2.35 billion, representing an increase of 10.2 per cent over the J$2.13 billion for the corresponding quarter of the previous year.

Transaction count and average spend per customer both grew by 10.8 per cent and 1.5 per cent, respectively. Gross profit also increased to J$953.5 million or 13.9 per cent higher than the J$836.9 million recorded in Q2/2022.

Capitalising on economies of scale

This was due to increased revenues and an overall improvement in gross margins by 3.4 per cent, as the pharmaceutical chain continue to capitalize on economies of scale in procurement, and the efficiencies from Fontana’s new point of sale system. Operating expenses increased by 20.7 per cent to J$592.2 million, up from J$490.5 million over prior year.

Apart from the expenses of opening a new store, the company also incurred costs in preparing to comply with the new Data Protection Act 2022. Like other businesses, Fontana continues to face increased staff costs, as it strives to improve staff retention and build bench-strength for future growth.

There was a significant increases in security costs and insurance rates, which also impacted operating costs. Despite these factors, operating profit increased to J$361.3 million, up 4.3 per cent from the J$346.5 million earned last year.

Marginal increase in finance costs

Finance costs increased marginally by 1.7 per cent to J$54.9 million, compared to J$53.9 million in the prior corresponding quarter. Other income saw an 11 per cent increase to J$34.7 million compared to J$31.2 million earned last year.

This is expected to grow as other income streams come onboard with the new Portmore branch, the seventh store in the chain, which was opened on November 8, 2023. Short-term investments continue to yield relatively good returns.

Total assets at the end of the quarter stood at J$5.8 billion, up from J$5 billion in the previous comparative period, reflecting an increase of 15 per cent. Cash and cash equivalents remain favourable at J$1.66 billion, compared to J$1.68 billion for the pervious comparative period.

According to the December 2023 audited financial statement, shareholder’s equity grew to J$2.7 billion, up from J$2.4 billion or 11 per cent over the prior year. January 2024 marks the end of Fontana’s first five years on the junior market of the Jamaica Stock Exchange.