Net profit grew by 43.3% during September first quarter

Durrant Pate/Contributor

Pharmaceutical chain Fontana is now seeing a shift in its sales mix with better growth from higher margin items such as stationery.

The company is reporting its best back-to-school sales season since the start of the pandemic.

Revenues for the September first quarter is up 25.8 per cent to J$1.64 billion over the J$1.3 billion for the corresponding quarter of 2021.

Net profit for the quarter grew by 43.3 per cent, closing at J$87.6 million compared to the J$61.1 million earned last year. These represented J$0.07 earnings per share versus J$0.05 for the prior period.

The net profit margin increased from 4.7 per cent prior year to 5.3 per cent in the current year. Gross profit jumped by 33.4 per cent from J$441 million in the first quarter of last year to $589 million in the September 2022 quarter.

Gross profit margin was 35.8 per cent compared to 33.8 per cent last year, as Fontana continues to recover from the pandemic-related challenges and benefits from improved international freight rates.

Big jump in operating expenses

Operating expenses for the period under review increased by 35.3 per cent to J$464 million, up from J$343 million over prior year. Staff costs were the main driver, as the operating hours returned to their pre-pandemic norms, which required additional man-hours.

In addition, the pharmaceutical chain hired more staff with the opening of its new warehouse facility. In preparation for the new state-of-the-art Point of Sales system, Fontana encouraged customers to redeem their loyalty points through increased advertising and promotions.

Despite this, the company’s operating profit increased by 26.9 per cent to J$124.5 million this quarter. Finance costs grew by 4.7 per cent, ending the quarter at J$54.2 million compared to J$51.8 million in the prior quarter. This was impacted primarily by the loan interest associated with the bond issued in December 2021.

Total assets at the end of the quarter stood at J$4.7 billion, up from J$3.9 billion in the previous comparative period, reflecting an increase of 20.3 per cent. Cash on hand remains favourable at J$1.35 billion, an increase of 61.7 per cent over last year.

Shareholder’s equity grew to J$2.2 billion, up from J$1.9 billion or 20.5 per cent over the prior year.