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Jamaica | Feb 28, 2023

Rising expenses at Carreras clawing back profitability

/ Our Today

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Net profit year to date fell by 10% to J$2.74 billion

Durrant Pate/Contributor

Profitability at cigarette company, Carreras is being ploughed back by rising expenses.

Net profit for its combined three quarters ended December 31, 2022 dropped 10 per cent to J$2.74 billion relative to J$3.05 billion booked in 2021. Net profit for the December quarter closed at J$1.13 billion, which is down two per cent from the J$1.15 billion booked for the similar quarter of 2021.

Profit before income tax for the period under review closed at $3.68 billion relative to $4.08 billion in 2021. Taxation of J$938.14 million was incurred for the year to date compared to J$1.03 billion in 2021.

The earnings per share (EPS) for the period was J$0.56, down from the J$0.63 for the corresponding period of 2021. EPS for the December quarter amounted to J$0.23 (2021: J$0.24).

Mounting expenses

Total operating expenses for the nine-month period increased 28 per cent to J$2.14 billion compared to the J$1.66 billion reported in 2021. Of these expenses the most significant was administrative, distribution and marketing expenses which increased 28 per cent to J$2.14 billion (2021: J$1.66 billion).

Admin expenses for the December quarter amounted to J$832.02 million (2021: J$665.52 million). Revenues for the year-to-date period closed on J$12.53 billion, representing a seven per cent increase relative to the J$11.72 billion booked in 2021.

Revenue for the December quarter inched up 10 per cent to J$5 billion (2021: J$4.53 billion). Cost of operating revenue also increased year-over-year by 10 per cent, amounting to J$6.73 billion, up from the J$6.09 billion booked 12 months earlier.

As such, gross operating profit grew by three per cent to total J$5.80 billion relative to the J$5.63 billion in 2021. Gross operating profit for the December quarter improved nine per cent to J$2.35 billion (2021: J$2.16 billion).

Profit from operation

Profit from operation amounted to J$3.66 billion (2021: J$4.08 billion) for the nine months ended December 2022. Profit from operation for the quarter reflected a two per cent decline to J$1.50 billion compared to J$1.54 billion reported as at December 2021.

Interest income closed the period at J$37.32 million (2021: J$12.83 million) year to date. Interest expense closed at J$14.45 million (2021: J$13.78 million) for the period.

Total assets amounted to J$6.03 billion as at December 31, 2022, up from J$5.01 billion reported in 2021. This was mainly due to an increase in ‘Accounts receivable’ totalling J$2.38 billion (2021: J$1.61 billion).

The overall movement was tempered by a decline in ‘Cash and cash equivalents’ which amounted to J$2.4 billion (2021: J$1.78 billion). Shareholders’ Equity attributable to stockholders of parent amounted J$2.16 billion (2021: J$2.14 billion) with book value per share of J$0.444 (2021: J$0.441).

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