Ended a profitable year with revenues of $38.07 billion

Manufacturing conglomerate Seprod ended its 2020 financial year on a high, reporting big pre- and post profits despite the challenges faced as a result of COVID-19.

Net profit for the year ended December 31, 2020 amounted to $3.10 billion, which represented a massive jump of 218 per cent over the $973.33 million reported in 2019. For the December quarter, net profit closed at $614.19 million, coming from the $595.59 million posted the previous year.

Profit before taxation increased by a whopping 162 per cent to $3.64 billion coming from the $1.39 billion reported in 2019. Profit before taxation for the fourth quarter amounted to $710.04 million, coming from the $99.34 million posted for the same period in 2019.

Net profit from continuing operations was up by a creditable 86 per cent year-over-year to $3.17 billion, coming from $1.71 billion posted in 2019. The company’s management reports that, “profit from continuing operations for the year include a one-off gain of J$762 million from the sale of a property that the Group was able to dispose of due to the consolidation and relocation of a distribution operation”.

The year also saw the company contracting its net loss from discontinued operations. The contraction for 2020 totaled $69.84 million, coming from the net loss of $732.31 million in 2019.

Given the consequent positive financial returns, earnings per share (EPS) for the year amounted to $4.22 relative to $1.33 for the corresponding period in 2019. EPS for the quarter amounted to $0.84 (2019: $0.81).

The 12-month trailing earnings per share amounted to $4.22. Seprod traded yesterday (February 9, 2021) at $67.61 with a corresponding P/E ratio of 16.01 times.

Revenue growth

For 2020, Seprod posted revenues of $38.07 billion, up from the 2019 posting of $32.69 billion, representing a 16 per cent increase year over year. Revenue for the quarter amounted to $9.41 billion relative to the $7.90 billion reported in 2019.

Commenting on its 2020 performance, the company’s management reports that, “this ended a good year that validated deliberate efforts made by the Board in prior years to focus on execution, a strong innovation pipeline and diversification of our revenue pillars. The pandemic has brought many challenges, but it has also offered opportunities for us to relook at how we operate, accelerated our digitisation process and is driving us to expand our innovation pipeline to include healthier options”.

Direct expenses increased by six per cent from $23.89 billion to $25.34 billion, resulting in gross profit increasing by 45 per cent to close at $12.73 billion (2019: $8.80 billion). For the quarter, gross profit closed the period at $2.129 billion (2019: $2.125 billion), a negligible 0.2 per cent increase when compared to the previous comparable period.

Other operating income totalled $1.47 billion compared to $1.31 billion in 2019, an increase of 12 per cent year over year. For the quarter, other operating income declined by 59 per cent to close at $467.97 million (2019: $1.14 billion).

Other operating expenses increased by 24 per cent to close the yearend period of 2020 at $9.09 billion (2019: $7.31 billion). As such, operating profit grew 82 per cent, moving from $2.80 billion in 2019 to $5.10 billion to close the yearend period of 2020.

For the quarter, operating profit totalled $1.29 billion (2019: $693.43 million). Finance costs amounted to $1.472 billion (2019: $1.465 billion), a one per cent decrease year over year.

For the quarter, finance cost closed at $599.48 million compared to $606.29 million in the prior comparative quarter. The management highlighted that, “the pandemic has had a negative impact on our operations, but the Group’s diversified portfolio has certainly allowed it to be resilient up to this point”.

“We have gone above and beyond the health protocol guidelines of the Ministry of Health and Wellness to ensure the safety of everyone that has to interface with the business and to ensure supply continuity to our customers and consumers,” the management reported.

As at December 31, 2020, total assets increased by two per cent to $37.14 billion from $36.50 billion a year ago. Non-current assets closed at $21.17 billion while current assets amounted to $15.97 billion compared to $14.43 billion posted in 2019.

The decrease in non-current assets was mainly attributable to a 62 per cent decrease in ‘right of use assets,’ which ended at $397.49 million (2019: $1.04 billion). Additionally, the increase in current assets was mainly due to an 11 per cent increase in ‘trade and other receivables’ which amounted to $5.83 billion, relative to the $5.24 billion reported 12 months prior.