Fontana increases first-quarter profits by 146%

Fontana increases first-quarter profits by 146%

Revenues total $1.1 billion for the period

Business reporter

Friday, November 27, 2020

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Despite the economic disruption caused by COVID-19, pharmacy and retail chain Fontana Limited was able to record significant growth for its first quarter ended September 30, 2020.

Net profit for the period under review increased to $45.2 million, a 146 per cent improvement from the $18.4 million recorded in the previous corresponding period.

Revenues for the quarter also increased by 21 per cent to $1.11 billion, up from the $920.7 million recorded in the corresponding quarter of the previous year. In addition, operating profit had a massive 322 per cent increase, moving from the $20.2 million previously recorded to $85.2 million.

Commenting on the performance, Chief Executive Officer (CEO) Anne Chang said, “Despite the impact of COVID-19 and reduced operating hours, we saw increases in prescription sales, transaction volumes and average basket sizes. We continue to be encouraged by the growth in new customers, which is driven by our new Waterloo Square location as well as the strength of our brand.”

During the quarter under review, the company's operating expenses marginally increased by 5 per cent, which was attainable through concerted efforts to contain costs and improve efficiencies.

Finance costs were also impacted primarily by the foreign exchange losses recorded in relation to the revaluation of the lease liability (IFRS 16) accounting for $22.8 million of the overall loss.

Meanwhile, total assets at the end of the quarter stood at $3.3 billion, up from $2.9 billion in the comparative prior period, reflecting an increase of 13 per cent. Shareholder's equity grew to $1.43 billion, up from $1.28 billion or 12 per cent over prior year. This, Fontana said, is after providing for dividends of $99.95 million declared in the period.

The company added that, despite the encouraging first quarter results, Fontana continues to be impacted by COVID-19 as it relates to its operating hours and reductions in disposable income of its customers.

“Our pivoting efforts in providing convenient customer service options continued into this quarter, supporting our customers wanting to shop on their own terms. We are responsive and accommodating to their demands and will deliver the supplies they want in the channel that best suits their needs,” it said in its report to shareholder.

Fontana further indicated that while it had to reduce its sponsorship budget, it was still able to support the Mount Olivet Boys Home, Gospel JA Amazing Race grand finale, the Television Jamaica virtual show, the Ministry of Health social media competition, as well as made back-to-school donations to the St Barnabas ECI centre. It added that it continues to support its Fontana Food for Families initiative as well as the Unicycle School Uniform initiative.

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