As the season for March quarterly results by listed companies is winding down, the evidence is showing that manufacturing and distribution companies continue their profitable run in spite of the ongoing pandemic.

Over 40 companies released their quarterly results of which 12 belonged to the manufacturing and distribution sector. Ten of these companies reported year-over-year growth in net income ranging between a low of one per cent to a high of. 443.1 per cent.

These include Fontana, Caribbean Flavours & Fragrance, Honey Bun, Salada Foods, GraceKennedy, Derrimon Trading, Jetcon Limited, Stationery and Office Supplies (SOS), and Mailpac Group. On the other hand, companies like Caribbean Producers Jamaica and Everything Fresh Limited reported steeper losses, due to lower revenues as a result of the ongoing effects of the pandemic.

Junior Market stand outs

Of note is the fact that the Junior Market companies were among the leaders, in terms of year-on-year growth in earnings. Fontana reported a 56.0 per cent increase in net profits to $366.7 million for the nine-month period ended March 31, 2021.

This outcome was driven by an 11.0 per cent (or $385.86 million) increase in revenue as well as a reduction in operating costs, due to the cost-cutting measures implemented by the company. Derrimon Trading, which reported a 68.3 per cent (or $62.55 million) expansion in its net income for the quarter ended March 2021 was another Junior market standout.

The company saw a 20.6 per cent increase in revenue owing to the acquisition of Marnock LLC, its New York-based subsidiary. On the foods manufacturing side, Honey Bun was able to grow its bottom line by 20.7 per cent to $111.58 million aided by the introduction of new products and an increase in demand for seasonal products.

Other Junior Market manufacturing and distribution companies that reported positive earnings were Jetcon, SOS, Caribbean Flavours & Fragrance and Mailpac Group Ltd. Mailpac benefited from strong revenue growth, while for Jetcon, CFF and SOS, all saw a decline in revenue.

Main Market leaders in manufacturing and distribution

On the Main Market, two manufacturing and distribution companies reported positive results, namely, Salada Foods and GraceKennedy (Food Trading Segment). Salada foods reported a 443.1 per cent increase in profits to $64.48 million for the six months ending March 2021, up from the $11.70 million reported in the same period of the prior year.

This was driven by an increase in 3.0 per cent revenues due to strong demand for Salada’s products both locally and overseas. The company also benefited from low input costs for some key raw materials.

GraceKennedy’s food trading segment was able to grow revenues by 6.5 per cent to $25.04 billion for the quarter, as demand for Grace branded products remained strong. This translated to a 22.8 per cent increase in profit before tax to $1.47 billion for the first quarter ended March 2021.

Since the start of the year, the JSE manufacturing and Distribution Index has risen by 24.12 per cent to 103.64 as of Friday, May 14, 2021. Sagicor Select Funds Limited Manufacturing and Distribution (SELECTMD) also released its earnings, reporting a turnaround from the previous year’s loss.

The fund reported a net profit of $500.87 million for the first quarter ended March 31, 2021 aided by an unrealised appreciation in the value of investments, as the prices of some listed manufacturing and distribution companies rose relative to the start of the year.

Improvements projected in the coming months

Manufacturing and distribution companies that are heavily dependent on tourism could also see an improvement in the coming months, due to the recent increase in the number of reported bookings to the island. As such, the sector should return to its pre-pandemic levels over the medium term as the spread of the virus is contained and the vaccination process becomes widespread on the island.