Fontana delivers massive Christmas gains .Wednesday, February 17, 2021
EVEN with COVID-19 reducing the sales of several retailers across the island, pharmaceutical retailing giant Fontana Limited overcame the headwinds of the period to generate a net profit of $293.8 million for the first six months up to December and surpass the $276.5 million earned over the entire 2020 financial year (July 2019 - June 2020).
The company, which operates six locations across the island, saw its second-quarter revenue peak 10 per cent higher at $1.5 billion as its flagship Waterloo Square location drew in packed parking lots full of customers in the Yuletide season. With a year in full operation, the 35,000 square foot location has served as a strong catalyst for sales even as the company's higher-margin products decline while lower-margin products gain traction, particularly in the health department, along with higher transaction volumes. This was evident in the growth of gross profits by 6 per cent to $621.9 million in nominal terms, though amidst a slight decline of 40.3 per cent compared to the 41.8 per cent.
Total expenses declined by 6 per cent to $355.6 million, which the principals credited to successful cost control measures that saw a 27 per cent reduction in selling expenses to $27.3 million and administrative expenses closing at $328.4 million. As a result of these efforts, operating profit grew by 31 per cent to $266.3 million. Due to the lease liability related to International Financial Reporting Standards (IFRS) 16, finance costs rose by 42 per cent to $34.7 million based on an additional cost of $11.9 million. With other income flat for the quarter, net profit increased by 28 per cent to $248.6 million, which propelled the company's 6-month net profit by 38 per cent to $293.8 million. This left the six-month earnings per share at $0.24 compared to the prior $0.17 or $0.22 for the full year.
Total assets for the company grew by 3 per cent to $3.41 billion as current assets rose by 15 per cent to $1.7 billion, which was driven by cash and cash equivalents of $822.8 million. Cash flow from operations was up by 23 per cent to $391.7 million, which nearly rivalled the performance of the full year. Total liabilities declined by 9 per cent to $1.7 billion, with shareholders' equity growing by 18 per cent to $1.7 billion.
During the quarter, local investment firm QWI Investments Limited increased its exposure to Fontana by becoming the number 5 shareholder with 5,362,040 shares or 0.43 per cent of the company. This is in contrast to Mayberry Jamaican Equities Limited which disposed of its top 10 stake, firstly to Sagicor Select Funds Limited and then to St Elizabeth International Holdings Limited.
“We are thankful for our dedicated team members who continue to go above and beyond the expectations of our customers in these difficult times. We thank our customers for their continued goodwill and their unwavering support — undoubtedly, without them our sales would not continue to grow as they have during this pandemic. We are committed to remaining resilient, adaptable, and are hopeful for the future. Our balance sheet and significant cash on hand will anchor Fontana through the continued challenges of the current pandemic while allowing us to continue to explore acquisitions and expansion for the brand,” said Chairman and Chief Executive Officer Kevin O'Brien and Anne Chang, respectively.
Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at https://bit.ly/epaper-login