Paramount’s Earnings Continue to Decline

• The nine-month period ending February 2021 was a challenging period for Paramount as the company continued to battle the negative impact of the COVID-19 pandemic on its operations. Net profit declined by 43.1% (or $21.04Mn) to $27.74Mn as the general falloff in the transportation sector weighed down its lubricants division. At the same time, its food division suffered from the closure of educational institutions and the lockdown of the entertainment industry.
• Revenues contracted by 11.6% (or $133.87Mn)  to $1.02Bn, and other operating income fell by 52.6% (or $20.84Mn).
• This substantial falloff in income was largely softened by the company’s cost rationalization program, which saw a 14.3% (or $115.52Mn) and 7.7% (or $22.99Mn) reduction in direct and indirect expenses, respectively.
• Paramount’s revenues will continue to be adversely impacted in the short term by the re-tightened restrictions. However, it should gradually improve as restrictions are lifted allowing for the re-opening of schools and a rebound in economic activity and the entertainment sector.  
• Paramount’s stock price has declined by 3.4% year to date following a 35.3% falloff in 2020. The stock currently trades at a P/E of 70.0x earnings, well above the Junior Market Distribution average of 27.4x.

(Source: Paramount Trading Financials & NCBCM Research)