AMG Sees Slight Fall Off in its Bottom Line YTD  

• AMG Packaging & Paper Limited recorded a net profit of $32.56Mn for the third quarter that ended May 31, 2023. This represents a 19.2% yoy increase in profitability. However, despite this increase, profit for the nine months ending May 2023 decreased by 6.7% to $74.80Mn due to the fall-off in its quarter-one performance.
• Revenue for the quarter was up by 11.7% yoy to $281.02Mn. Similarly, revenues for the nine months increased by 5.9% yoy $781.84Mn.
• Gross profit for the quarter was up 39.7% to $88.57Mn while for the nine months ending May 31, 2023, it's up 17.8%. This was primarily driven by an increase in its property insurance as well as the major servicing of its corrugator.
• Despite this increase, gross margin improved to 31.5% (from 25.2%) and  29.9% (from 26.9%), over the three and nine months periods, respectively as the rate of the sales increase outpaced increases in manufacturing cost.
• Total expenses for the nine months ending May 31, 2023, increased by 25.0% yoy to $131.31Mn. Total expenses for the quarter increased by 20.6% yoy to $43.52Mn. The main contributing factors were the increase in depreciation as well as the cost associated with participating in the Jamaica Manufacturers and Exporters Association (JMEA) EXPO.
• AMG’s stock price has decreased by 13.5% since the start of the calendar year. The stock closed Tuesday’s trading session at $2.51 and currently trades at a P/E of 13.2x which is below the Junior Market Manufacturing Sector Average of 18.8x.
• The company recently pulled back from its plan to produce boxes made from recycled paper because the expected cost savings are anticipated to be slim. Additionally, the company has been challenged with the timely shipment of its raw material and has been closely monitoring the situation so that sales are not affected. As such, the company has around three months’ worth of inventory which should be able to sustain production until the next shipment arrives.

(Source: JSE)