Seprod Reports Contraction in Earnings Largely Due to a Falloff in A.S Bryden’s Performance

• Despite revenue growth, Seprod’s net profit attributable to shareholders declined by 6.6% (or $123.97Mn) to $1.76Bn for the six months ending June 30, 2024, compared to the prior year.
• The falloff in net profit was primarily due to the performance of its Trinidad subsidiary, A.S. Bryden Holdings (ASBH), which saw net profit attributable to shareholders declining by 41.3% (or TT$20.40Mn) due to expiration of one-off benefits which the company had in 2023 and higher than planned finance costs to acquire foreign exchange.
• Revenues for Seprod amounted to $58.33Bn, a 7.1% (or $3.87Bn) increase, compared to the $54.46Bn in 2023. The business benefited from a 27% increase in export sales and has been regaining lost margarine market share (in the domestic and export markets), which occurred during 2023 when the company embarked on the modernisation of its margarine plant.
• Direct expenses also increased 6.8% (or $2.77Bn); however, revenue growth outpaced the increase in direct expenses causing the gross margin to rise slightly to 25.6% of revenues from 25.4% in 2023.
• The overall effect of revenue growth was tempered by a 9.1% (or $890.38Mn) increase in operating expenses to $10.63Bn and a 21.8% (or $315.10Mn) increase in finance cost. The increase in finance cost included costs associated with foreign exchange, which has been increasing largely due to foreign exchange shortages in Trinidad and Tobago.
• Seprod’s stock price has appreciated marginally by 0.5% since the start of 2024 and closed Monday’s trading session at $80.11 per share. At this price, the stock trades at a P/E of 20.6x, which is above the Main Market Distribution & Manufacturing sector average of 13.1x.

(Sources: JSE & NCBCM Research)