SEPROD’s “SERGE” and CARRERAS’ Profit “Puff” Lead M&D Earnings

  • The March 2026 quarter earnings season is in full swing, and Local Manufacturing and Distribution (M&D) Stocks are grabbing early headlines. Main Market M&D stocks, Seprod Limited (SEP) and Carreras Limited, have kicked it off with strong quarterly earnings. At the same time, results are mixed for Junior Market M&Ds, with growth from Atlantic Hardware & Plumbing Company Limited (AHPC) and Fontana Limited (FTNA), met by a slowdown from Woodcats International (WOODCATS).
  • Seprod Limited (SEP) posted a 94.0% surge in quarterly net profit to $1.65Bn, as one-off gains and lower taxation expenses outweighed the dip in the group’s revenues. Core revenues declined by 3.4% to $36.42Bn amid continued Hurricane Melissa drag on the Hotels, Restaurants, and Catering (HORECA) channel. With direct expenses down by 3.3% to $9.70Bn, gross profit closed at $9.72Bn (-4.0%), and gross margins narrowed from 26.7% to 26.6%. However, the one-off gain for the divestment of a subsidiary, International Biscuits Limited (IBL), saw the group’s other operating income jump 8-fold to $952.25Mn. This and $475.52Mn in tax savings contributed to the surge in earnings. The filings did not disclose the source of the tax savings.
  • Carreras Limited (CAR) also puffed up strong earnings. Its net profit surged by 78.0% to $2.51Bn, driven by strong revenue growth and cost management. Revenue grew by 57.3% to $6.29Bn. While the cost of sales grew faster than revenues (+62.1%) and gross margins narrowed marginally from 59% to 58%, gross profits increased by 54.0% to 4.02Bn. Notably, CAR’s strong earnings continue to support its higher dividend distributions. On May 11th, the company declared an interim dividend of $0.46 per share, payable on June 18th to shareholders on the register at May 27th, which is 14.2% higher than the previous distribution.
  • As at May 19th, SEPROD traded at $82.78, is down 1.4% and has a 11.53x P/E ratio. Meanwhile, CAR traded at $22.44, which is up 23.90% YTD and trades at a P/E of 14.15x. Both stocks trade below the 17.35x peer average for Main Market M&D stocks.
  • On the Junior Market Front, Atlantic Hardware & Plumbing Company Limited (AHPC) stood out, with earnings tripling to $74.25Mn on strong revenue growth, improved gross margins and lower finance costs. Revenues climbed 49.5% to $687.1Mn on robust post-Melissa demand. Operating expenses rose 74.4% to $116.8Mn on higher staff, lease and motor vehicle expenses tied to its agro-distribution expansion. Nonetheless, operating profit still advanced 27.9% to $97.5Mn, contributing to the bottom line. Notably, Finance costs decreased by 46.7% to $23.3 million, due to significant debt repayments from the previous year, aided by including funds from its February 2025 Jr Market IPO and the sale of the 7A Ashenheim Road property. Tax expenses were nil compared to $8.14 million in Q1 2025, reflecting the 100% tax break from its Jr Market listing. At $1.84, the stock is up 7% year-to-date, and its P/E ratio of 26.67x is above the 17.28x peer median for Energy Material and Infrastructure (EMI) stocks.
  • Fontana Limited (FTNA) also grew its earnings to $114.1Mn (+11.0%), with revenue rising 17.7% to $2.63Bn on same-store sales growth and contributions from its four recently integrated Monarch Pharmacy locations. Gross margin held steady at 36.9%, although EBITDA softened to $795.2Mn from $857.2Mn as operating expenses rose 18.2% on one-time Monarch integration and amortisation charges. At $6.48, FTNA shares are down 16.88% YTD and its P/E ratio of 17.51x is marginally below the 23.34x average for Junior Market Distribution Stocks.
  • Bucking the trend, Woodcats International Limited’s (Woodcats’) earnings splintered by 13.7% to $14.30Mn, as the trailing impact of Hurricane Melissa, other climatic factors, and sales seasonality weighed on top-line performance. Revenues declined 5.3% to $241.88Mn, while administrative expenses rose 7.8% to $67.73Mn on one-time costs tied to its recent Junior Market listing. Additionally, finance costs climbed 33.6% to $6.10Mn, further compressing the bottom line. While Woodcats paid $4.77Mn in taxes, it is set to benefit from a five-year income tax exemption as a newly listed Junior Market entity, which should enhance earnings going forward. The company is also set to gain from its plant modernisation program and the new "waste-to-revenue" initiative launched in Q1. Management is also exploring export opportunities in the Eastern Caribbean. However, rising oil and fuel prices may strain the supply chain and logistics costs, potentially impacting margins as the company balances pricing with customer relationships. At $0.73, Woodcat’s stock is down 12.0% YTD and trades at a P/E of 10.43x, which is below the 15.01x average for Jr Market Manufacturing Companies.

(Sources: Company Filings via the JSE & NCBCM Research)