Trinidad: Massy makes $167m in profit in first quarter

By Trinidad Guardian

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(TRINIDAD GUARDIAN) – Massy Hold­ings Ltd has reg­is­tered a $167 mil­lion in prof­it af­ter tax for the first quar­ter (Q1) of the 2020 fi­nan­cial year.

In the com­pa­ny’s fi­nan­cial state­ment, Massy chair­man Robert Bermudez said, “Low­er ef­fec­tive tax rate (aris­ing from Bar­ba­dos tax re­forms in 2019) pro­duced an even high­er in­crease in prof­it af­ter tax (PAT) of 13 per cent to $167 mil­lion.”

The com­pa­ny al­so post­ed third- par­ty rev­enue of $3.27 bil­lion, two per cent above the pri­or year’s Q1 third-par­ty rev­enue.

The group’s prof­it be­fore tax (PBT) of $250 mil­lion was al­so eight per cent high­er than PBT in Q1 pri­or year. The or­gan­i­sa­tion’s earn­ings per share (EPS) saw an in­crease from $1.37 per share in the pri­or year to $1.57 per share in Q1 of FY 2020, which rep­re­sents a 15 per cent in­crease.

Bermudez said, “The group has start­ed to see the ben­e­fits of the new port­fo­lio struc­ture an­nounced in its 2019 an­nu­al re­port and an­nu­al gen­er­al meet­ing. The sig­nif­i­cant growth in most of the group’s port­fo­lios and lines of busi­ness (LoBs) is not a co­in­ci­dence.”

In the com­pa­ny’s 2019 An­nu­al Re­port, CEO Ger­vase Warn­er ex­plained: “Chair­men and LoB chair­men will fo­cus on pri­or­i­ties for their busi­ness­es and will no longer par­tic­i­pate in an ex­ec­u­tive com­mit­tee re­view­ing op­er­a­tions and mak­ing group-wide de­ci­sions for all units.

“Chair­men and their ex­ec­u­tives in port­fo­lios will fo­cus at­ten­tion on the strat­e­gy, risks and op­er­a­tions of their re­spec­tive port­fo­lios to dri­ve stronger en­gage­ment with em­ploy­ees and cus­tomers to pro­duce ex­cep­tion­al fi­nan­cial re­sults.”

The struc­tur­al changes, ac­cord­ing to Warn­er, will “help our busi­ness­es sur­vive and thrive by be­ing bet­ter able to change be­fore a cri­sis forces us to.”

Warn­er added the changes will al­so re­sult in im­proved cash flow for share­hold­ers and more trans­par­ent re­port­ing on the in­dus­try port­fo­lios which will pro­vide a clos­er in­sight for in­vestors on the per­for­mance of the busi­ness­es.

“We be­lieve that more trans­par­ent re­port­ing be­yond what is re­quired by ac­count­ing stan­dards will al­low our share­hold­ers to make bet­ter de­ci­sions on their in­vest­ment in the Massy share,” said Warn­er.

Bermudez added, “The port­fo­lio struc­ture of the group is pro­vid­ing more au­ton­o­my and par­tic­i­pa­tion for ex­ec­u­tives and pro­fes­sion­als in the port­fo­lios to dri­ve the suc­cess of their busi­ness­es as they un­leash their cre­ativ­i­ty and am­bi­tion.

“Ex­ec­u­tives are op­er­at­ing with greater fo­cus and have in­ten­si­fied the time spent with their lead­er­ship teams and staff, fo­cus­ing on strat­e­gy, op­er­a­tions and peo­ple.”

In Q1 of 2020, the com­pa­ny’s PBT growth from the in­te­grat­ed re­tail, mo­tors and ma­chines and gas prod­ucts port­fo­lios were 10 per cent, 15 per cent and 27 per cent re­spec­tive­ly.

How­ev­er, Bermudez not­ed that the adop­tion of IFRS 15 (rev­enue recog­ni­tion) and IFRS 16 (leas­es) had a neg­a­tive im­pact on rev­enue and ex­pens­es for the re­tail busi­ness and re­duced the PBT im­prove­ment for in­te­grat­ed re­tail to four per cent.

He said that the fi­nan­cial ser­vices and the ITC LoBs al­so re­port­ed ex­cel­lent PBT growth of 38 per cent and 37 per cent re­spec­tive­ly. Massy’s port­fo­lios and op­er­at­ing LoBs added $37.6 mil­lion of PBT above Q1 2019.

How­ev­er, the busi­ness lines for strate­gic and oth­er in­vest­ments saw a de­cline of $26.1 mil­lion ow­ing to loss of in­come from di­vest­ed in­ter­ests in se­cu­ri­ty com­pa­nies and a re­duc­tion in prof­it from Massy Wood (as client ac­tiv­i­ty de­clined ver­sus the same pe­ri­od in FY 2019).

Mo­tors and ma­chines and in­te­grat­ed re­tail port­fo­lios gen­er­at­ed strong im­prove­ments of 10 per cent and five per cent re­spec­tive­ly.

The rev­enue growth from dis­tri­b­u­tion com­pa­nies of 10 per cent out­per­formed the two per cent rev­enue im­prove­ment from the re­tail com­pa­nies.

Bermudez not­ed that Massy Stores Trinidad was with­out two stores in Q1 2020, which were op­er­at­ing in Q1 2019, and this re­sult­ed in a loss of ap­prox­i­mate­ly five per cent of its rev­enue in Q1 2020.

“All Massy Stores Rev­enue lines were neg­a­tive­ly af­fect­ed IFRS 15, which re­quires loy­al­ty points to be de­duct­ed from rev­enue (loy­al­ty points were pre­vi­ous­ly booked to cost of sales).”

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