Fontana remains in expansion mode, profit dips as tax holiday ends

 

 Fontana Limited which in final quarter 2023 opened its seventh store in Portmore St. Catherine is considering new locations for the chain of pharmacies and department stores.

Management indicated in the company’s annual report, released on November 29, 2024, that “The future of Fontana Limited lies in continued business growth with proportionate returns to stakeholders. To accomplish this, we will seek to capitalize on feasible opportunities to expand our footprint across Jamaica and expand our customer base.”





Roughly $100 million was spent on the Portmore store. Staff costs increased by 25 per cent  year over year as a result of the expansion, as well as the start-up costs associated with a new store (recruitment, training, uniform and other benefits).

In the financial year ended revenues grew 11 per cent over prior year, moving from $7.32 billion. This was driven by the growth in same store-sales coupled with the addition of the new store in Portmore that opened in November 2023.

Fontana’s staff complement increased by 13.6 per cent from 470 to 534 team members year over year. Net assets increased by 10.6 per cent mainly due to the acquisition of inventories and other assets for the new store, ending the year at $5.7 billion.

Management commented, “Our current ratio continued to improve reaching 3.2 in 2024, indicating our strong ability to meet our short-term liabilities. Our debt-to-equity ratio remained stable at 1.1.”  

Net profit for fiscal 2024 (financial year ended June 30) for Fontana Limited was $589.8 Million, representing a decrease of 10 per cent due primarily to the change in the taxation rate as well as the growth in operating expenses.

The chain’s operating profit was impacted by a 4.4 per cent growth in finance costs, all attributable to the new store. Profit before tax ended the year at $629.8 million saw a decline of 4.1 per cent when compared to the $656.8 million reported last year.

Total tax for Fontana increased to $40.1 million, up from $1.6 million in the prior year  due to increases in deferred taxation of $11.3 million, as well as corporate income tax for the January to June 2024 period of $28.8 million.

Fontana’s tax-free period of 5 years ended in January 2024, the company’s tax rate increased to 12.5 per cent, from 0 per cent (0 per cent for the first 5 years, 12.5 per cent for the next 5

Company earnings per share ended at $0.47 compared to $0.52 in 2023. Cash Flows and Liquidity Cash flows improved by 6.3 per cent, ending the year at $1.7 billion compared to $1.6 billion for the comparable previous period.

EBITDA continued its growth for the fiscal year. Our primary source of liquidity in 2024 included funds provided by operating activities ($763.9 million).

During the year, the company acquired fixed assets amounting to $196 million, repaid loans of $14.9 million and received net loan proceeds of $15.2 million.

Shareholder equity grew by $464.8 million, an increase of 19 per cent over last year, and this was after a dividend payout of $124.9 million.

Cash flows improved by 6.3 per cent, ending the year at $1.7 billion compared to $1.6 billion for the comparable previous period.

The company is expecting its best performance in December, with management noting, “We continue to record our best performance during Q2 (December quarter) and continue to go all out to ensure that we have what our customers need when they need it.”

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