Gleaner Company's head office at 7 North Street, Kingston.
DB&G'S WINNER'S EDGE
The first quarter survey of local business and consumer confidence showed a record level of business confidence and favourable consumer confidence derived from recent declines in inflation and interest rates, the stabilisation of the dollar and record tourism inflows. The upbeat expectations for the economy augur well for sustained growth in local equities.
CORPORATE NEWS
The Gleaner recorded net profits of $365.8 million for the year ended December 2004, an increase of 58 per cent. Goodyear (Ja.) Ltd earned $50.9 million in net profits for the same period, 19.3 per cent below results of the prior year. Mobay Ice recorded $3.5 million in net profits for the year ended December 2004, a 75.5 per cent reduction over the prior year.
Year-end profits of Berger surfaced at $67.02 million compared with $81.77 million in 2003. Jamaica Producers registered $426.32 million in net profits for the year ended 2004, down 52.2 per cent.
At the same time, its subsidiary, Sunjuice Ltd, announced the recall of several batches of a product supplied to customers in the U.K. following the discovery of an empty syringe in a product. H&L's renounceable rights issue has been fixed at $26.00 per stock unit. GraceKennedy declared a dividend of $0.45 per share payable on May 27, 2005 to shareholders on record at May 4, 2005. Directors of Pegasus will meet on April 15, 2005 to decide on a dividend
payment.
COMPANY SPOTLIGHT: GLEANER COMPANY
The Gleaner Company reported $1.72 billion or 23 per cent higher revenues for the year ended 2004, buoyed by 15 per cent growth in sales and 257 per cent increase in surplus from the pension scheme. With total expenses increasing 18 per cent to $1.23 billion, operating profit surged 38 per cent ahead to reach $433.9 million.
The low interest rates environment triggered a 37 per cent fall in finance costs, which along with $130 million from sale of investments (exceptional item) pushed pre-tax profits 71 per cent above the comparative result for 2003.
After taxes and minority interests were considered, net profits surfaced at $365.8 million, or 30.20 cents per share compared with $231 million or 19.07 cents per share.
Growth in future profit is highly contingent on continued growth in Media Services, which currently contributes over 90 per cent of net profits. This will rest heavily on improved profits from Independent Radio and Print Media operations.
Modest improvements from Sangster's will also be a positive contributor. On the other hand, The Gleaner could continue to be adversely affected by its overseas companies. Although the group discontinued the production of Extra, the acquisition of the Voice has only pronounced losses for its overseas operations. The Gleaner also appears to be highly dependent on non-core operating income streams, which exposes profits to wide fluctuations.
Notwithstanding, at the current P/E of 9.23 after exceptional item and 12.2 before, there are modest gains to be realised from having Gleaner in one's investment portfolio.
RECOMMENDATIONS
The Winner's Edge recommends that investors add Gleaner, Courts, Lascelles, JBG, Pan Jam, Seprod and First Life to their investment portfolios. Also look to buy RJR, NCB and GKC for the long-term.
For further information on these and other stocks, please contact DB&G's stockbrokerage department at 1-888-CALL DBG or visit www.mydbg.com.
