Chairman of Fontana Limited, Kevin Chang, indicates that the company has been significantly impacted by the ongoing COVID-19 pandemic, but that continued consumer support has bolstered results.
Net profit for March 2020 was $21.59 million, down from $29.77 million in March 2019. For the nine month period to March, profit was $234.63 million, compared to $ 204.67 in March 2019.
Revenues for the March quarter were $1.17 billion, representing a 33 per cent increase over the $885.1 million achieved in the corresponding quarter of the previous year.
Administrative and other expenses were significantly higher $324.69 million during the quarter under review, compared to $245. 41million in the comparable quarter last year.
The chairman attributed this to an increase in operating expenses for the quarter of 32 per cent over the prior year caused by the opening of the Waterloo location, a new store in Kingston.
“We anticipate that the COVID-19 fallout will continue to affect business for the remainder of 2020.”– Chairman of Fontana Limited, Kevin Chang
The company’ Waterloo Square location’s expenses were $79.7 million of the total increase of $84.6 million.
Year to date for the nine months, revenues were $3.49 billion, up from $2.80 billion in 2019.
Chang cited government restrictions on opening hours and the corresponding effect on consumer behaviour as affecting overall business in the second half of March 2020.
He said, “As an essential service, Fontana has been fortunate to be able to support the economy and our customers by continuing to operate during this difficult period.”
Chang noted that operating profit increased by 69 per cent from $34.2M recorded last year to $57.7M in the quarter.
He stated that the decline of 27 per cent in profit before tax, over corresponding period last year, was due to a $26.4 million unrealized loss in the value of our short-term unit trust investment this quarter.
Overall, he said the dip in value is in keeping with the decline in financial markets locally and globally.
Total assets at the end of the quarter stood at $3.2 billion, up from $1.8 billion in the comparative prior period, reflecting an increase of 75 per cent.
This was due primarily to the increase in fixed assets for the new Waterloo store, as well as the impact of IFRS 16.
Shareholder’s equity grew to $1.45 billion, up from $1.16 billion or 25 per cent over prior year.
The company chairman noted in the comments posted on the JSE, “the combination of restricted hours imposed by ongoing curfews and the drastic decline in economic activity has resulted in a decline in consumer purchasing power.
“We anticipate that the COVID-19 fallout will continue to affect business for the remainder of 2020. We continue to monitor the situation daily and are implementing changes to meet the challenges ahead and to become a leaner and more efficient company.”
Chang disclosed that Fontana was in the “advanced stages” of developing and implementing a new integrated POS and accounting system which will improve efficiencies, controls and the customer experience.