By Anthony Morgan

THE ANALYSTS are surprised at Fontana Pharmacy’s dramatic profit and revenue rise for their first quarter ending September 30, 2020.  Profit more than doubled for the period, growing to $45 million from $18.4 million a year earlier. Revenue also surpassed $1.1 billion over the July-September quarter, up from $920 million.

Senior Wealth Advisor at Ideal Portfolio Services, Orick  Angus said the figures beat market expectations, despite the company being considered essential during the ongoing pandemic.

Angus pointed out that the company benefited from increased prescription and retail sales, while at the same time it kept expenses growing at a slower rate. Fontana’s retail sales covers cosmetics, household and school supplies. During the quarter, Fontana’s operating expenses increased by 5%, well below the 21% growth in revenue compared to 2019.

“I expected them to do well, but as for the magnitude, it was a little surprising,”  said Angus.

Angus however reasoned that the new Waterloo location in Kingston has increased the company’s brand presence and awareness, which led to more sales.

He added that based on the company’s portfolio and outlook, he recommends Fontana as a viable investment for shareholders right now. In fact, the company just paid out some $100 million in dividends against its annual profit of $276 million. The dividend at $0.08 per share was double the distribution of $0.04 declared last year, said Angus who added that the money was paid out as an incentive to shareholders that stuck with the stock during the earlier stages of the pandemic. 

Meanwhile, Research and Strategy Analyst at Sagicor Investments, Jodian Aris agreed that the July to September results were unexpected. 

“I know we would probably see an uptick with the pandemic but it’s still a surprise,” she said.

What’s more, the company recorded an increase in revenue and profit despite increased finance costs associated with the buildout of the Waterloo Square location. Finance costs totaled $51.4 million from $14.2 million a year earlier.

She added that the new location has attracted new customers which lessens the impact of higher costs.

With heightened activity expected over the holiday season, THE ANALYSTS have high expectations for Fontana’s current quarter.

-THE END-

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