The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods suffered a near-63 percent profit decline for the quarter to end-July 2018 as the hangover from its prior financial year carried over into the new one.

Franklyn Butler, the BISX-listed food retail and franchise group's chairman, blamed the decline on "specific issues rather than an overall deterioration in performance", although he did not identify them. He told investors the group was "confident" all problems would be resolved in the short to medium term.

Profits for the three months to end-July fell year-over-year by almost two-thirds, from $1.305m to $485,000, with net operating profit down 61.4 percent to $533,000 compared to $1.381m the year before.

The decline was caused by a $2m-plus rise in the cost of sales, which dropped gross profit by 3.4 percent from $13.015m to $12.571m. This was compensated for by a sales increase, but SML Foods' selling, general and administrative expenses also jumped by 4.5 percent to $11.972m

"Sales for the quarter were $41.437m, an increase of 6.14 percent for the same period in the prior year," Mr Butler said in his report to AML Foods' shareholders. "During the quarter, transaction counts remained strong and continue to grow.

"Same store sales growth was impacted by a significant decrease in the value of transactions, an indication that our focus on quality and value continues to attract customers, but customers have made adjustments to their spending habits given the current economic environment and recent increase in the rate of value-added tax.

"Despite tough economic conditions in Freeport, our businesses there are performing strongly. Customers are continuing to support our brands, allowing us opportunities for customer engagement and, in turn, more opportunities for increased revenues. Over the next quarter, building customer engagement will remain a priority."

Mr Butler added: "We are maintaining our focus on investing in the development and training of our team, as well as driving efficiency and effectiveness in our systems and processes.

"In July we opened a new and expanded training centre in Freeport, and a new and improved training centre will open in Nassau in January 2019. The roll out of the new ERP (Enterprise Resource Planning) system piloted in Solomon's Yamacraw will also begin in early 2019."

AML Foods' first quarter for the 2019 financial year mirrors how it closed out the prior year-end, when "distractions" resulted in margins and shrink heading in the wrong direction, leading to a 75 percent profit drop.

Gavin Watchorn, the BISX-listed food retail and franchise group's chief executive, told Tribune Business then that it had moved quickly to take "corrective" action and refocus on daily operations following a period when it has been occupied with opening its Solomon's Yamacraw location.

While admitting it might "take a quarter or two" for the Solomon's, Cost Right and Domino's Pizza operator to return its financial performance to levels shareholders have become accustomed to, Mr Watchorn said it was "still confident" it is laying the platform for long-term growth.

He added that AML Foods results for the full-year, and final quarter, to end-April 2018 "don't reflect what we're doing", as the financials were affected by one-off costs related to the closure of its Carl's Jr franchise and the pre-opening/start-up impact at Solomon's Yamacraw.

Mr Watchorn said the negative impact to margins and shrink, the latter measuring inventory lost to theft, damage and spoilage, was "enough that we felt it".

"Our fourth quarter and year-to-date numbers were disappointing and don't reflect what we are doing; the effort we're putting in," he told Tribune Business previously. "One or two pockets are under-performing, but a lot of units are performing quite well.

"There were quite a lot of one-charges, and the focus on Yamacraw kind of distracted us from our existing business. We saw the impact on margins and shrinkage. In the last couple of months we've refocused and are correcting those things.

"While we've had some setbacks, we're not concerned this is a long-term change in our results. We're still pretty confident we're laying down the platform we need for growth. Long-term, we're still pretty confident we're making the right decisions. It may take us a quarter or two to get back, but we're confident it's only a short-term impact for us."