Purity nearly doubles profit, expects growth to continue
Consolidated Bakeries Limited, the maker of Purity and Miss Birdie baked goods, which trades as Purity Bakery, nearly doubled its net income due to sales from new and existing products for its first quarter ending March.
It represents one of the largest surges in profit for the bakery listed on the junior market for more than three years. And management expects continued growth in the periods ahead.
"We expect continued progress as we go into the third and fourth quarters," said Chairman Vincent Chang in his comments on the results. "Our goal is to build a strong, robust company."
In the March quarter, Purity earned $22.8 million in net income, up from $13.9 million a year earlier. During the quarter, the company launched its Oatmeal Raisin Cookie, the first in a series of new products to be rolled out over this year.
In previous quarters, the company suffered from price discounts and marketing activities in the marketplace. At the time, Purity deliberately maintained margins while keeping expense items like marketing flat. For this quarter, management "sounded the call" to market and launch products, according to their statement to shareholders.
Solid sales drove profitability during the quarter, with Easter sales particularly better than expected. Specifically, Easter sales grew in real and by double-digit levels over last year. Revenues totalled $260.6 million over the quarter or 16 per cent higher than the $224.8 million a year earlier.
During the quarter, Purity kept its cost of sales at bay, which led to gross profits of $96.4 million or 25 per cent higher than year-earlier levels.
The company's sales are also translating into cash and equivalents at $63.7 million or one-third higher than the $48.2 million a year earlier. Its total assets now surpass $701 million with shareholder equity at $558 million, up from $539.8 million a year earlier.