Purity profits up after a year in the red

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Friday, November 09, 2018

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Consolidated Bakeries Jamaica, which trades as Purity Bakery, managed to pull itself out of the red after it posted profit of $338,576 for its third quarter ended September 30, 2018.

The company, which has suffered blows to its bottom line over the years, reported an increase of 14.5 per cent in revenues for the quarter to total $223.9 million, pushing net profit up to $338,576 over losses of $14.2 million a year earlier. Unrealised gains on investment of $2.4 million boosted total comprehensive income of the company to $2.75 million at the end of the quarter under review.

In 2013, the baking company embarked a marketing strategy which, it reckoned, would yield encouraging results. Three years later, Purity reported that it had seen considerable growth in sales despite having been met with strong competition.

“Our activities over the last few years were focused on strengthening our positions and building sustainable growth, which were substantiated by the growth we witnessed of 30 per cent and nine per cent in 2013 over 2012 and 2014 over 2013, respectively.

“Continuing the growth incline, in 2015 the company registered overall growth of three per cent, but witnessed double-digit growth in some key product areas. Furthermore, during the last quarter of 2015, sales grew by 11 per cent over the same period in 2014,” the company said in a report to shareholders in 2016.

Still, administrative, selling and distribution expenses continued to suppress bottom-line results for the company.

Since its listing on the Jamaica Stock Exchange in 2013, Purity's profit record has been unstable. In the first year the company made $33 million — or nearly tenfold its 2012 performance — but a year later experienced a decline in profit to $21.5 million. The bread and pastry maker's performance worsened by nearly two-thirds in 2015 to $7.86 million.

Fast-forward three years later, Purity not only increased sales of its products but also managed to keep expenses under control. Selling and distribution expenses totalled $81.4 million, slightly above the $75.5 million posted a year earlier.

Earnings per share of the company moved up to $0.002 from losses of $0.06. The growth in share price was also aided by $407,583 increase in other income. Cash and cash equivalents of the company more than doubled the comparative quarter of 2018 at $52.8 million.

Purity's line of products include the Miss Birdie branded Crackers and Easter Bun, as well as Purity wholewheat, corn and raisin bread. Its big rivals include National Bakery in the breads and biscuits market, while the company competes with Honey Bun in the snacks segment.

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