Business

Jamaican Teas posts tepid results

BY JULIAN RICHARDSON Assistant business co-ordinator richardsonj@jamaicaobserver.com

Wednesday, August 15, 2012    

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JAMAICAN Teas reported flat profits for the third quarter despite stronger revenues.

The tea manufacturer said it earned $22 million in the June 2012 quarter compared to $22.3 million over the same three months last year. But sales jumped during the period by 27 per cent to $216 million, catalysed by a robust 63 per cent revenue growth in the company's retail division.

The bottom line was primarily impacted by a 43 per cent increase in administration and other expenses, and losses related to new businesses.

"The results are negatively affected as we positioned the group for growth and expansion with the acquisition of certain assets and a retail outlet, which have resulted in some losses, as the operations are geared up to grow and improve income and profit in future periods," said the company report.

Jamaican Teas is the largest tea maker in the Caribbean. Sales in the company's manufacturing segment increased by 6.6 per cent to $113.8 million during the 2012 third quarter, with domestic revenues improving by 5.7 per cent to $68.2 million, compared to the corresponding period in 2011.

Foreign manufacturing sales, at $45.6 million during the period under review, were 7.8 per cent more than over the same three months last year.

The firm said that it was particularly encouraged by the progress being made in exports "that continue to grow", adding that some of the increase in overall sales can be attributed to the addition of its Caribbean Dreams -- Jamaica Blue Spring Water to its product line late in the 2011 fiscal year.

Retail sales from three supermarket operations soared during the June 2012 quarter to $102.2 million, higher than the $62.8 million recorded over the comparative period last year, the company reported.

Jamaican Teas operates JRG Shoppers Delite supermarket on Chancery Street in Kingston, specialising in the retail distribution of consumers and household products. The company reported that JRG "continues to be profitable" with year-over-year sales up 15.8 per cent during the period under review.

However, according to the company, its new store in Savanna-la-Mar, though enjoying steady sales, is not yet profitable, having lost $2.54 million in the quarter.

Additionally, the company took a $1.45-million hit during the period as its share of losses in a jointly owned supermarket in Montego Bay, Bay City Foods, acquired in November 2010 for $33 million.

Though Bay City saw sales rising 13 per cent in the June quarter, above the same period last year, it has yet to show a profit, the company said.

"Management is constantly reviewing this operation, so as to place it in a profitable position at the earliest possible time," said the company's statement.

The company reported that 'other income', mainly from its investment and property segments, almost doubled to $10.2 million during the June 2012 period.

This was boosted by interest income jumping 73 per cent to $6.4 million and foreign exchange gain moving from $289,000 in the June 2011 quarter to $1.8 million over the period under review.

"Our fixed interest securities continued to perform to expectations. Our holdings of equities did not do as well as expected, nevertheless, these are expected to do well over the medium to longer term," said the company in the report.

Jamaican Teas added that it expects to obtain building approval for an apartment complex in Kingston during the fourth quarter and anticipates that it should be completed and ready to be delivered to purchasers in the first half of the 2013 calendar year.

Funding for the development has been secured from internally generated funds, but completion of the project will be partially financed by borrowed funds, which will be repaid when units are sold, the company said.

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