Business

New software drives Honey Bun's profit growth

BY SHAMILLE SCOTT Business reporter scotts@jamaicaobserver.com

Sunday, February 16, 2014    

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A software that tracks and forecasts orders for Honey Bun helped drive the company's net profit up by 30 per cent.

The bakery posted $19.8 million in earnings for the three months ended December 31, 2013, up from $15.2 million during the comparative period in 2012, mainly as a result of significant improvements in manufacturing costs, said Michelle Chong, CEO.

"We started using the software two years ago, and the forecasting component, is now paying off," explained Elizabeth Swaby, Honey Bun's marketing executive. The software essentially predicts the orders of customers using intelligence from previous spending patterns.

Moreover, the software can tell how much ingredients are needed, which invariably cuts wastage.

Revenue dipped marginally by four per cent during the quarter under review, down from $191.9 million in the three months ended December 2012 to $184.8 million.

The local economic situation resulted in reduced spending power of consumers, consequently, local sales remained flat, Honey Bun said.

Nonetheless, export sales increased by 74 per cent.

"Our exports are doing extremely well; we've sold more to North America and in addition to selling the goods, we offer a marketing package," Swaby told Sunday Finance. "We've also improved the shelf life of our products so we can export more."

On the local end, the company rolled out a marketing programme last December, in which it recruited entrepreneurs to sell Honey Bun's products on the street -- in a bid to increase the company's direct sales. The plan is to add more vendors to the eight who are currently on the road.

Total expenses for the three months ended December 31, 2013 was $64.2 million, $229,000 more than the comparative period in the previous year. Administrative costs declined by three per cent and selling and distribution expenses increased by six per cent.

"In October 2013, we acquired a new property in the same area as our current plant on Retirement Crescent. As such, our manufacturing has been consolidated at one location and our distribution and marketing area also consolidated and expanded," said Chong in the financial statements. "This will result in further efficiencies in management and cost improvements in the future."

It has, however, reduced the company's investment portfolio and the finance income.

Swaby replaced Krystal Chong, Honey Bun's marketing officer who migrated to pursue other opportunities during the review quarter.

Krystal will continue to pursue the interests of Honey Bun in her new location as a family member, the company said.

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