Rising flour prices pinched Honey Bun’s revenue gains during the first three months of 2013.

But new tax measures ate away the company’s bottom line.

The bakery’s $23.2 million in net profit for the review quarter was two per cent lower than earnings during the comparative period last year, despite an 18.3 per cent increase in sales.

Honey Bun beefed up sales to new local markets and exports, so that the $29 million in additional revenue it earned during the quarter, compared to the first three months of 2012, was enough to offset the $20 million, or 24 per cent increase in the cost of sales.

“Extensive increases in raw material prices contributed to lower than expected results as our main ingredient, flour, experienced major price increases”, Honey Bun said.

The price of flour was largely due to the recent devaluation in the Jamaican dollar while other major ingredients also faced price increases.

However, new tax measures helped push up the company’s administrative costs from $31 million during the first three months of 2012 to $41.5 million during the review period.

The company said it was not able to pass on further price increases to its customers, but it has established a new pricing committee with the assistance of the board of directors to manage pricing and competitive strategies, according to Honey Bun’s latest financial statements.

Over the next six months Honey Bun will conduct reviews of its quality management systems to culminate in various international best practice certifications.

Earlier this year, Honey Bun said it was investing $70 million to buy a property closer to its Retirement Road head office in Kingston.

The move is “strategic” and will” provide for greater logistic efficiencies to be realised”, the baking company said.

The acquisition that will be finalised year-end will allow for two of Honey Bun’s current operations to be relocated and housed in the same place, reducing its overall operational costs.