HONEY Bun has inked a deal to buy a 20,000 square feet property which will join its existing operations on Retirement Crescent to another piece it bought last October.

The three properties combined — numbers 22, 24 and 26 on the street — totals 1.3 acres, or 57,000 square feet.

“On completion of this purchase (come August), the three properties will be combined and result in greater efficiencies and capacity in the upcoming years,” said the company in its most recent financial statements.

The baked goods manufacturer saw its net profit dip 46 per cent from $23.2 million in the comparative period last year to $12.4 million in the review period, despite seeing an eight per cent increase in sales to $205.7 million.

The decline was mainly caused by a 32 per cent increase in the cost of distribution due to one-off incidents. Honey Bun said it expects the issues to be resolved in the future.

While local sales remained flat, export sales increased by 52 per cent over the comparative quarter last year.

“Our strategies to identify more export markets and contract manufacturing remain viable and results are promising,” said Honey Bun.

Finance income decreased during the first three months of the year, moving from $250,000 in the comparative period in 2013 to $10,800 in the quarter under review.

During the period the company incurred $73.9 million in expenses, an increase of 15 per cent over the comparative period in 2013.

More specifically, during the period under review, Honey Bun spent $43.9 million in administrative costs, up from $41.5 million, while selling expenses was $30 million, up from $22.7 million in the comparative period.

Despite an increase in the material input costs, the company is developing a leaner manufacturing environment to reduce other costs.

Consequently, the cost of direct labour decreased by two per cent, the company said adding this represents its largest expense after raw material.

Electricity contributes the most significant dollar value increase and utilities increased by 40 per cent, year over year.

To help address the cost, the company plans to reduce energy costs through the implementation of recommendations of an energy audit.

Honey Bun’s principal activities comprise the manufacture and distribution of baked products to the local and export markets, it listed on Jamaica Stock Exchange Junior Market three years ago.