Purity 1Q earnings fall amid rising input costs, no Easter bump
FIRST quarter profit at Consolidated Bakeries declined by nearly half for the three months ended March 2014.
The bakery, which trades as Purity, reported a net profit of $7.4 million for the period ending March 31, 2014, 48 per cent lower than year-earlier levels. Revenues increased by 14 per cent to $196.6 million, but it was supplanted by a 25 per cent rise in cost of sales to $136.4 million. The company is behind the Purity and Miss Birdie brands of baked products. According to chairman Vincent Chang, rising input costs affected margins.
“Furthermore, market prices for the period did not increase and the company kept prices in line with the market,” Chang said.
Operating expenses rose by 10 per cent to 55.6 million. What’s more is that Purity’s bumber Easter sales period — when it sells buns to diaspora markets US, UK and Canada — did not fall in the first quarter this year, while it did in the corresponding period in 2013. This impacted the results, according to Chang.
“In 2014, Easter occurred in the second quarter, where as in 2013 Easter occurred in the first quarter; and thus sales for the first quarter 2013 reflects the full seasonal Easter bun sales,” the chairman noted.
The Good Friday holiday weekend began on April 18 in 2014. In 2013, it began on March 29.
Purity currently gets the bulk of its business from the Jamaican market but exports on a seasonal basis — during the Easter period. The company has declared its intention to export more regularly going forward.
Purity also reported that, during the review quarter, it expanded distribution of a line of bread, Artisan, developed in the latter part of 2013.
The company listed on the Jamaica Stock Exchange Junior Market in November 2012, after raising some $100 million via an initial public offer (IPO). The proceeds of the IPO improved its working capital and operational processes. Given a tax break from going public, the company didn’t report any corporate tax during the period under review.
Purity was incorporated in 1957 following the consolidation of three existing bakeries: Valentine Bakery, owned by the Chang family; Powell’s Bakery, owned by the Powell family; and Huntington Bakery, owned by the Seivright family.
In 1972, the Chang family members acquired the shares of the Powell and Seivright families and since then, have owned and operated the company.
