Jamaica Teas Limited manufacturing arm was saved in its third quarter ended June 30 by a jump in export sales, as domestic sales during the period were flat.

The manufacturing operations had good results during the quarter with sales improving by 33 per cent to $386 million with the main contributor to this being the jump in export sales, which saw an increase of 56 per cent over the prior year. However, domestic sales were essentially flat compared with the prior year, inching up by only four per cent.

Exports accounted for 68 per cent of total sales in the quarter and the company’s principals, Chairman John Jackson and Chief Executive Officer John Mahfood, have told shareholders that this positive trend in exports will continue through to the end of the financial year. The jump in exports reflects in part, a reversal of the temporary customer de-stocking that took place last year.

In addition, there were strong sales increases to final consumers, particularly in the USA. For the cumulative nine months, the 40 per cent increase in sales reflected a 42 per cent increase in export sales and a four per cent increase in domestic sales.

Jamaica Teas manufacturing arm produces Tetley, Caribbean Dream teas and Jamaica Blue bottled water.

MANOR PARK

During the quarter, Jamaica Teas, which is listed on the Jamaica Stock Exchange (JSE), completed its real estate project in Manor Park and has signed sale agreements for 15 of the 18 units. The proceeds and profits from these sales will start to be realised in the fourth quarter.

The Violet’s View Apartments began construction in August 2018 with each of the 18 super studios averaging 650 square feet and selling for more than $21 million. Jamaica Teas expects to rake in $380 million from the Manor Park housing development.

During this quarter, the sharp fall in the prices of stocks on the Jamaican and New York Stock Exchanges up to March 2020 began to reverse. This has resulted in an unrealised investment gain for its QWI Investments subsidiary of $115 million in this third quarter.

The expectation is that this trend will continue into the next quarter. These positive performances resulted in Jamaica Teas increasing its total revenue for the third quarter by $189 million to $506 million or an increase of almost 60 per cent.

Net profit attributable to Jamaican Teas for the quarter was $107 million, a decline of nine per cent from the $118 million profit in the previous year quarter. Total attributable comprehensive income per share was 12 cents (2018/9 – earnings of 32 cents).

This profit decline arose from the unrealised investment losses experienced by QWI in the first half of the year, offset in part by strong profits growth at the manufacturing operations.

OUTLOOK

The outlook for manufacturing continues to be positive so long as the company is able to continue its operations without interruption from the effects of COVID-19. Sales at the supermarket subsidiary have since April 2020 declined over 2019. This is as a result of the restrictions placed on operating hours from the varying curfew hours in Kingston.

The real estate business should contribute significantly later in the year from proceeds from the sale of apartments in Manor Park and revaluation gains on the investment properties owned. The Net Asset Value per share of QWI Investments Ltd ended the month of June 2020 at $1.03 and has continued to rise to $1.06 up to the end of July 2020.

In July 2020 the income tax concession enjoyed under the rules of the junior market of the JSE will expire and thus Jamaica Teas will return to the full 25 per cent corporate tax rate.