Sales and market costs have tempered growth figures for tea producer Jamaican Teas. Despite recording an $8-million increase in net profit for the three months ending June 2021, the company suffered heavily from factors including higher shipping costs and commodity prices.

For the period under review, net profit jumped to $115 million, up from the $107 million earned in the previous year quarter — a seven per cent increase. The company’s revenues are also up five per cent increasing from $506 million in 2020 to $531 million this year.

Research and strategy analyst at Sagicor Investments Jodian Aris has described the overall performance, including the 60 per cent increase in investment income, as good. However, while speaking during THE ANALYSTS segment of Taking Stock, Aris pointed out that the company continues to be impacted by the cycles of the novel coronavirus pandemic similar to other manufacturing companies.

This, she said, was evident by the 40 per cent drop in sales and market costs. Over the three-month period, that figure went from $15 million in 2020 to $9 million. According to Aris, this was partly a result of a change in consumption patterns abroad. “So they’re seeing increases for local sales but on the export side there’s actually a dip and they pointed to a shift in work from home [as the factor],” she said.

“So you had more people in the Diaspora working from home and they would have been going to supermarkets and consuming a little bit more of what it is you’re used to, the Caribbean teas that they produce, [for example]. However, now that they’re back in office, there’s going to be a shift in terms of those numbers in their export market,” reasoned Aris.

She said the company has also been losing money by absorbing global inflation movements and higher logistics costs. “They’re looking at higher things such as higher freight costs as well as higher prices for raw goods or raw materials and they have, similar to other companies in the manufacturing space, opted to not pass on these costs to consumers at this time so if it is that they are not passing it on to consumers then it is really having an impact on their bottom line,” said Aris.

She argued that this has been the case for several companies in the manufacturing sector, but notes that there will come a time when they will have to adjust. In terms of the company’s investment income, Aris noted that this too would have been impacted by the changing landscape brought about by the pandemic.

“It would have been from both realised and unrealised investment gains. In March 2020 when we would have had the onset of COVID-19, asset prices, stock prices would have fallen and when it is you are comparing it to this year when we are seeing an uptick in terms of performance on stock markets, then you have unrealised gains so it’s not really money money but possible money, because if it is that you were to sell you would have made a gain based on where it was last year,” she reasoned.

Meanwhile, wealth advisor at Ideal Portfolio Services, Dwayne Taylor, believes overall consumption patterns will lead to more manufacturing companies passing on higher prices to consumers. “If you look at where we are in the stage of recovery it’s just a lot of moving parts. You have what is called the reopening trade; things getting closer to normalcy, people going back to work so consumption patterns should change which is a part of why we’re seeing such a strong rebound in prices and prices have actually started to overshoot,” he said.

Last month, Jamaica recorded its highest single-month inflation increase in seven years. In July the cost of goods and services rose 1.5 per cent, resulting mainly from increases in the food, electricity, water and transport divisions.