Caribbean Flavours and Fragrances Limited (CFF) for the second quarter ending June 30, 2022 saw a revenue uptick as several large clients experienced increased demand for their products and as the Jamaican economy recovered following full reopening late last year.

The company also added new clients from Trinidad and Tobago and the Dominican Republic. Due to an increase in some raw material costs, CFF increased prices on some products in July 2022. The company added new equipment during the quarter and hired new staff members for distribution across the Caribbean.

The reporting period for CFF saw revenue increase by 10.82 per cent to $185.69 million as the company responded to these demands. Management commented in the company’s latest financials that growth was primarily driven by generally improved economic activities as demand in the economy began to pick up.

“Several of our larger clients experienced increased demand for their products quite rapidly which required CFF to be agile and ready to respond.”

CFF supplies fragrances and flavours used by manufacturers in the baking, confectionery, ice cream and other industries in Jamaica and several other Caribbean islands.

Revenue for the first half of the year improved to $359.85 million which the company describes as its “best six months performance to date”.

Gross margins improved to 32.18 per cent with gross profit rising 20.90 per cent to $115.79 million. Our operating profit is 9.78 per cent higher at $50.75 million generating net profit of $44.75 million which represents an improvement of 8.55 per cent. The year-to-date earnings per share remained flat at $0.05.

Management indicates that total expenses for the June quarter rose by 4.19 per cent to $31.57 million due to selling and promotional expenses related to new clients. Administrative expenses increased due to the increased cost of fuel, electricity, staff costs, security and other general expenses. Finance expenses also increased. Profit before taxation was $27.35 million while net profit ended the quarter at $24.35 million generating earnings per share at $0.03.

CFF’s total assets improved by 14.30 per cent to $771.55 million on a year over year basis. Due to what management described as the frequency of urgent orders and rising costs on freight and inventory, CFF increased its inventory by 39.80 per cent to $214.88 million to ensure capacity to respond to client demands

Shareholders’ equity increased by 7.18 per cent to $569.38 million from the higher accumulated surplus during the reporting period.

Management highlighted risks faced including currency risk (caused by the depreciation of the Jamaican dollar against other currencies), noting that by exporting more to other markets, we’ve limited some of the risks that come with the depreciation of the local currency.

They also noted supply chain challenges, noting that even though shipping costs have begun to normalise after the mass spike seen in 2021, there is now a rising lag in the processing of goods which is leading to shortages in various categories of goods and commodities.

Management commented, “We have maintained an additional buffer of inventory to mitigate against the delay in receiving raw materials from suppliers. Though this is one strategy, the company still has to contend with shortages of different materials from suppliers who can’t get their key inputs to start their transformation process in the manufacturing of raw materials. As a result, the company is working closely with clients.”