ECL plans to resume dividend payments next financial year
EXPRESS Catering Limited (ECL), the operator of all food and beverage concessions at the Sangster International Airport (SIA) in Montego Bay, St James, said it will resume dividend payments in its next financial year. ECL’s financial year starts on June 1.
The announcement means shareholders of the company which operates franchises for brands such as Cinnabon, Auntie Anne’s, Domino’s Pizza and local favourites such as Tastee’s and Juici Patties in the departure lounge at the airport, will go for a fourth-consecutive year without a dividend payment, and will have to wait until the second half of 2024 at the earliest to receive a next payment. The last time ECL, which listed in 2017, paid a dividend to its shareholders was on March 4, 2020. Then ECL made an interim dividend payment of US$0.0245 per share for a total payout of US$401,187.50 on that day.
Two weeks later however, the detection of the novel coronavirus disease in Jamaica forced the Government into a series of restrictions aimed at containing its spread, including shuttering the nation’s airports, barring tourist traffic which ECL depends on for 100 per cent of its revenues. Passenger numbers at the Montego Bay airport, which recorded a pre-COVID peak of 2.68 million in 2019, precipitated the following year in 2020 to 880,000. The final figure was helped by Jamaica implementing a resilience corridor, a quasi-sterile area for tourists along the resort areas of the north coast to accommodate limited numbers of vacationers from June of that year.
Still, the fall-off in tourist arrivals was telling for ECL. The company, which posted revenues of US$14 million in its June 1, 2019 to May 31, 2020 financial year with a profit of US$1.5 million, reported a loss of US$1.7 million the following year as sales plummeted to US$4.4 million, less than a third of what it was the previous year. The result was a company which paid dividends that were “significantly above” the 25 per cent minimum it promised in its 2017 prospectus, not having the money to pay anymore.
But things are beginning to turn around for the company. For the financial year which ended a few months ago on May 31, ECL reports revenues of US$21.2 million, up 49 per cent from the prior year and surpassing the previous record of US$US$17.3 million realised in 2019. Profit, on the other hand, which was US$2.7 million, was almost triple last year’s out-turn. This was the second year of profit after the losses recorded in 2021
“We are seeing that this financial year that trend is getting stronger,” Ian Dear, CEO of Express Catering, told the Jamaica Observer about the company’s post-COVID rebound. The trend referenced relates to the fact that the for the first quarter of its current financial year, that’s the period which started June 1 and ended August 31, ECL’s revenue and profit continue to grow. Revenues jumped to US$6.4 million up from US$4.9 million for the same quarter of last year as it managed to get passengers, mostly tourists, to spend US$8.69 on average on its food and beverage offerings at the airport compared to the average US$7.89 it earned per passenger last year.
“And because of that, we are optimistic, and our intention is for the next financial year which starts June 1,  to be in a position to pay a dividend,” Dear said. He said the size of the dividend to be paid will be evaluated with managers and the board before an announcement is made about what shareholders can expect.
At the same time, ECL is making plans to cut its dependence on visitor traffic at the Sangster International Airport for all its business. The company has already expanded in that space with new offerings, the latest of which was Bob Marley One Love, a restaurant, and the Guitar Bar. It has also expanded the Cinnabon, Auntie Anne’s Pretzels and Spice Kitchen and Bar outlets to the general area of SIA, making their products available to everyone as a test of their acceptance amongst Jamaicans ahead of rolling out the concepts across the country. But the biggest opportunity for Dear lies in mirroring the SIA operations in other airports. The ECL CEO said negotiations are already taking place with the operators of prospective airports about the possibilities.
“There are airports outside of Jamaica with which are having dialogue,” Dear said. He declined to say which airport operators he is negotiating with or in which countries the airports are located or how many are being targeted, but assured, “It could be pretty exciting. We will see as it comes to past.”
Dear said ECL also has eyes on the Ian Fleming International Airport in Boscobel, St Mary, and will evaluate a bid to operate food and beverage outlets as more airlines extend operations to that end of the island to serve resort towns in north east parishes of St Ann, St Mary and Portland. In late October, American Airlines announced it will start regularly scheduled service to Ian Fleming International Airport in February 2024, and there are indications that at least another airline could make a similar announcement soon.
“I am very excited for St Mary and the Oracabessa area with the advent of Ian Fleming [International Airport] and I think we can bring great value to the experience based on our 20 plus years experience at Sangster International Airport,” he told the Business Observer.
“ECL has an exciting and bright future and will continue to grow with great shareholder value return, and if we execute in the other areas mentioned, there is no stopping us and we are looking forward to all our shareholders growing with us.”