Honey Bun investing in manufacturing technologies
…company experiencing sharp increases in raw material costsWednesday, February 17, 2021
BY DURRANT PATE
Honey Bun continues on its path of making big investments in its manufacturing processes with the latest investment being made in improving its manufacturing technologies.
During the December 2020 quarter, the baking company invested an additional $39.6 million in property plant and equipment, while expanding its product offerings. This investment represents an increase 199 per cent over the same period in 2019.
At the same time Honey Bun, which principal activities is the manufacture and distribution of baked products to the local and export markets, has also been increasing its marketing activities to boost sales, particularly in the December 2020 quarter. During the quarter, the company earned revenues of $461.3 million, which is up nine per cent over the same period in 2019.
Gross profits for the quarter was $218.1 million, up three per cent over prior year. However, net profit was down 29 per cent to close at $34.8 million below the prior year.
RAW MATERIALS GETTING MORE EXPENSIVE
Chief Executive Officer Michelle Chong is highlighting the fact that raw materials are getting more expensive. She points to the sharp increase in the cost of production in recent months, particularly in some key raw materials.
Chong admits that Honey Bun is feeling the effects of the pandemic due in part to the closure of schools, which is a significant segment of its market. She notes that “.”
As such, Honey Bun, which is based at 26 Retirement Crescent, Kingston 5, had to boost in expenditure on marketing activities. This has contributed to operating expenses closing the period at $176.0 million or 14 per cent over prior year.
Overall receivables fell by $53.7 million to close at $74.7 million, whilst overall trade and other payables fell by $84.0 million to close at $129.4 million. Net current assets closed the period at $305.8 million, or 41 per cent over the prior year.
NEW BAKED PRODUCTS
In October 2020, the company introduced the hot dog rolls under Honey Bun's Shorty brand, joining the Shorty loaf bread (bran and white) and the Shorty burger bread. The hot dog roll was launched to satisfy consumers baking needs especially during the novel coronavirus pandemic, as it was an easy snack to make at home.
In November, the company launched a staff wellness programme to help team members cope with the psychosocial effects of the pandemic.
The response to the programme, Chong said “has been positive and encouraging”.
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