In what has been a year of navigating challenges and strategically positioning itself for growth, the net profit attributable to Jamaican Teas Limited (JTL) stands at $45 million in the fourth quarter of 2023, a significant improvement from $21 million in the previous year’s quarter. Year-to-date results reveal a net profit of $237 million, an improvement from $194 million in the previous year.

“Last year was pretty bad and so we were starting basically from a lower performance,” explained CEO, John Mahfood. “We have been spending this year, in terms of trying to improve our productivity, looking at where our problems are in machines, in systems, also trying to do a better job in ordering so we have less stockouts. That has been a primary area of attention, and we continue to do that now.”

Mahfood disclosed that one major beneficial initiative was the implementation of a second shift, increasing production by about 40 per cent in the last three to four months, with the anticipation of higher sales in 2024.

“That meant that in 2023 it was a year of correction, a year of improving productivity, so that contributed something to it,” he said. “We are not where we want to be. I think that our expectation for 2024 would be a significant improvement in the manufacturing side of the operation.”

“We were burdened as well in 2023 with high interest costs as a result of the investment in the Belvedere project, which is the 30-apartment complex in Red Hills,” Mahfood pointed out. “And that was totally financed from internal resources and, to some extent, overdraft. That project is now complete. So, again, for 2024 we are looking at significantly reducing our borrowings and using those cash resources to do other things.”

One of those things is the anticipated expansion of JTL’s manufacturing facilities to Temple Hall in St Andrew to optimise operations.

In the fourth quarter, manufacturing sales decreased by 6 per cent, export sales slipped by 5 per cent, and local sales declined by 9 per cent.

The appointment this year of new distributors, WISYNCO in Jamaica and a subsidiary of Ansa McAl in Trinidad, is expected to address the situation. While their impact was limited in 2023 because they started operating very late in the year — November for WISYNCO and October for Ansa McAl — the CEO anticipates they will contribute to increased revenue in the coming year.

Meanwhile, fourth quarter retail revenues at the supermarket amounted to $190 million, a notable increase of 18 per cent.

“We did a renovation of the store in 2023,” Mahfood revealed. “Physically, we expanded it to a small extent, but we did renovate it and improve the appearance. And the last part of that is now we’re going to replace all the equipment. So by January next year all of the equipment in the stores will be replaced. So between the renovations in 2023 and the new equipment, we’re looking at something like about a $80-million investment in that store. The renovations and expansions seem to have paid off with increased customer account. That’s what really drove that improvement.”

During this quarter, stock prices experienced further declines on both the main market of the Jamaica Stock Exchange and overseas exchanges, leading to a diminished performance for its sister company, QWI, compared to the third quarter. Despite this, QWI’s results showed improvement over the same period last year.

Decline in investment income was primarily attributed to realised and unrealised investment losses at QWI compared to the same period last year. However, for the full year, QWI’s overall investment performance saw a 34 per cent improvement, largely driven by the strong overall performance of the company’s USA-listed stocks.

“The performance of QWI surpassed the performance of the main market index in Jamaica, but with a very bearish market with no new listings, with high interest rates and people tending to come out of stocks rather than go in, we have seen the index decline for the last two years,” Mahfood commented. “Right now there’s not a whole lot of confidence in the Jamaican stock market. And you see that in terms of our net asset value at about a dollar twenty-five, but the stock is trading between 60 and 70 cents. So there’s a lot of unrealised gain that is sitting there. And, of course, QWI is not alone, in that Mayberry Investments is the same and Sagicor is the same. So the last two years have been disappointing.”

While the past 24 months have been disappointing, he anticipates a potential rebound in the market in the next year.

JTL’s total revenue for the quarter was $652 million, a marginal decline from $655 million a year ago and gains on investment properties were $33.5 million compared to $30 million in 2022. Cost of sales fell and gross profit margin improved by almost 100 basis points for both the quarter and the year, a trend that is expected to continue in 2023/24.

Mahfood offered insights into the company’s performance in different markets, noting that the majority of JTL’s customers are international, with more exports than domestic sales.

Although there was an increase in exports compared to the previous year, he expressed a desire for stronger growth. The CEO anticipates improvements in exports in the next year, especially with positive trends in Caribbean economies driven by factors like tourism and economic growth in countries like Guyana.

In the US, where the company also exports, there was growth, but he noted that the diaspora might not be experiencing the same economic strength as the broader US economy suggests. He attributed this to challenges faced by individuals on the lower end of the employment scale and expressed hope that the US economy’s growth would extend to benefit a broader section of the population, positively impacting the company’s exports.

Looking forward to the next financial year, Mahfood highlighted key priorities and areas of focus.

“We are like all other manufacturers,” he said. “We are faced with the problem of available staffing at the entry level, which means that as we go into 2024 we have to look at productivity from new equipment where you make big investments in the equipment rather than increase your labour force. And hopefully, at the same time, by being more productive you pay your existing workers better. But that labour shortage is definitely a problem for all manufacturers and we are hoping to successfully move the factory, relocate it, which will give us a lot more space to operate. And being in one location, because we are now in two, we will have some economies from that.”