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Investment division was the star performer during  September quarter

Jamaican Teas Group enjoyed a relatively good 2021, but profitability slowed down during the fourth quarter ended September 30.

For the full year, net profit came in at $391 million, an increase of 76 per cent from the $222 million in the previous year. Total attributable comprehensive income per share was 19 cents coming from 2020 when the earning was 11 cents per share.

However, net profit attributable for the quarter was $78 million, a decline of $53 million or 40 per cent from the $132 million profit in the comparable quarter. Total attributable comprehensive income per share was four cents compared to six cents for 2020.

As much as $61 million of this decline in profit arose from lower profits at the real estate division, due to the completion of sales at Violets View and a write down in the value of its 132 Harbour Street property. The remainder of the decline arose from a decline in the profits of the manufacturing division due to the sales declines and cost increases referred to earlier.

These declines were partly offset by gains in Jamaican Teas investment subsidiary, QWI investment portfolio in the 2021 fourth quarter versus that of the previous year’s quarter.

REVENUES FOR Q4

Total revenues for the quarter declined by $262 million, moving from $787 million in September 2020 to $524 million for the quarter in review. Some $248 million of this decrease resulted from the sale of 12 of the studios at the Manor Park complex in the year ago quarter compared to no real estate sales this quarter.

The remaining $16 million sales reduction mainly reflects a decrease in export sales partly offset by an increase in domestic sales in the manufacturing business but there were increases in other income, which mainly resulted from higher realized investment gains and dividend income at QWI. This was in addition to reduced gains on the Jamaican Teas Group’s investment properties compared with the year ago period.

For the full year, Jamaican Teas experienced a four per cent increase in group sales, which is a 17 per cent increase in export manufacturing sales, 10 per cent increase in domestic manufacturing, a two per cent drop in supermarket sales and the completion of only six sales of the Manor Park studios compared with 12 last year.

The increase in other income primarily resulted from higher realised investment gains at QWI. The reversal from Fair Value Losses on Investments of $482 million to gains of $354 million, which arose from the significant recovery QWI experienced in its shareholdings during the year, as the effects of COVID-19 on many business operations began to reverse.

This process is still ongoing, particularly in Jamaica, where the economic recovery is still to be completed.

EXPENSES

The changes in cost of sales for the quarter and full year, largely match the changes in revenues, but there was a significant deterioration in the gross profit margins of the manufacturing division during the fourth quarter due to heavy increases in sea freight costs and increases in costs of raw materials.

Manufacturing Division

The highlight for the quarter was a gain in our local sales which rose 13 per cent over the prior year. This was acceleration in the growth rate seen in the three prior quarters. Exports accounted for 59 per cent of total sales in the quarter and declined 12 per cent from the year ago quarter.

Real Estate Division

Development of the latest project on Belvedere Road, Red Hills comprising 30 studios and one-bedroom apartments is proceeding apace and the complex is more than 50 per cent completed. Physical completion is expected during the first half of calendar 2022.

Retail Division

For 2021, revenues amounted to $127 million for the fourth quarter down from the 2020 posting of $129 million. The division recorded revenues of $520 million for the year versus $534 million in 2020. The retail operation was affected by COVID 19 and the imposition of “no movement “days during the quarter as well as the closure of schools.

Investment Division

During this quarter, the improvement in the prices of stocks on the Jamaica and New York stock exchanges seen earlier in the year, was reversed. Notwithstanding this negative development, the division was still able to improve on its performance compared with the year ago quarter.

This improved performance resulted from increased realised gains on the sale of shares, an exchange gain on the overseas portfolios and stronger dividend income. The  expectation is that the trend of higher share prices will continue into the new financial year, as economic performance, locally and overseas, gradually recovers from the dislocations of 2020.

This is reflected in the rise of QWI’s Net Asset value to $1.41 recently up from $1.33 at the end of the fiscal year.