However, company delivered commendable June quarter performance

Durrant Pate/Contributor

The canned ackee production of Spur Tree Spices Jamaica was rocked by inadequate can supply during the June quarter, which affected its bottom line during the period.

The management is admitting that its “revenue for the quarter was adversely affected by challenges with the production of ackee during the seasonal crop in January and February of this year. The provider of cans had limited or no stock for three weeks during this period; hence production of ackee was much lower than projected”.

This resulted in the ackee being out of stock for most of the second quarter, which had a significant negative impact on the overall revenue achieved for the quarter. Spur Tree Spices said the issue has been addressed both at the Jamaica Manufacturers and Exporters Association and the Government ministerial level.

No recurrence expected

The company said it doesn’t expect a reoccurrence, as it moves into the second crop for the year, which is expected to run between August and September. Despite the significant cost challenges being faced by Spur Tree Spices, due to the ongoing supply chain issues, the company continues to work assiduously at growing efficiencies in all areas of the business.

The company generated revenue of $201.7 million for the quarter, representing an increase of 1.5 per cent over the $198.8 million achieved in the corresponding quarter for the previous year. Despite not achieving revenue target for the second quarter, Spur Tree Spices’ revenue performance for the first six months was approximately 20 per cent above the same period for 2021.

This was very commendable given the challenges experienced with production inputs and those associated with the current economic climate. Cost of sales for this quarter is 63 per cent of revenue, which is appreciably lower than the 66 per cent achieved for the corresponding period of the previous year.

Profitability rising

The six month’s performance was even better at 63 per cent compared with 68 per cent for 2021. With improved revenue performance and the cost reduction, gross profit for the quarter was J$74.2 million up from $67.1 million for the corresponding period for 2021.

This represents an improvement of 10.5 per cent, and gross margin improved to 37 per cent, up from 34 per cent for the same period of the previous year. The company’s gross profit for the first six months of 2022 is $163.2 million, up from $117.8 million for the same period in 2021, reflecting a 39 per cent increase.

Administrative expenses incurred for the period was $35.8 million compared with $28.9 million for the same period last year. The increase of 23.7 per cent in administrative expenses is primarily driven by additional business costs and consolidation of expenses in exotic products.

Net profit for the quarter was $38.4 million, an improvement of $10.0 million or 35.5 per cent above the $28.4 million achieved for the same period of the corresponding year. Net profit for the six-month period to June 2022 was $89.3 million, up from $45.7 million for the same period of 2021.

This represents an improvement of 95.5 per cent. The outstanding performance for the first six months of the financial years was achieved despite many external challenges. These include, supply chain issues, input cost increases and a general softening of demand in the local and international markets.

Building market opportunities

Spur Tree Spices continues to explore new avenues to growth revenue and increase its presence in the local and export markets. Recently, we took a significant step in this regard with the signing of a distribution agreement with Massy Distributors to cover an important segment of the local market which was not previously properly serviced.

This agreement also explores opportunities to establish the Spur Tree brand in other Caribbean markets.