Durrant Pate/Contributor

Jamaican Teas is now reaping dividends from its growth initiatives, which were rolled out at the start of this year

The John Mahfood-led company and John Jackson chaired board say the performance from the just-ended June third quarter reflected many positives and continued the positive financial trajectory seen in the March quarter.

According to Jamaican Teas, “A number of the initiatives put in place from the start of the year are now coming together resulting in better results in this quarter compared with the second quarter. This is reflected in the rising sales and improved manufacturing and retail profits now being reported as well as improved investment division results.”

Segment performance

The investment division, QWI, had a marked improvement in the third quarter as a result of strong share price appreciation in its local and overseas investment portfolios. During this quarter, the decline in the prices of stocks on the main market of the Jamaica Stock Exchange continued from the second quarter.

Share prices overseas and on the junior market in Jamaica increased significantly, resulting in a much improved performance for QWI versus the year-ago period. For the manufacturing division, export sales increased 13 per cent in the quarter with exports accounting for 64 per cent of total sales.

Local sales increased by 4.0 per cent cent during the period. The company reports that “management actions have been planned to achieve sales improvements in several of our largest markets and we will announce the results of these actions in the coming quarters”.

Real Estate and Retail Divisions

No real estate sales were booked in the quarter this year or the fiscal year to date, as no units were available for sale. Construction work on the new studios at Belvedere Road, Kingston, is almost complete, and the units sold to date will be delivered to customers in August.

For 2023, retail revenues amounted to J$184 million for the quarter, an increase of 14 per cent. This improved sales performance has resulted in the year-to-date divisional profit contribution increasing by 55 per cent.

Total revenues for the quarter went up by 10 per cent, moving from J$648 million last year to J$715 million. Investment income improved by J$315 million, mainly reflecting the realised and unrealised investment gains of QWI, compared to 2021.

Cost of sales for the quarter and year to date went up marginally, slightly exceeding the growth in revenues. Jamaica Teas experienced sharp increases in ocean marine freight rates during 2022, and the effects of these higher costs are still being reflected in the cost of inventories purchased in 2022 but consumed in the current financial period.

However, not all of these cost increases were passed on to customers. The sharp reductions in current ocean freight rates now being experienced will improve the company’s cost of sales later in the year.

The increases seen in sales and marketing costs reflect increased levels of sales activity overseas while the higher levels of administrative costs in the quarter, due to the higher staffing and security costs of operating its second manufacturing facility at Montgomery Avenue, which opened in March 2022 together with increased accruals for higher investment management incentives at QWI.

The increase in interest expense during the quarter and year to date resulted from higher interest rates and increased short term borrowings by Jamaican Teas.

Sharp improvement in net profit

Net profit attributable to Jamaican Teas for the quarter was J$105 million, a sharp improvement from the J$24 million profit in June 2022. Total attributable comprehensive income per share was 5 cents (2021/22 – earnings of 1 cent). For the year to date, net profit attributable to Jamaican Teas was J$191.8 million, an improvement from the J$186.3 million in the previous year. Total attributable comprehensive income per share was 9.0 cents (2021/22 – earnings of 9.0 cents.