Coffee regulator blamed for setback due to delays in getting requisite permits

Salada has suffered a severe setback in the production of its flagship Mountain Peak Instant Coffee brands.

The company is admitting that, “its production capabilities have been adversely affected by the delay in obtaining permits from JACRA (Jamaica Agricultural Commodities Regulatory Authority), resulting in our inability to produce some of our flagship products, which are being demanded by the domestic market.”

JACRA is a statutory body that falls under the Ministry of Industry, Commerce, Agriculture and Fisheries and is responsible for the regulation, promotion, standardisation and development of the agricultural commodities industry, which includes coffee, cocoa, coconut and the spices (nutmeg, pimento, ginger and turmeric).

JACRA has since then given the necessary approval for Salada to continue production of its flagship coffee products.

With this in effect, Salada said it expects that the situation will normalise during this current second quarter.

Salada had taken JACRA to court last year seeking to overturn its order that the coffee blender increases its instant coffee formulation from 10 per cent local coffee content to 30 per cent.

However, Salada resisted this requirement claiming that it would lead to severe damage to its coffee brand and took the matter to court.

However, last November the Supreme Court rejected Salada’s petition and ruled that it comply with JACRA’s requirement and adjust its formulation of instant coffee from 10 per cent local coffee content to 30 per cent.

Salada is reporting that during the December quarter exports continued to perform, showing a 1.3 per cent increase when compared to the previous year.

Fall off in turnover

For the December quarter, Salada recorded a 22 per cent decrease in turnover to $226.36 million coming from the $288.46 million posted for the comparable period in 2019. Cost of sales for the period decreased by 24 per cent to close the quarter at $168.65 million relative to $223.18 million in 2019.

As such, gross profit for the quarter amounted $57.71 million, a 12 per cent decline year over year from the $65.28 million booked in 2019. Other operating income for the first three months amounted to $491,000, two per cent down from $501,000 booked in 2019.

Administrative expenses for the quarter recorded a decline of six per cent to $29.60 million, while selling and promotional expenses decreased 22 per cent from $15.63 million in 2019 to $12.14 million. Consequently, this resulted in an operating profit of $16.47 million compares with $18.75 million posted in December 2019.

The company reported net finance income of $1.25 million for the quarter as against the $11.52 million documented for the same period in 2019. Profit before taxation amounted to $17.72 million for the first quarter ended December 31, 2020, representing a 145 per cent increase from $7.23 million booked for the prior corresponding quarter.

Taxes for the period under review amounted to $4.62 million, up from $1.81 million booked in 2019. As such, net profit totaled $13.10 million for the period, relative to net profit of $5.42 million reported in 2019.

Shareholders’ profit up

Net profit attributable to shareholders amount to $13.10 million, up from the $5.49 million posted in 2019. As at December 31, 2020, total assets declined by 10 per cent to $1.04 billion coming from $1.16 billion in 2019.

The overall movement in the asset base stemmed from a decline in cash and cash equivalents to $144.26 million from $217.58 million reported as at December 31, 2019.