Durrant Pate/Contributor

Jamaican manufacturing company Spur Tree Spices has more than doubled its net profit for its first quarter ended March 31, 2022, amounting to J$50.8 million, up from the J$17.3 million posted for the same period of 2021.

This represents an improvement of approximately 194 per cent for the company, which went public earlier this year having had a successful initial public offer (IPO) of shares. Total assets at the end of the quarter under review totalled J$766.9 million, up from J$388 million for the same period last year and J$596.7 million for year ended December 2021.

This position reflects an improvement of 97.6 per cent above the period ended March 2021 and 28.5 per cent up from December 31, 2021. Cash on hand improved to J$223.2 million at the end of the quarter, up from J$51.2 million at March 31, 2021, an improvement of 336 per cent.

Shareholders’ equity was J$671.9 million at the end of the quarter, up from J$199.7 million for the corresponding quarter, an increase of 236.4 per cent.

The manufacturing company generated revenue of J$237.1 million for the quarter, an increase of 40.7 per cent over the J$168.48 million achieved in the corresponding quarter for the previous year. Spur Tree’s newly acquired subsidiary, Exotic Products Jamaica Limited, generated revenue of J$73.25 million for the quarter.

Some J$71.06 million of this amount was sold to Spur Tree Spices and hence only J$2.18 million is included in the consolidated revenue of J$237.1 million.

Reasons cited for strong revenue growth

The strong performance in revenue growth continues to demonstrate the company’s push to expand its reach in the export markets and the strength of the brand among its loyal customers. Despite the significant cost challenges being faced due to the ongoing supply chain issues, the company continues to work assiduously at growing efficiencies in all areas of the business.

In addition, Spur Tree Spices continues to capitalise on the economies of scale provided by the growth in our top line in leveraging better input costs.  Cost of sales for this quarter is 62 per cent of revenue, which is a significant improvement over the 70 per cent achieved for the corresponding period of the previous year.

With improved revenue performance and the cost reduction gained, gross profit for the quarter was J$89.0 million up from $50.6 million for the corresponding period of 2021. This represents an improvement of 75.8 per cent, and gross margin improved to 38 per cent, up from 30 per cent for the same period of the previous year.

Administrative expenses incurred for the period was $37.7 million compared with $27.4 million for the same period last year. The increase of 37.7 per cent in administrative expenses is primarily driven by additional business costs, consolidation of expenses in Exotic Products and residual listing costs.

The directors of the company expressed pleasure with the financial results for the first quarter and are proud of the commitment and outstanding work of the executive team and staff as Spur Tree Spices strives for continued growth in all segments of the business.

Positive outlook

The directors are trumpeting a positive outlook pointing out that, “The company is working on several strategic priorities focused on growing revenue and containing costs. We expect to realise the full financial benefits of most of these initiatives sometime in the third quarter and beyond.”

These initiatives include expansion of production capacity in both companies, Spur Tree Spices and Exotic Products to meet increased demand for existing products, and the introduction of new items under the Spur Tree brand, as the company continues its transition from spices and sauce provider to a full-blown food company. Work has started to expand Spur Tree Spices’ footprint in the local market with special emphasis on the food service segment.

According to the directors, “As we look forward in the coming months, we will continue to prioritize this initiative, not only as an important element of our revenue growth strategy, but also as a part of our risk mitigation approach in building more diverse revenue streams. We are cognizant of the current economic challenges, with inflation at record levels in our main market, the United States, and the uncertainty that this creates.”

However, the directors remain confident that the work being done in the market with various stakeholders, will put the company in a great position to continue our current growth trajectory.