Record sales in September

Durrant Pate/Contributor

Local spice and condiments manufacturer Spur Tree Spices has ramped up its capital expenditure programme in expanding the business over the past nine months.

These include an advance of $J100 million on purchase of controlling interest in the 36-year-old St Thomas based agro-processing company, CANCO Limited, upgrade of its production capacity, expansion of its Exotic Products factory infrastructure to double production capacity and the purchase of a building in Port Morant, St Thomas to establish a production facility.

As a result, cash and cash equivalents in September 2022 was down J$12.9 million or 14.8 per cent to J$77.3 million from the J$87.2 million posted a year ago. The management in its just released third quarter report said the decline is directly related to several investment projects now being undertaken.

Irrespective of the challenges faced to date, such as the can shortages and major transition in its largest US distributor, profit for the year is up by over 66 per cent. According to the management, “this speaks to the resilience and strength of the brand. The company recorded its highest monthly sales for 2022 in September which puts us on a positive trajectory to finish the year strong”.

Positioning for sustained growth

With expected increased production capability through CANCO and the final stages of the factory expansion project at Exotic Products under way, the Metry Seaga-chaired board and Albert Bailey-led management team reports that, ”the company is well positioned to meet the increased demand for its products locally and internationally for the remainder of 2022 going into 2023″.

According to them, “the strategic imperatives set by the board of directors positioned the company to be laser-focused on growth, increasing the demand of the product lines, increasing cost efficiencies and expansion of production capabilities. The unyielding focus and execution of these strategic priorities by the executive leadership and staff at Spur Tree Spices has positioned us well for excellent results”.

As such, the Board has indicated it has tremendous confidence and anticipates “a strong 2022 fourth quarter and an outstanding 2023”. Having been affected by challenges that one of its North American distributors experienced earlier this year, Spur Tree Spices has expanded its focus to develop more channels for products distribution.

The company, which went public earlier this year following its successful initial public offer of shares, said it was pleased that other distribution partnerships locally and internationally have been finalised with the most recent being its strategic partnership with Massy Distributions for increased regional distribution.

Revenues climbing

Revenues for the nine months ended September 2022 increased by J$57.8 million or 9.4 per cent to J$672 million over the figure booked for the corresponding period last year. Cost of sales for the combined three quarters amounted to J$433.8 million or 64.5 per cent of revenues.

This is an improved position over the same period for 2021 when Spur Tree Spices cost of sales, which was 69 per cent of revenue. As a result of improved cost efficiencies, gross margin increased from 31 per cent in 2021 to 35.4 per cent in 2022.

Operating expenses for the nine months increased by J$28.4 million, or 32 per cent, mainly due to increases in marketing spend, staff costs and rental costs. Profit attributable to shareholders for the nine-months to September 2022 was J$118.8 million, up from $71.3 million for the corresponding period in 2021.

This represents an improvement of J$47.3 million or 66.3 per cent. Earnings Per Share for the nine-month period is J$0.07, up from J$0.06 in 2021, an improvement of 16.7 per cent. Total Assets in September 2022 stands at J$872 million, up from J$513 million for the same period in 2021.

This represents a 70 per cent improvement year-over-year. Shareholders’ equity as of September 2022 was J$739.7 million compared with J$253.7 million in September 2021, an improvement of 191 per cent.