Jamaican Teas doubles yearly profit
Published:Friday | November 29, 2019 | 12:24 AM
B everage company Jamaican Teas Limited, JAMT, doubled profit for the year ending September, despite a big dip in revenue.
However, the company already sees a pathway to recovering lost ground on top line sales, including anticipated flows of about half-billion dollars from its full acquisition of the supermarket business it held with a partner, and income from a real estate project.
“Those items will be reflected in the results for next financial year [ending September 2020], because we’ll have the sales from our Portview development, which will be roughly $360 million; also, we’ll have the sales of the supermarket, which will be just over $500 million next year. And we expect to have a 10-15 per cent increase on the manufacturing side of the business,” Mahfood told the Financial Gleaner.
Jamaican Teas previously accounted for its Bay City supermarket holding as an associate company, but having bought out partner Amalgamated Distributors’ 50 per cent shareholding in Bay City Foods Limited, the operation will be consolidated into the group’s results going forward as a full subsidiary.
In a consequential year for the maker of Tetley and Caribbean Dream teas, JAMT, which hived off its investment arm and listed the new company, QWI Investments, on the stock exchange in September, made yearly profit of $399.7 million, up from $198.5 million in 2018.
In the wake of the QWI IPO, Jamaican Teas and KIW International now control 34 per cent of the investment company.
The fourth quarter contributed nearly half of the company’s profits for the year, earnings having tripled in the period to nearly $181 million.
Revenues fell nearly 27 per cent, from $1.77 billion to $1.29 billion for the group.
The core tea operation had a temporary setback in sales in the US market, where Mahfood said JAMT’s distributor IBERIA and others had too much inventory and expended effort in working the numbers down. The company therefore had to cut back on regular supplies to overseas partners while waiting on that market to absorb the excess.
Mahfood expects supplies to that market to get back on track in 2020.
“We worked off the excess inventory that our distributors were holding, so for 2020, we should see a good increase in revenues, particularly from export sales, possibly taking us to about 60 per cent of total sales,” he said.
JAMT is also looking for new sales from new tea flavours that it is already rolling out under the Caribbean Dreams brand.
“We’re always trying to come up with interesting new products so we produced some fruit-flavoured teas. We call it our select range and they come in four different flavours. There will be additional new products in 2020 with a range of new herbal teas,” Mahfood added.
As for the company’s real estate operations, Mahfood says he expects to put Portview on the market in January 2020. The 22 super studios being developed in Manor Park, St Andrew, are priced at around $20 million each.