Concern Over Poor Salada Q1 Results
New managing director of Salada Foods Jamaica Limited, Jerome Miles, defended the fall in profit for the first quarter ending December, saying a 69 per cent jump in world coffee beans prices had jolted the coffee processing company.
Miles began running the company in January, as permanent replacement for the boss who had left in May 2014.
The company was overseen in the interim by a board director, who has since resigned her seat.
Miles fielded tough questions at Salada’s annual general meeting on Wednesday as investors voiced concerns about the results.
Salada’s Q1 earnings report shows that despite a 5.3 percent increase in sales, gross profit nosedived by 46.9 per cent from $50.815 million to $27.037 million.
Pre-tax profits were in negative territory, reflecting a loss of $735,000 compared to a positive $27 million outturn at December 2013.
Miles said Salada had to absorb the increase for coffee beans as it was unable to adjust prices at the time. He said raw material prices have fallen since then and this should put Salada in a better position for the second quarter.
And, he dismissed suggestions that the 57-year-old company is in trouble, saying that Q1 represented only one period of poor results.
The continued poor performance of recently acquired subsidiary Mountain Peak Foods Processor also came in for scrutiny. The company manufactures a rage of food products under the Roberts brand. It contributed $8.4 million out of total revenue of $736.4 million for financial year 2014.
Shareholders pressed the managing director for an indication as to when Mountain Peak Food Processors would at least break even. Miles said he is working on a plan to turn around the ailing subsidiary, but would not commit to a definite date when this would happen only that it would be “in the shortest possible time”.
Miles took over the reins of Salada from interim manager Keshia Nelson-Brown on January 5, after Julian Rodney demitted office in the middle of May with no replacement.
Salada went on to post a strong fourth quarter which was enough to overhaul some dismal half yearly results as reported by the Financial Gleaner on May 23.
At yearend September 2014, Salada was showing total assets of $877 million. Turnover was $736.4 million with cost of sales at $467.53 million, while net profit amounted to $98 million.