Jamaican Teas snags shelf space in 300 US outlets
Free of income tax liabilities for the past five years, manufacturing company Jamaican Teas Limited, has used the period to expand and diversify into grocery retail and real estate.
The company recently chalked up another achievement in exports, which will either exceed or equal local sales this financial year, having gained entry to new retail channels in the United States - 200 Wal-marts and 100 Winn-Dixies, said CEO John Mahfood
Wal-mart is the largest grocery retailer in the US, while Winn-Dixie has nearly 500 stores, ranking among the top 45 of grocery outlets.
Mahfood said at the company's annual general meeting on Wednesday that Jamaican Teas switched distributors in the Florida area, leading to a fallout in sales from which the company has began to recover. A distributor has also been secured for the New York area, and the company is looking next to the Caribbean for new sales opportunities.
"By the end of the year, we will be in Grenada and St Martin," said Mahfood. The company is also doing reconnaissance in Haiti and Cuba.
Jamaican Teas is the exclusive distributor of Tetley teas under contract and its own Caribbean Dreams tea brand. It also began manufacturing tuna and sardines last year.
Under its Caribbean Dreams brand, Jamaican Teas has a contract packaging arrangement with an unnamed company in Thailand for sardines, tuna and coconut milk, which are re-exported. Additionally, it has a joint-venture arrangement for spring water, and also packages chocolate, browning and salt for export under the same brand.
The company listed on the junior stock exchange in 2010, immediately qualifying for 100 per cent waiver of income taxes for five years, to be followed by a 50 per cent waiver in the next five years. Its full waiver ends with the June 2015 quarter.
"For us, going public has been very beneficial. For the country, it has been very beneficial in terms of employment and taxes paid," he said, while criticising plans by the Jamaican Government, already in play, to phase out the junior market incentives.
Reviewing Jamaican Teas' five years of operation as a junior market company, Mahood ticked off several accomplishments, among them a 75 per cent increase in the company's capital base, 500 per cent increase in jobs at the company, and expansion into an export market slated to reach $370 million in value by the end of the company's fifth financial year this September.
"Shareholder equity was just about $400 million when we went public; at this point it is about $700 million. I expect that it will complete this financial year at about $750 million," he told the AGM.
Employment moved from about 25 persons then to about 150 persons now
And: "Exports have increased dramatically and that has been our focus. I expect this year that our exports will be up to about $360 million/$370 million, which will represent about 50 per cent of manufacturing sales," he said.
The company's sales at half-year ending March 2015 rose to $611 million - compared to $534 million for the 2014 period - with manufacturing accounting for $350.5 million of revenue. Profits spiked 16 per cent to $43 million.
The retail operations accounted for $257 million of revenue, while the property segment brought in $10 million. The company has completed the second phase of its Orchid Estate residential development in Yallahs, St Thomas, with five of 29 units left to be sold.
Acting Chairman John Jackson said at the annual meeting that Jamaican Teas had the option of paying down debt connected to its real estate projects from the proceeds of the sales, but is otherwise weighing whether to use the inflows to fund new investments. Total debt, he said, was in the region of $400 million, some of which is connected to an overdraft facility for the Orchid Estate project, as well as mortgages on the company's new factory, and a margin account used to buy stocks and shares.
The bank overdraft of $49.99 million with BNS and NCB is secured by unlimited guarantee from a director.
The directors proposed that if exports did as well as promised, dividend payment would be considered in the current financial year.