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Jamaican Teas doubles exports since market listing

Published:Wednesday | January 13, 2016 | 1:00 AMCamilo Thame

Jamaican Teas doubled its annual exports to more than US$3 million since listing on the stock exchange five years ago.

With half of its sales overseas going to the Caribbean market and the rest to North America, the tea maker nurtured two major growth markets in Trinidad & Tobago and the state of Florida in the United States.

The company, which distributes the Tetley and Caribbean Dream brands, also managed to boost domestic revenue for its core beverage manufacturing business by 60 per cent over the five-year period since 2010.

The doubling of warehouse and factory space not including the recently acquired Bell Road property; the purchasing of new equipment; and the introduction of new products such as instant chocolate, readyto-drink teas, and bottled water, have undoubtedly helped transform the local manufacturer.

Indeed, profit from manufacturing, which contributed to 55 per cent of total sales in the year ended September 30, 2015, was the highest on record. It also represented a 15 per cent return on operating assets for the segment.

However, Jamaican Teas' foray into retailing and real estate development is yet to pan out.

The flagship store, which is located in Kingston, managed to turn a profit in 2013, the year its operations in Savanna-la-Mar, Westmoreland, commenced operations. But that was followed by a $14-million loss in 2014 and $1-million profit last year, which represented less than 0.2 per cent margin on the $520-million sales recorded for retail in 2015.

Comparatively, Jamaican Teas' manufacturing returned more than 13 per cent operating margin on its $732 million in sales during the 12 months to September 30, 2015, up from 12 per cent on its $626 million in sales the year before.

The company's retailing position worsens when its 49 per cent stake in Montego Bay supermarket, Bay City, is accounted for. That store has racked up $111 million in losses since 2011; realised three per cent growth in revenue over the last four years; and its liabilities now exceed its assets by $110 million.

Earnings from real estate are lumpier. 2013 was a good year in that the company realised $21 million in operating profit from $185 million in sales from rental and development, when the first real estate development comprising a 18 super studio apartment complex at 12A Kingsway Avenue in Kingston was completed.

In 2014, real estate returned a $2-million profit from $26 million in sales, and last year the business segment incurred a $9-million loss from $82 million in revenue.

The company's second development an 11-acre property comprising 71 two-bedroom houses located in Yallahs, St Thomas commenced in 2015.

Directors expect to generate positive cash flows from the proceeds of sales from phase one, which comprises 29 units of this development.

"The funding will be used to repay some loans, dividends to shareholders and to finance phase two of the development," wrote directors John Jackson and John Mahfood in a statement to shareholders accompanying the latest quarterly results.

camilo.thame@gleanerjm.com