CPJ bullish despite profit dip
Sales at Caribbean Producers Jamaica Limited ticked up in the past year, but profits went south in line with a warning from the company two months ago that 'unregulated players in the market' would weigh on its bottom line.
Still, CPJ chairman Mark Hart acknowledged that the company was disappointed by its performance, considering the investments made to drive returns at the food and distribution company.
"We expected more growth and better margins than we were able to accomplish at the end of the year," Hart told Gleaner Business.
"We had built in costs in terms of administration and selling costs, particularly salaries and wages, in anticipation of new lines of business that we were expecting to materialise," he said.
For year ending June, CPJ reported revenue of US$94.1 million and profit of US$1.05 million. That compares to revenue of US$86.85 million and profit of US$3.43 million in 2015.
The outcome resulted from increased production costs and administrative expenses, some of it linked to CPJ's expansion overseas.
"We added a lot of employees, and the St Lucia business is still in a start-up situation in its second year, so we have had to build in a lot of overheads and human resources," said Hart. "Such costs as we are putting in now are in anticipation of profits that will take a little while to materialise."
CEO Dr David Lowe also attributed the increased costs to capacity building to take advantage of market opportunities.
"We had just about a little over 10 per cent increase in headcount. In addition, we increased our manufacturing capacity year on year, which introduced a new product line, and with the new capacity, we had to bring new people on board," Lowe said.
He said some of the expenses were linked to investments in machinery.
In November 2015, the company commissioned a 450kW solar system, which Lowe said was already paying off in decreased electricity bills.