Sat | Sep 19, 2020

Honey Bun enters two Caribbean markets, more to come

Published:Wednesday | August 8, 2018 | 12:00 AM
CEO of Honey Bun, Michelle Chong.

Bakery operator Honey Bun Limited entered two new markets in the Caribbean within the quarter ending June, but CEO Michelle Chong is keeping the country's identities close to her chest.

Other Caribbean forays are in the works, she said, adding to existing markets in Canada, the United Kingdom and United States.

The company sells its products overseas though third-party distributors. Its range of baked goods includes pastries, breads and cakes.

The listed company racked up sales of $1 billion over nine months ending June, up from $969 million in the 2017 period, but saw slippage in net profit from $84 million to $72 million, linked to higher costs of sales and distribution.

For the third quarter, net profit of $9.7 million on sales of $331.7 million was an improvement over the $7.5 million profit earned in the year-prior period on sales of $289 million. The additional markets should drive sales higher in coming periods.

Chong was bullish about the future on Wednesday, saying the expanded complex that Honey Bun commissioned earlier this year allows the company to increase capacity.

"Our previous building space would not allow for more space to purchase new equipment and as such, our capacity was maxed out," she said.

Last year - the company's fiscal period ends annually in September - Honey Bun grew sales by a modest five per cent to $1.25 billion, but profit fell 32 per cent to $93 million. Chong cited lack of space as the problem.

The factory upgrade stemmed from a capital expenditure plan in 2016, when the company announced it would spend in excess of $150 million in a phased programme to add to the existing plant at Retirement Crescent in Kingston on two adjoining properties that were acquired for $120 million.

Chong said then, the additional space was expected to double capacity, alongside investments in more automation of in-factory processes and machinery to improve efficiency. The company's aim in 2016 was also to double export within two years.

On Wednesday, Chong said the company will be spending on more equipment towards the end of the year, and although exports were flat year-over-year, it is working on a plan to address it plans that seem to include both new products and new markets. However, Chong's only comment in this regard was a declaration that they were "amazing strategic plans".

One of Honey Bun's most recent innovations was a pocket-sized version of its Buccaneer Jamaica rum cakes, in three flavours. The company has also added new distribution channels inside Jamaica to drive local sales for its range of products.

The 30 per cent improvement in sales in the June third quarter was as a result of continued investment in production capacity and restructuring of distribution, the company noted in its earnings report.

Honey Bun 1982 Limited produces under brand names Goldie, Buccaneer, Island Bites, Honey Bun and Shorty. The company was founded by Chong and her husband Herbert.