UPDATE: EFresh eyes second acquisition, new product launch
Having consumed a meat company this year, Everything Fresh Limited is near ready to gobble up another target.
The food distribution company, which trades as EFresh on the junior stock market, is eyeing a company that fits within its current line of business.
“In terms of acquisitions, I feel it’s safe to say that there is another coming for next year. We will be staying in food service. It’s important not to move too far from the core business – stay in your lane; do what you know and understand,” Chairman Gregory Pullen told the Financial Gleaner on Monday during EFresh’s first annual general meeting as a listed company.
In February, EFresh acquired processing company Meat Experts Limited for $50 million, which was financed from proceeds of its initial public offering of shares in mid-2018.
Meat Experts, which has its own abattoir, cutting, processing, packaging and cold storage facilities and logistics network in Bog Walk, St Catherine, is currently operating at about 30 per cent capacity but Pullen expects to improve utilisation of the factory with new product lines.
The acquisition, which was booked by EFresh in the June quarter, has allowed the company to expand its product line and reduce administrative costs, while expanding its partnerships with local livestock and produce farmers.
The new business helped to drive up EFresh’s revenue by 25 per cent to $525 million in the September third quarter, but expenses relating to the “underutilised” meat processing plant weighed on the group. Overall, EFresh reported losses of $11.5 million for the quarter, but it was still a better outcome than the June second quarter, which recorded losses $28.8 million; and an improvement over the $17 million loss reported for the September 2018 period.
Pullen says the company will rely on cash to finance the second acquisition. Its cash holdings amounted to just under $37 million in September, down from $120 million year to date.
He adds that EFresh will be venturing into new product lines in an effort to further diversify its revenue streams, and is looking to secure a greater share of the hotel market, which currently stands as its primary customer base.
New product line
“We have a substantial product right now, which is in sight, but it’s in an embryonic stage so I can’t discuss the details of it,” he told the Financial Gleaner.
Already, EFresh has added locally made hamburgers, pork and pork products from the Meat Experts business to its distribution line. The new meat cuts are expected to hit supermarket shelves by March 2020.
“Previously we were importing burgers for the hotels; now we are manufacturing burgers locally, and we’ve added pork sausages, jerk sausage, mild Italian and honey garlic sausages. All these products we are pushing into the hotel sector and we are developing packaging to introduce them into the retail space as well,” Pullen said.
Operating from 78 Marcus Garvey Drive in Kingston, Everything Fresh imports and distributes dairy, meats, assorted dry and canned goods, fruits and vegetables, seafood and meats locally. The company is a major supplier to hotels, including Secrets, Iberostar, Bahia, Couples, Jewels, Royalton, and Fiesta, as well as supermarkets and retail outlets.
CORRECTION: The story has been updated to reflect that the comments were made by Chairman Gregory Pullen and not the Managing Director Courtney Pullen.