Thu | Jul 2, 2020

Jamaican Teas heading for strong finish

Published:Friday | June 26, 2020 | 12:11 AM

John Mahfood, CEO of Jamaican Teas Limited.
John Mahfood, CEO of Jamaican Teas Limited.

Tea maker Jamaican Teas Limited is expecting a strong end to financial year 2020, a forecast that rests on improved sales at half-year and the take-up of units in its latest real estate development.

The company’s outlet remains positive despite the drag on its bottom line by its investment subsidiary from COVID-induced losses.

Reporting to shareholders, CEO John Mahfood said that in the three-month period ending March, sales grew 50 per cent to $473.3 million, just about two-thirds of the gain coming from the retail side of the business, specifically the Shoppers Delite supermarket in Kingston.

Jam Teas took 100 per cent control of that operation in January of this year, according to Mahfood. The effect of this was that revenues from the supermarket boosted Jam Teas top line by $105.3 million.

Mahfood says the main source of optimism for a positive year was the $380 million expected from the sale of the just-completed housing development at Manor Park.

“My expectation is that the manufacturing side of the business will show a very strong 2020. The retail side will make a small profit. Meanwhile, 16 of the 18 units at Manor Park have been sold. Those deals are expected to close later this year,” Mahfood reported to the company’s annual general meeting, AGM, last week.

Although the company boosted sales by $159 million in the March quarter, the company made a loss of $412 million, $47 million of which was attributable to shareholders. Mahfood said it was due to the company’s $117-million share of subsidiary QWI Investments Limited’s losses.

At half-year ending March, sales amounted to $906 million, up from $692 million. Losses amounted to $456 million, $19 million of which was attributable to shareholders, erasing the profit of $162 million made at HY 2019. The company’s fiscal year ends in September.

The company’s best year for revenue was 2018 when sales topped $1.7 billion. At its current pace, and barring any COVID fallouts, it could match or exceed that record.

Looking ahead, Mahfood said Jam Teas was focussed on growing sales, including exports, having rolled out a new range of teas targeted at a younger demographic, with flavours such as chocolate mint truffle, lychee ginger and pineapple coconut. In addition, the health conscious set is being targeted with a range of three ‘super teas’ – Immune, Boost and Support – which have added ingredients such as vitamins and antioxidants. The maker of Tetley and Caribbean Dream teas has also refreshed the packaging for all products, using brighter, more vivid colours.

Jamaica Teas and QWI’s annual general meetings were held two hours apart last week at The Jamaica Pegasus hotel in New Kingston and streamed live on Facebook and YouTube.

The Jamaica Stock Exchange, JSE, has warned its listed companies that such live-streamed meetings, held without the sanction of the court, are subject to legal challenge later. The JSE Group and 16 other listed companies have sought, and got, such an order from the Supreme Court, but Jam Teas and QWI were not among them. Neither were GraceKennedy and Kingston Wharves, which also streamed their annual general meetings.

The companies declined participation in the court application to avoid any possibility of having to reschedule the meetings, said John Jackson, the chairman of both Jamaican Teas and QWI.

As a precaution, Jackson moved to remove a resolution for a 2:1 stock split from the agenda at the AGM, saying based on advice, the vote would be taken instead at an emergency general meeting, to be held in a few weeks.

“The legal advice that we got is that we should defer any resolution that is sensitive and could lead to any challenge. Out of an abundance of caution we have accepted the advice,” Jackson said.