Salada profit rises in June quarter
published: Friday | October 31, 2003

By Andrew Green, Staff Reporter

SALADA FOODS Jamaica Limited earned an operating profit of $8.1 million for the quarter ended June 30 of this year.

Representing a 22 per cent increase from the June quarter last year, this was also a turnaround from declines in the two previous quarters of the financial year. The $1.5 million profit boost in the third quarter had been preceded by a $2.7 million fall in the March quarter and a $2.6 million fall in the December quarter. "We have continued to do what we have always been doing," said company secretary M. Olivia Glover, in an interview. She said, "We just need to sell more and more coffee."

Incorporated in Jamaica, Salada is the sole manufacturer of instant coffee in the island. Sales of instant coffee and roasted and ground beans represent approximately 80 per cent of the company's and the group's turnover.

The Coffee Company of Jamaica is a Salada subsidiary and Shirriff (Jamaica) Limited is an associated company.

Salada Foods, whose flagship brand is Mountain Peak Instant Coffee, last year sought to raise the money to assist the company in paying its debt, upgrade some of its equipment and boost its export drive. It raised $48 million through a rights issue.

Salada has placed an emphasis on exports in its attempts to boost sales, with a focus on the North American market.

For the nine-month period ended June 30, operating profit was $15.97 million, down 20.1 per cent from the same period in the year before. This decline was not isolated, as operating profit for the full year ended September 30, 2002, was $26.4 million, down 20.9 per cent from the year before.

Salada saw a 15 per cent drop in operating profit to $33.4 million in its 2001 financial year when the decline took hold. In the 2000 financial year, the company had 24.2 per cent increase in operating profit.

Salada earned a gross profit of $63.09 million for the nine months ended June 30 of this year, up 10 per cent from the similar period the year before.

The growth in gross profit was based on an 8.4 per cent increase in turnover to $168 million, and a less aggressive 7.5 per cent increase in cost of sales to $105 million.

Selling and promotion costs for the nine-month period fell 17.1 per cent to $8 million, but administrative expenses soared by 41 per cent to $39.2 million. Salada thus ended up with a $15.97 million operating profit for the first nine months of 2003.

Unlike the nine-month gross profit increase in the 2003 financial year, gross profit for the 2002 financial year showed a 0.6 per cent reduction to $74.1 million. Turnover grew 8.3 per cent to $205.5 million in 2002, but cost of sales increased by an even more sprightly 14.1 per cent to $131.4 million. The fall in gross profit in 2002 was then exacerbated by a massive 81.7 per cent increase in selling and promotional costs to $11.8 million and a more moderate 4.6 per cent increase in administrative expenses to $36.4 million.

The result was the $26.4 million operating profit for the 2002 financial year.

For the first three quarters of 2003, finance costs, at $4.2 million, ended up as a positive contributor to profitability. This pushed profit before taxes to $20.2 million.

Taxes amounted to $6.8 million, resulting in a net profit attributable to stockholders of $13.4 million. For the similar period of the previous year, stockholders had been entitled to $16.6 million.

Earnings per share amounted to 129.17 cents.

Salada had 10.4 million issued shares at the end of the third quarter of 2003 compared with 7.6 million issued shares for the similar period of 2002.