New acquisition boosts Jamaican Teas sales

Jamaican Teas Limited made J$306 million of sales in its nine-month period ending June 30, from which it made operating profit of J$56 million.

Sales grew by J$74.75 million or 32 per cent relative to the 2009 nine-month period, J$38.4 million of which was generated by a supermarket, JRG Shoppers Delite, which Jamaican Teas said was newly acquired and commenced operations in March.

JRG is described as a retailer of household and consumer products. Its cost and sales and administrative expenses, combined were greater than sales, resulting in an operating loss of J$600,000 in the supermarket's first three months of business as a Jamaican Teas subsidiary.

Admin costs double

The Jamaican Teas group, however, grew operating profit by more than J$5 million or 10 per cent to J$56 million, but ended the review period with lower net profit, resulting from a doubling of administrative costs, from J$20 million to J$42 million, plus J$3.5 million of translated foreign exchange losses, compared to a J$25-million gain in 2009.

The forex losses resulted from a more than four per cent appreciation of the Jamaican dollar.

Net profit of J$50.4 million or 71 cents per share at 9M 2009 fell 32 per cent to J$34.4 million or 24 cents per share in the current period as a result. Earnings per share are calculated on 142.66 million units outstanding at June. At listing in July, outstanding shares rose to 167.828 million units.

No Tax

Jamaican Teas paid taxes of J$17.5 million year to review date, but expects to be freed of corporate income tax liabilities over the next five years - a concession granted to companies listed on the nascent junior stock market.

Jamaican Teas is largely in the business of tea manufacturing for the Jamaican and export markets, with about 40 per cent of sales overseas. Its main brands are Tetley and Caribbean Dreams.

Sales of its core manufacturing products rose 16 per cent relative to the 9M 2009 period

Having debuted on the market at J$3.37 per share, the stock is now selling at J$3.50, valuing the company at J$587 million.

Its book value of J$371 million (book value per share: J$2.21) is up J$100 million in the nine months from September 2009.

The JRG acquisition has helped to boost the group's total assets to J$744 million - J$826m with receivables IPO, which was booked post quarter in July - compared to J$307 million at September 2009.

Total liabilities increased by J$18 million, from J$36 million to J$55 million, mostly due to inherited payables of J$16 million from the supermarket operation.

business@gleanerjm.com