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Profits slide at CPJ

Published:Wednesday | February 6, 2013 | 12:00 AM
Chairman Mark Hart (left) and CEO Tom Tyler of Caribbean Producers Jamaica Limited. - CONTRIBUTED

Start-up costs associated with a second CPJ Market outlet and the popular Cru Bar clipped profits at Caribbean Producers Jamaica Limited in its December quarter.

The distribution company known for its wine and meat products spent J$80 million developing its second CPJ Market, a retailer of fine products, which opened at Lady Musgrave Road in Kingston close to yearend 2012.

"CPJ Market and Deli has opened to resounding reviews with our existing food and beverage product lines as well as new brands that we have introduced to the local palate," said CPJ president Thomas Tyler in a statement accompanying the company's second-quarter financial results.

CPJ said previously that it projects annual income of J$300 million from the new CPJ Market outlet.

CPJ's selling and administrative costs increased to US$3.4 million in the December quarter due to the new complex, as well as separate meat-processing plant.

"It is, however, against this background that the company's selling and administrative expenses in comparison to last year have increased by 25 per cent. In particular, staffing costs and utility expenses have increased due to the addition of the new business units," Tyler said.

Profits fell 12 per cent US$701,600 (J$65m).

CPJ also attributed lesser profits to Hurricane Sandy, which disrupted tourism arrivals and related product sales. The company revenues were flat at some US$16.5 million year on year but its gross profit margin grew from 24.3 to 28.5 per cent year on year.

The company, which relies heavily on imports, remains vulnerable to local currency movements against the US dollar. It plans to diversify by bolstering exports.

"The Jamaican dollar is still devaluing rapidly in response to the pending agreement between the government and the International Monetary Fund. Notwithstanding these challenges, over the next three months the company will focus on strengthening operations for the exportation of products from our meat-processing facility and continue to focus on building our distribution lines and working with our customers to market our products to the Jamaica n consumer," said Tyler.

In July 2011, CPJ raised some J$426 million from its initial public offering ahead of its listing on the junior exchange. Its cash flows have dropped steeply from US$1.2 million to US$197,200 at December 2012.