Fri | Sep 17, 2021

Honey Bun weighs best use for newly acquired property

Published:Sunday | March 14, 2021 | 12:06 AM
Honey Bun 1982 Limited CEO Michelle Chong.
Honey Bun 1982 Limited CEO Michelle Chong.

Baking company Honey Bun Limited will, by mid-year, decide on what use it will put the property it quietly purchased last year.

The lot connects to the back of its manufacturing complex located at Retirement Crescent in Kingston, but Honey Bun isn’t sure whether it’s best utilised on the production side of the business’ near 39-year operation or not.

The company said it spent $45 million to acquire the property.

“While the purchase was a real estate investment, we could use that building for further manufacturing opportunity or look at other opportunities to diversify our business. Diversification would be considered, where we can utilise more of our local input or for the development of a business within our supply chain,” said Honey Bun CEO Michelle Chong at the company’s annual general meeting on Wednesday.

While the company is weighing how to utilise the 9 Warrenton Road property in its continuing expansion programme, the aim of which is to grow capacity in order to go after additional market share, Honey Bun is pushing ahead with the development of new products.

Last year, the baking company launched the Shorty burger bun and hot dog bun, as well as repackaged its Buccaneer Jamaica pocket rum cakes for greater take-up in the export market. More recently, it released a cinnamon raisin loaf. And now it’s doing research on two other products, Chong said.

“We know that our products have grown in popularity over the years, and with this new product we are going after the higher end of the market,” Chong told the Financial Gleaner, with reference to the cinnamon raisin loaf.

Honey Bun has had to manoeuvre around school closures and a general downturn in business activities, largely as a result of COVID-19 restrictions, to keep both earnings and revenues intact. Yearly profit grew seven per cent, while sales climbed 8 per cent to $1.6 billion. The company was able to maintain revenue through more direct truck sales locally and quick response to demand in main export markets in the United Kingdom, United States and Canada, leading to 42 per cent growth in overseas sales.

The results were otherwise mixed for the first quarter, October to December 2020, with revenue climbing by nearly $40 million to $461 million, but profit sliding below $35 million, from $49 million the previous year.