Salada shuts down Mountain Peak Food Processors, transfers assets
The operations, assets and liabilities of Mountain Peak Food Processors Limited, MPFP, have been transferred to parent company Salada Foods Jamaica, SALF.
MPFP, which produced and owned the Roberts brand of vinegar, browning, canned beans and fruit juice, officially ceased operation on September 30.
“The board’s decision to transfer the business operations of Mountain Peak Food Processors to Salada Foods was a cost-containment measure,” Salada’s Acting General Manager, Tamii Brown, told the Financial Gleaner on Tuesday.
The transfer of the business operations took effect on October 1, a day after SALF’s September 30 financial year end.
The decision comes at a time when Salada Foods is attempting to keep its top line growing and its expenses in check. The instant coffee processor is also faced with the prospect of higher production costs arising from the mandate by commodities regulator JACRA to utilise more Jamaican coffee beans, which are more expensive than imports, in its blends.
The local content quota has shifted from 10 per cent to 30 per cent.
Salada Food’s has requested time for the publishing of its 2020-21 audited accounts, but its 2019-20 annual report showed that on a yearly basis, the parent company was investing $102 million in MPFP. At the end of 2019, it had $33 million due from the subsidiary.
Salada Foods acquired MPFP as part of a diversification strategy in 2012, but had its manufacturing arm closed in 2016 largely from an ‘antiquated and inefficient’ operation. The parent company proceeded to have a portion of the Roberts brand of product sourced through third-party manufacturing partners, and the remainder taken up by Salada’s Bell Road factory.
Up to the time of its closure, MPFP was the entity responsible for the local distribution and sale of Salada’s instant coffee, juices and condiments. The distribution of Salada’s products, including the company’s flagship brand Jamaica Mountain Peak, is now being handled by parent company Salada Foods.
Brown did not disclose how many persons were employed to MPFP, but in response to queries from the Financial Gleaner, said the transfer of business operations will not result in loss of employment for staff members at the present time.
In a notice to the Jamaica Stock Exchange, Salada said it does not expect the transfer of MPFP’s operational business and assets and liabilities to Salada to have any operational impact or material financial impact on the consolidated net assets, earnings per share, capital and substantial shareholdings for SALF.
“The board also do not foresee any significant risk or liability to be assumed by SALF,” the notice said.
Salada booked $13.7 million from the transfer of machinery, equipment and vehicles from MPFP for the financial year ended 2020.
For the nine months ending June 2021, its most recent financial report, the coffee processor made a net profit of $115 million, tripling the $35 million over the same period in 2020, while sales grew nine per cent, from $819 million to $890 million.