However net profit for the quarter is down $53 million to $78 million coming the $132 million in 2020

The Jamaican Teas Group enjoyed a positive 2021 fiscal year, particularly in the performance of its investment division, QWI.

The reversal from fair value losses on investments of $482 million last year to gains of $354 million in the just ended 2021 financial year in September, arose from the significant recovery QWI experienced in its shareholdings during the year, as the effects of COVID-19 on many business operations began to turn around. This is still ongoing locally, as economic recovery has yet to fully rebound.

The four per cent increase in the group’s revenues reflected growth of 17 per cent in export manufacturing sales, 10 per cent in domestic manufacturing, a two per cent fall off in supermarket sales and six Manor Park studios sold this year compared with 2021.

However, revenue for the fourth quarter in September declined by $262 million moving from $787 million in September 2020 to $525 million for the fourth quarter under review. The decline in revenue stems from the fact that no real estate sales occurred in the quarter versus the $248 million from the sale of 12 of the studios at the Manor Park complex a year ago.

The remaining $14 million mainly reflects lower export sales that were partly offset by an increase in domestic sales in the manufacturing business.

QWI was star performer in the 4th quarter of 2021

There was growth in other income for the fourth quarter of 2021, largely due to higher realised investment gains and dividend income from its QWI Investments subsidiary and reduced gains on the group’s investment properties compared with the year ago period. QWI improved on its performance in the last quarter compared with comparable quarter in September 2020.

Realised gains on the sale of shares increased as well as foreign exchange gains on the overseas portfolios and stronger dividend income. The management’s expectation is that the trend of higher share prices will continue into the new financial year, as economic performance, locally and overseas, gradually recovers from the dislocations of 2020.

This is already noticeable in QWI’s Net Asset Value of $1.43, up from $1.33 at the end of the fiscal year. Net profit attributable to the group for the fourth quarter was $78 million, a decline of $53 million or 40 per cent from the $132 million profit recorded in 2020.

Lower profits in the Real Estate Division, due to the completion of sales of the Violet’s View Manor Park units and a write down in the value of 132 Harbour Street contributed to $61 million of the decline. However, this was partly offset by gains in QWI’s investment portfolio in the 2021 fourth quarter versus that of the 2020 quarter. For the full year, net profit attributable to Jamaican Teas was $391 million, an increase of 76 percent from $222 million in the previous year.

Higher sea freight cost hurting manufacturing division

The manufacturing division is hurting from the considerably higher sea freight and raw material costs this year. This resulted in a significant deterioration in the gross profit margin in this division.

According to the management, “we expect to begin recovering some of these cost increases during the first half of 2021-22. Curtailed activity in some of our overseas markets accounted for the reduction in sales costs, due to COVID-19 related travel restrictions, which limited our ability to implement certain sales programmes. The increases in interest expense during the quarter and full year resulted from higher borrowings by QWI”.

The highlight for the quarter was a gain in our local sales in the manufacturing division, which rose 13 per cent over the prior year. This was an acceleration in the growth rate seen in the three prior quarters.

Exports accounted for 59 per cent of total sales in the quarter and declined 12 per cent from the year ago quarter. The feedback from overseas customers indicates that the current slow-down in shipments is a result of distributors reducing their inventories in certain product lines and does not reflect an overall slow-down in their sales to consumers.

Jamaican Teas has finally received planning approval for a major expansion of the manufacturing plant to meet and prepare for continued growth. Construction is expected to commence in 2022, in addition to the relocation of the soups and spices operations of the manufacturing division from Bell Road in Kingston to its temporary facility at Richmond Park in St Andrew.

An extraordinary general meeting was held at which the company’s new Articles of Incorporation were approved and also the transfer of the manufacturing division to its new subsidiary company, Caribbean Dreams Foods Ltd. Planning for this transfer is well under way.