Big jump in operating expenses, which went up by 30%

Jamaican listed logistics company, Mailpac Group had a less than good 2021 financial year with revenues inching up slightly but profits declining.

In its just released 2021 financial returns Mailpac generated revenues amounting to J$1.82 billion, up five per cent compared to the J$1.73 billion booked for 2020. Revenues for the December 2021 final quarter were down two per cent, closing at J$501.73 million in comparison to the 2020 posting of J$512.14 million.

The company attributed the decline in revenues to a decline in “online shopping during 2020 driven by government-mandated limitations on physical movement”.

Cost of sales for the year totalled J$926.38 million, up from J$906.72 million in 2020.

Operating expenses for the year under review closed at J$442.22 million, up from J$340.11 million in 2020, reflecting a 30 per cent increase. Management notes that, “this increase reflects the cost of our enhanced processing capacity, improved customer service capacity, additional delivery store locations, and amplified brand marketing”.

Investments to expand the company’s local footprint

This was aligned with Mailpac’s stated commitment to invest in expanding its footprint as the e-commerce logistics provider of choice for Jamaican consumers. The increases in operating expense were linked to;

• Selling and promotion totaled J$69.03 million (2020: J$53.89 million) rising 28 per cent year over year.
• Administrative and general expenses closed at J$373.19 million (2020: J$286.22 million), up 30 per cent year over year.

Operating expense for the December quarter closed at J$129.82 million, versus J$110.18 million booked twelve months earlier. As such, operating profit for the twelve months ended December 31, 2021 amounted to J$451.19 million, a six per cent decrease from the J$479.41 million reported as of December 31, 2020.

Profitability goes down

Mailpac booked profit before taxation of J$400.01 million for 2021, down from J$443.05 million in 2020, representing a 10 per cent decline. Profit before taxation for the fourth quarter closed at J$114.58 million, up from the 2020 booking of J$104.17 million.

There was no taxation for the period under review, relative to a tax credit of J$28,000 booked in 2020, as such net profit closed the 2021 at J$400.01 million, 10 per cent down from the J$443.08 million reported for 2020.

In commenting on the 2021 performance the management explain that, “given the investments made throughout 2021, Mailpac is more focused and better equipped to meet its long-term goal of becoming a regional leader in e-commerce fulfillment. Through a mix of organic initiatives and acquisitions or investments, we expect Mailpac to efficiently capitalise on the inevitable long-term growth in the ecommerce sector within the Caribbean region”.

As at December 31, 2021, total assets closed at J$820.58 million, 25 per cent up from J$654.39 million booked in December 2020. Notably, the increase in asset base is due to cash and cash equivalents amounting J$366.36 million, 29% up from J$283.99 million recorded in 2020.

‘Property, plant and equipment’ and ‘Right-of-use-assets’ also contributed to the growth by amounting to J$96.61 million and J$47.66 million respectively