Jamaica Teas Reports lower Net Profit Due to Higher Direct Costs

  • Jamaica Teas Limited reported a net profit attributable to shareholders of $171.15Mn for its six months ending March 31, 2022, which represents a 13.7% decline relative to the prior year. 
  • The local manufacturing sales segment grew by 22.8%, despite the shortage of inventory items that resulted in lower sales for several products, particularly peppermint products which are in high demand. 
  • However, there was an overall decline in the Group’s operating revenues primarily because of the gain from apartment sales recorded during the same period in 2021, which did not occur this year. The decline in revenues was also influenced by a drop in export sales (3.1%) as higher freight costs diminished demand for some types of products, and an inability to fill orders because of delays in the arrival of imported raw materials. If the gain on the apartment sales is stripped out, the company realized a 5.8% growth in revenues in 2022. 
  • Additionally, though its subsidiary’s (QWI’s) investment portfolio outperformed the local stock market, total gains for the second quarter were 12% below the prior period which would have harmed the Group’s overall earnings. 
  • Despite challenges faced in the first half of the year, there are signs that some of the issues may be abating. In April, export shipments were 39% higher than in Apr 2021 and export shipments for the 7 months to April now exceed the comparable period for last year. 
  • The recovery in the local tourism sector, increasing employment and the reopening of the economy will contribute positively to the company’s performance. However, elevated shipping costs could continue to affect activities. 
  • Jamaica Tea’s stock price has decreased by 1.4% since the start of the calendar year. The stock closed Tuesday’s trading session at $3.76 and currently trades at a P/E of 20.9x. which is marginally above the Junior Market Manufacturing Sector Average of 20.1x

(Sources: Company’s Financials and NCBCM)