CPJ Q1 2025 Earnings: Solid Growth, Weak Margins

  • Caribbean Producers Jamaica (CPJ) reported strong earnings for its first quarter ended March 31, 2025 (Q1 2025), with net profit increasing by 28.5% year-over-year, driven by higher sales volumes and expanded product offerings.
  • Revenues rose to $45.97Mn, marking a substantial 21.5% (or $8.14Mn) increase, compared to $37.83Mn in Q1 2024. This growth was fueled by increased sales to large resorts and the successful introduction of new products, notably the Stry8 Vybz rum, developed in partnership with Angostura Limited of Trinidad and Tobago.
  • The company also improved its protein supply through increased manufacturing capacity and expanded its entire spirits portfolio. These efforts, along with an expanded distribution footprint and intensified marketing strategies, contributed to positive top-line performance.
  • However, top-line growth was met by a 26.9% rise in direct costs totalling $33.30Mn. Consequently, gross margin declined to 27.6% of revenues, down from 30.6% in Q1 2024. 
  • Operating expenses also rose by 5.7%, reflecting higher selling and administrative costs from increased headcount as the company prepared for upcoming business opportunities by employing additional staff. Other expenses related to manufacturing upgrades also contributed to the higher operating costs. Financing costs also increased (+15.3%).
  • Despite the increase in direct and indirect costs, CPJ’s bottom line growth was robust, supported by an improvement in revenue and operating profit (+20.22%). Consequently, there was an accompanying improvement in its net profit margin to 3.9% from 3.7% in the prior corresponding period.
  • Looking ahead, the company is poised for several operational improvements throughout 2025. These include its manufacturing plant upgrade, slated for completion in June 2025; the implementation of warehouse storage and distribution in Kingston in June 2025; and ERP implementation, which should enhance efficiency and overall productivity by July 2025.
  • At market close on Thursday, CPJ’s price was J$8.03, down 3.40% since the start of the year. At its current price, the company trades at a P/E of 8.8x, which is below the Main Market Distribution and Manufacturing Sector average of 15.97x.

(Sources: CPJ Financial Release & NCBCM Research)