Donna Ortega, News Editor
INSTANT coffee manufacturer Salada Foods Jamaica is pushing ahead to recover its profitable position after years of decline.
The Group and its wholly-owned subsidiaries, Coffee Company of Jamaica and Shirriff's (Jamaica), earned $21 million in net profit attributable to stockholders at financial year-end September 2000 compared with $9 million during the previous year, according to its audited financial statements.
Sales of instant coffee and roasted and ground beans represent about 80 per cent of the company's and the Group's turnover. Turnover, representing the ex-factory price of goods sold to third parties, increased from $167 million in 1999 to $184 million in 2000.
However, while sales were up approximately ten per cent, cost of sales increased by about 20 per cent largely due to a significant increase ($12 million) in factory overheads, hence a decline in gross profit from $72 million in 1999 to $69 million in 2000. Salaries, wages and termination costs were significant. But high administrative expenses and finance costs were slashed from $41 million to $32 million, and $19 million to $14 million, respectively. Salada's operating profit improved to $35 million in 2000 (1999: $28 million).
The Group's net current asset situation looks healthy as the ability to pay bills increases. Of note, loans moved from $65 million in 1999 to $57 million in 2000. These are to be repaid by 2009, a maximum of 10 years.
Among Salada's loan obligations are those to the Financial Sector Adjustment Company (FINSAC). In November 1998, FINSAC took over the loan portfolio from National Commercial Bank Jamaica Limited (NCB). The terms and conditions of these loans were renegotiated and are now repayable within a maximum period of ten years.
Previously, for the period ended September 30, 1997, Salada had losses brought forward of $52 million.
Last week Salada was among the securities trading on the Jamaica Stock Exchange which had the largest percentage price declines, losing 16.7 per cent (down $1.00 to close at $5.00).
Managing director Robert Parkins, in an interview last week, said confidently that during the current financial year, his "main aim is to protect local market share" and even "increase it."
"We're looking at a major marketing thrust," he disclosed.
The Group also expects to improve on non-coffee products such as Rise 'N Shine, Lushus Jelly Crystals, Salada Cocoa Mix, Salada Tea and the new Mountain Peak Peppermint which is already being exported to the United States.
The local makers of Mountain Peak instant coffee -- their flagship brand -- have not let go of their intention to carve out a segment of the U.S. market with a value-added product.
Plans have been afoot since July 1998 to install an agglomeration plant but Mr. Parkins told The Sunday Gleaner that Salada was nowhere further with that. "It is a matter of funding... but we're trying to do that out of our working capital," he said. Estimated cost for the installation and additional upgrading of the existing plant is half million US dollars.
The plant would propel Salada onto the big instant coffee market in the U.S. where the competition is the agglomerated product (coffee granules). The plant would be a further extension of the process allowing Salada to double its throughput.
"We're still trying to break into the U.S. market with the product as it is now (coffee powder)... though the ultimate aim is agglomeration," Mr. Parkins said. Negotiations are currently under way with American distributors and, according to the Salada managing director, "They like the product. It is good Jamaican coffee."
Salada claims an estimated 80 per cent share of the local market and during 1999 initiated efforts to expand locally by broadening its distribution and marketing network with the appointment of T. Geddes Grant (Dist.) Limited, Musson Jamaica Limited and Lasco Distributors as the main suppliers within Jamaica.
