Sunday 23 February, 2020

Salada profit hit by government cess

Dianna Blake-Bennett, Salada  general manager.

Dianna Blake-Bennett, Salada  general manager.

Coffee processor Salada Foods Jamaica Limited saw its net profit dip by 35 per cent to $141.3 million at year-end September 2019. Profit for the 2018 period was $219 million.

Dianna Blake-Bennett, Salada general manager said Monday that profit fell because of the (government) cess.

She said: “$81 million was paid in cess, carried in cost of sales in comparison to last year’s $20 million. If you added $81 to the $141 million we would have posted $222 million in profit.”

“So the reason (for the fall in profit) is government,” she added.

The Jamaica Agricultural Commodities Regulatory Authority (JACRA) in 2018 introduced charges that range up to US$2.40 per kilogram of beans.

The agency says it needs the money to regulate and develop the industry.

The result has been an increase in production costs, coming from both the cess and higher prices for local coffee – which itself has been caused by government stipulation that local coffee content is increased in produce.

Sales for Salada were flat during the year under review, moving from $1.04 billion in the year ending September 30, 2018, to $1.13 billion in 2019. 

Cost of sales increased 17 per cent to $752 million in the year under review, up from $641 million in the year ending September 30, 2018.

Meanwhile, operating expenses totalled $197.3 million for the year ending September 2019 up from $129.8 million in the comparative year. Administrative expenses stood at $138.7 million while selling and promotional expenses totalled $62.4 million for the year ending September 2019.

In the meantime, Salada is hoping to overcome the handicap created by the cess, via the introduction of new products, especially for hard currency markets.

“The main platforms for the new fiscal year is increased exports and introduction of new products,” the Salada Foods general manager. 

Blake Bennett previously said Salada is looking to sell premium roasted and ground products under a new brand. It will comprise 100 per cent Blue Mountain coffee.

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