9 months ago
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Food distributor Everything Fresh Limited has doubled its profit to $100 million for 2023, some of it due to tax credits, amid a rise in travel to Jamaica.
The group is now arching into higher profit, a recovery that’s been occasioned by a rise in debt that the company intends to refinance.
The distribution company plans to attack the debt load, in particular, its rising credit card balances which hit $109 million by the end of last year. That formed the fastest-growing chunk of its borrowings, which has grown to $440 million in total.
EFresh’s borrowings are now almost equal with its equity base, its capital having risen to $463 million at year ending December.
“We will be refinancing this debt with a lower interest rate substitute in 2024,” said Managing Director Courtney Pullen in response to Financial Gleaner queries.
Trading companies at times use credit cards for quick online and in-store purchases but the interest charged on outstanding balances can rise above 40 per cent, which is four to five times as high as regular corporate loans.
Still the usage obviates the need for structured loans, while also offering benefits such as airline reward points. Nationally, credit card usage is growing among businesses and consumers alike. Last year, the stock of outstanding credit card receivables – that is, the amount of credit used by cardholders that they had not yet repaid to their banks – grew to $80 billion.
Everything Fresh remains current in its payment, but its credit card debt shot from $78 million to $109 million in the span of a year, its 2023 financials show.
Debt servicing
The distribution company, which mainly serves the hospitality market but is deepening its distribution channels in the retail market, spent $58 million on debt servicing. Refinancing would serve to cut those charges.
In 2023, travel volumes recovered and climbed to record levels, creating the landscape in which hotel bookings rose and demand for food spiked, which ended up benefited suppliers like EFresh, Pullen said.
Jamaica recorded 4.1 million visitors in the year, up 24 per cent from 2022 levels.
Pullen added that 2023 was a growth year in which the challenges of getting adequate supplies that obtained in 2022 due to bottlenecks related to the back end of COVID-19, were overcome. Despite a challenging base year, 2023 earned the company its highest revenue and profits.
The annual turnover at Everything Fresh rose to $3.17 billion from $2.6 billion, while its earnings shot to $85 million, and to $100 million after tax credits.
The growth in earnings served to reverse its net cash deficit of $4.2 million to positive holdings of nearly $57 million.
EFresh was founded by Pullen, his wife Melene Rose Pullen and Wen Juan Yu in 2003. In 2007, the Pullens became the sole ultimate beneficial shareholders of the company. And in 2018 they took the company public and listed on the junior market of the Jamaica Stock Exchange.
EFresh initially focused on importing and distributing dairy products and meats to supermarkets. That eventually grew to supplying hotels, with an expanded portfolio of seafood, dry foods, canned goods, fruits and vegetables.
EFresh made its first regional acquisition in two instalments in 2021 and 2022, and now holds a 80 per cent stake in Everything Fresh Bahamas Limited.
The Bahamas subsidiary contributed $565 million to group revenue in 2023, up from $553 million, while its earnings fell from nearly $16 million to $8 million.
“Bahamas was profitable and further growth is expected,” Pullen said.
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