3 months ago
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Coming off a bad second quarter in which its cash holdings were pressured amid falling revenue and heavy losses, Chairman and CEO of Consolidated Bakeries (Jamaica) Limited, Anthony Chang, says the company is in the process of applying fixes to effect a turnaround.
The baking company, which trades as Purity, made a loss of $22 million in the April-June second quarter, erasing the gains made in the first quarter and underperforming the $4.23 million of profit reported a year ago in the comparative June 2023 second quarter.
“We hope to stabilise the business in the near future,” Chang said in an interview with the Financial Gleaner following the company’s annual general meeting, from which the press was barred, last week.
Half-year sales at Purity improved from $826 million to $880 million, but much of that gain came from the March quarter. In the second quarter, sales revenue were down, from $368 million to $355 million.
As for the company’s bottom line, it spun from a profit of $24 million to a loss of $2 million at half-year, due to the $22-million bleed in the second quarter amid a spike in expenses.
Additionally, the company’s operating cash spun from positive flows of $49 million to a deficit of $47 million, while its overall cash position went south, plunging from $83 million a year ago to $1.4 million at the end of June, net of a $55-million bank overdraft.
“We had some operational gaps that we are working on to fix. There are initiatives in place to remedy the situation for sure. The good side of it is, the segments we are focusing on continue to grow. Investments we made in a new production line last year, sales from that line continue to grow in double digits over last year,” Change said.
The chairman said the company was adjusting its mix of products, that is, legacy, grab and go, and new offerings, to churn out more revenue.
“For the last two years, we have been adjusting our product mix because we want to meet the consumers where we think they are going, or for strategic reasons. That adjustment, it is fair to say, needs to happen faster,” Chang said.
Consolidated Bakeries is a producer of breads, biscuits, buns, pastries and snacks, through the Purity and Miss Birdie brands. Its products are sold in Jamaica as well as markets overseas.
Last year, exports, mainly to North America and some to the United Kingdom, grew “in the high double digits” but “less than 50 per cent”, but was still a fairly small component of total sales, Chang said.
“We just need to fuel that growth,” he added.
Last year, Consolidated Bakeries made $1.5 billion in revenue, bettering the prior-year performance by 11 per cent. But profit dimmed slightly to $12.9 million from $13.9 million achieved in 2022.
Like other companies, Purity reported to shareholders that it was having problems filling positions requiring technical skills – such as truck drivers, engineers, and technicians – saying it had to “significantly shift” its hiring practices and incentives to attract much-needed talent.
“Recruitment and retention strategies are critical to the culture we are aiming to build, and so we continue to endeavour to get the right people in the right roles, to continue effective growth aligned with our long-term goals,” its 2023 annual report noted.
However, Chang says the company was now better off than it was a year ago regarding technical skills.
“For the line staff, we have a challenge; for the technical and managerial staff, we are pretty decent,” he said. “It’s a challenge getting the truck drivers that can meet our requirements, but we are not the only ones. That’s a problem throughout the country.”
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