Sales for the three months ended June 2018, rose 15 percent to $332 million over the 2017 out turn of $289 million at Honey Bun, but profit before tax was just $9 million, 5 percent higher than the $8.6 million earned in the corresponding prior year period.
Profit after tax rose to $9.7 million up from $7.55 million as a provision of $1 million in taxes in 2017 turned into $695,000 in 2018. Management stated in their release to shareholders that “this has been as a result of continued investment in production capacity and restructuring of distribution.”
Year to date, sales for the nine months, were $1 billion up 4 percent over the corresponding 2017 period’s income of $969 million, leading to profit before tax of $80 million, 17 percent lower than in the previous year. After taxation of $8.3 million for the nine months, profit declined to $72 million from $84.7 million in 2017, after taxation for $12 million.
Earnings per share for the quarter amounts to just 2 cents and for the nine months period year to date amounted to 15 cents. Honey Bun’s last quarter is not the most robust for the fiscal year so not much improvement is expected when the year ends in September.
Even as the net profit was disappointing, there were some good signs. Gross margin increased to 44.1 percent from 42.4 percent in 2017 for the June quarter and from 43.2 percent to 45.2 percent for the nine months. Gross profit rose 19 percent to $146 million for the quarter but was up 8 percent for the year to date period to $455 million.
Marketing and Distribution cost rose 32 percent in the quarter to $61 million and 37 percent to $164 million while Administrative Expenses rose 14 percent for the quarter to $63 million and was flat at $166 million for the nine months. Depreciation moved up by 9 percent to $12.3 million for the quarter and 11 percent to $36 million for the year to date.
“The Company’s asset base has grown as a result of the investment in the expanded facilities. This investment will allow the company to take advantage of the strong market demand for our products.
One Honey Bun’s Products.
In April of this year Honey Bun launched its new Buccaneer Jamaica pocket size rum cakes in 3 flavors at the Jamaica Expo. We have entered two new markets with further interest from other buyers in existing markets,” Michelle Chong Chief Executive Officer, informed shareholders.
Operations brought in $113 million in cash for the nine months of which $93 million was used as payment for fixed assets and $18.6 million in dividends resulting in $84 million in cash at the end of the period.
Shareholders’ Equity grew to $600 million at the end of June, current assets fell to $212 million and current liabilities fell to $84 million from $117 million in 2017. Fixed assets rose to $441 million from $368 million in 2017 and borrowed funds stood at just $31 million.
