CBR
search

Consolidated Bakeries Limited open to acquisitions

Consolidated Bakeries Limited (Purity) has indicated that it is open to acquisitions as it expects shifts in the industry that would result in some of the smaller players falling out.

In the management discussion and analysis section of the company’s annual report Consolidated Bakeries Limited stated, “Going forward, we expect competition in the trade to shift with large players maintaining market share and some smaller players exiting the market resulting in more micro players with bread van distribution entering the trade.”

“To counter such pressures, the plan is to expand the distribution network to corner shops and vendors in rural and urban areas,” it added.

Consolidatd Bakeries Limited’s Purity Raisin Bread (File photo)

Consolidated Bakeries is owned by the Chang family, and is a subsidiary of Chang Brothers Limited. 

The company bakes, manufacturers and distributes breads, buns and other baked goods for islandwide distribution and export.

It distributes Miss Birdie and the Hearty Goodness brand lines island wide and exports the Purity and Miss Birdie buns to cities in Canada, USA and UK. The company’s pastry department bakes goods that are only sold in its retail shops.

Consolidated Bakeries listed on the Jamaica Stock Exchange in 2012.

 At present, the company continues to search for growth opportunities which include collaborations and acquisitions.

”A lot of smaller bakeries which hold key locations in rural and urban communities do not hold sufficient tangible assets to justify the valuations they seek. such acquisitions would result in us overpaying for tangible assets and justifying it with large amounts of goodwill. We continue to evaluate opportunities that approach us,” management said.

Product line growth in 2019

The annual report Consolidated Bakeries submitted to the Jamaica Stock Exchange was for the year ended December 2019.

“Going forward, we expect competition in the trade to shift with large players maintaining market share and some smaller players exiting the market resulting in more micro players with bread van distribution entering the trade”

However, management of the bakery operation disclosed plans, for the upcoming financial year, to continue strengthening areas of growth through marketing, supplying sufficient core bread and snack products through the distribution trade, while reducing grain-type breads that appeal to the higher tier of the market. 

“These items are important trailblazers in times of prosperity but they take the bulk of losses during times of austerity. We, however, remain committed to providing healthier ingredients at affordable prices even in our lower end tiered products,“ the report outlined

Consolidated Bakeries products include Purity Boxed Bun, Miss Birdie Boxed Bun, Purity Hearty Goodness Whole Wheat Bun, and Purity Hearty Goodness ‘No Sugar Added’ bun, the Miss Birdie branded,  and a variety of buns and pastry offerings. 

The company has recently introduced  Miss Birdie Cinnamon Raisin & Oats Bread, and cheese sticks.

Financial performance

Consolidated Bakeries Limited’s Purity Easter Bun (File photo)

In 2019, the company generated record sales of over JM$1.0 billion, with gross profit of JM$384.9 million, up from JM$372.2 million a year earlier. 

At year end, December 31, 2020, Purity earned an operating profit of JM$2.78 million from revenue of JM$996.41 million. This compared to an operating loss of JM$4.1 million from revenue of $1 billion the year before.

The company’s assets totalled JM$996.41 million at year end, down from JM$1 billion the prior year. Liabilities totalled JM$302.81 million (2019: JM$293.75) while shareholders equity amounted to JM$693.52 (2019: JM$706.3).

Cash and cash equivalents at year end reached JM$25.07 million, down from JM$44.46 million in 2019.