Salada Foods Jamaica Limited reported revenue of $1.067 billion for the year ended September 30, compared to $1.113 billion for the comparable period last year.
Export sales buoyed the fall out in revenue from the domestic market due to the global pandemic, directors said in statements attached to the year’s results.
Net profit for the group was recorded at $110.49 million, down 21.84 per cent when compared to last year’s 141.37 million. The out turn for EPS was $1.06 versus $1.37 per share.
The outturn was attributed to COVID-19 in the main, and also revived regulatory demands – fought over in court – that expensive local beans be added to product.
Company chairman Patrick Williams said “Salada remains resolute [nevertheless] to change and adapt to the existing environmental landscape to ensure business viability and focused on our mission of continually improving shareholder value.”
Directors explained that during the year ended, export sales improved by 26 per cent from revenues of $261 million to $200 million.
Domestic sales recorded a 10.5 per cent decline in comparison to the year before which was attributed to the fallout in economic activity linked to the shutdown affected for containment of the spread of the coronavirus.
The year’s operating profit declined by 25 per cent to $126.69 million from $168.69 million.
Salada said the decisions of the regulator Jamaica Agricultural Commodities Regulator (JACRA) to delay and deny permit requests for the importation of raw materials forced the use of higher priced raw materials to manufacture some flagship products.
This had the effect of driving up manufacturing costs and reducing operating profit.
Management commented, “the regulatory environment remains hostile to Salada’s business model. Margins are being squeezed by the cess imposed by JACRA on coffee bean imports and will be further depressed by having to increase local content by 30 per cent.
In November 2020, Salada lost its Supreme Court Bid to overturn the stipulation by JACRA which dictates “Salada must now include 30 per cent local coffee content in the production of our instant coffee powder with effect on September 1, 2020.”
On Friday November 13, 2020 Justice Nembhard delivered an oral judgment denying Salada’s application in which she ruled, among other things, that JACRA had the power under the Jamaica Agricultural Commodities Regulatory Authority Act to make regulations including regulation 19 and that instant coffee manufactured by the Salada was the subject of Regulation 19.
She further ruled that JACRA had no power to grant a waiver to the requirements under regulation 19 and accordingly Salada could not have a legitimate expectation that a waiver should be granted.