Honey Bun's profits rise by 43 per cent
Increased sales pushed Honey Bun's pre-tax profits to almost $40 million for the year ended September 30, 2011, according to its annual report.
The company, which listed on the Junior Market of the Jamaica Stock Exchange last July, saw its profits rise by 43 per cent.
Sales increased by 25 per cent last year, a result of "continued product quality improvements", said Herbert Chong, Honey Bun's chairman. "Our exports efforts (also) materialised to a record 35 per cent increase in export sales."
The company was taxed despite being listed on the Junior Market, leaving it with earnings of $27.6 million.
Companies that list on the Junior Market are given a 10-year tax break (the first five being 100 per cent free of corporate taxes, and the second five being 50 per cent free) if the company remains listed for 15 years. As a result, Honey Bun's profits for the first quarter, ended December 31, were untaxed but this was not applicable to Honey Bun's last financial year, the company said in response to queries by some shareholders.
The company, which started in 1982, held its first annual general meeting in New Kingston last Wednesday, allowing shareholders to question its directors about performance and plans for growth.
The coming year will bring several challenges, said Michelle Chong, company CEO.
"Prior to listing, naturally we knew it would be a challenge as it relates to a new environment (and) new rules in the market, she said. "(But) We've enjoyed the challenge."
Reduced spending is one possibility that the company is bracing for, the CEO said. "The global market tells us that things are difficult for the consumer. Their spending power is reducing so we're going to have to bite harder to make sure we maintain our share in the market."
Last year, the company restructured its distribution model as part of its drive to cut spending and increase sales. Money earned through its initial listing was used to pay off leases on several motor vehicles, as well as part of the company's loans. "We have also invested in various equipment for new products and to improve processes to reduce operational costs", said the chairman. Operational costs, including administrative and distribution expenses, totalled almost $200 million. That's more than 30 per cent over what was pent in 2010.
That aside, Honey Bun's executive said there are some challenges that they may not be able to anticipate for "A lot (will) depend on the Government and the decisions that they make relating to taxes, benefits and the plans that they have for the Junior Market."
Honey Bun will also launch a new "Golden Jubilee product" soon, to mark its "Jamaica 50" celebrations. Honey Bun was the recipient of the JMA's Competitiveness Award and the Jamaica Exporters' Association Award for micro, small and medium-sized businesses last year.