HONEY Bun posted pre-tax profits of almost $10 million for its first quarter ended December 31, according to its unaudited financial statements.
This is a 98 per cent increase over the profits of the comparable quarter of the previous year. It comes due to an increase in sales and a reduction in operational costs.
Honey Bun earned $9.8 million in pre-tax profits, an amount it will retain completely having listed on the Junior Market of the Jamaica Stock Exchange (JSE), last July.
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 after-tax profits are 217 per cent when compared to the same period last year.
Sales increased six per cent, which the unaudited results said might have been the result of the general election held during the period and the "prevailing economic conditions." No explanation was given for the contribution either of these could have made.
The launch of some new products, including coconut rolls, bread pudding and spice buns, may have given the brand a lift "in sales in spite of a competitive market and declining purchasing power".
The company was able to reduce its expenses for the quarter by using funds raised in its initial public offering of shares to repay loans. Additionally, manufacturing efficiencies were improved which helped to cut production costs. Administrative, sales and distribution costs were kept similar to the corresponding quarter in 2010.
The company had indicated last year that it would invest in product development, increased automation and distribution if its listing on the JSE was successful.
This would also allow Honey Bun to pursue expansion plans, including increased exporting across the region.
Export sales for the period "increased by 75 per cent over the first quarter as a result of new export markets identified and increased sales from existing ones". However, no figures were provided for the growth nor its export markets. Efforts to contact the company for further information were unsuccessful.
The company expects that the "introduction of new products to meet changing consumer demands" will help to further boost sales. The new products will be launched in the first half of this year.
Efficiencies will be further improved with the intended use of new accounting, manufacturing and distribution software.
Honey Bun is aiming to get a larger share of the local market, for which it has 38 per cent of individual packaged baked products. Similarly, it is attempting to make headway into having export market.