Company begins full recovery from COVID-19 downturn

By Durrant Pate
Observer business writer

Friday, October 30, 2020

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Caribbean Producers Jamaica (CPJ) is beginning its full recovery programme after an abysmal 2019-2020 financial year in which sales and revenues plummeted, resulting in losses of US$4.35 million ($630 million).

A key part of the recovery programme is increased sales and revenues expected from the upcoming winter tourist season, which starts next month and goes into the first quarter of 2021. CPJ is preparing for what it says is the certain full recovery of the travel industry, which was severely impacted by the novel coronavirus pandemic, leading to its shutdown in Jamaica.

The Montego Bay-based company, which has a subsidiary in St Lucia, is the largest supplier of food and beverage to the hospitality sector in Jamaica. It distributes wholesale food and beverages, non-food supplies. It also produces and distributes fresh juices and meats.

In its just-released 2020 annual report, CPJ states that “despite the unprecedented global economic dislocation caused by the COVID-19 pandemic, we at CPJ are extremely optimistic about our future”. The company admits that the financial results have been severely impacted by the pandemic, as sales plummeted from March 2020 and continued to be adversely affected.

As a result, sales in the fourth quarter of the year in review were US$5.78 million, down 79 per cent compared to Q4 of 2019.

The loss in revenue, particularly in Q4, was observed both in onshore and offshore operations. The company has taken a proactive approach to not only secure the business but to position it for growth when conditions return to normal.

CPJ is boasting about its St Lucia subsidiary, which had an eventful financial year due to the pandemic. In the pre-COVID period (July 2019-March 2020), the subsidiary was growing strongly with revenues up 23 per cent and earnings before interest, taxes, and amortisation (EBITA), which is a measure of company profitability used by investors, growing by 15 per cent from the prior year.

In the post-COVID period (April-June 2020), St Lucia closed its borders from early April until the end of the fiscal year, which all but eliminated CPJ St Lucia's hospitality revenues. This resulted in the company rapidly shedding 45 per cent of its operational expenses, forcing it to pivot swiftly to expand existing retail channels.

“Fortunately, the uncertainty surrounding COVID-19 sparked a run on food and other essentials that pushed many new customers into CPJ's flagship retail store. Retail sales surged by over 50 per cent to record highs during this period,” the parent company reported in its annual report to shareholders.

In addition, CPJ St Lucia placed increased focus on direct to consumer sales, growing revenue in that channel by over 100 per cent by end of its financial year. Growth in these cash generating segments enabled it to maintain a cash surplus year-over-year.

By its quick response, CPJ St Lucia was able to minimise losses while expanding sales channels to strongly position for the future. “Due to the low number of COVID-19 cases and St Lucia's strong tourism product, a gradual return to normalcy in 2021-22 appears possible,” CPJ concludes.

Turning to the group, the directors report that strategies such as aggressive debtor management coupled with inventory containment have resulted in strong cash flow management, despite the downturn in sales and revenues.

The company managed to meet all its obligations to vendors by the end of the fiscal year, decreasing total liabilities by US$10.02 million. The directors announced a slew of information technology (IT) initiatives to take the company into the new financial year.

The new IT initiatives will strengthen its digital platform for further growth and achieve operational efficiencies, the directors said, pointing out that the slowdown in the sales activity due to the ongoing pandemic has assisted the company in a smooth implementation of these new initiatives. The slowdown has reduced the risk of technological-related errors towards the fulfilment of customer obligations.

According to the directors, “most of these IT upgrades have already been smoothly implemented at the time of writing. We are excited to see the power of these systems and processes in use as the business begins its full recovery”.

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