Jamteas to complete factory consolidation by mid-year
…spends approximately $80 million to retool retail subsidiary
MANUFACTURING company Jamaican Teas Limited is pushing to have its entire operation under one roof sometime later this year as it looks to complete consolidation of its factories at the Temple Hall property in St Andrew.
“Our dry pack division, which does soups and dry spices, has been moved up about a month ago and is now operating from the premises and we are now preparing to move the tea business by about June so that we can have all our operations in one place,” said CEO John Mahfood while speaking to the Jamaica Observer earlier this week.
“We will start to see the savings from bringing the businesses together in about the third quarter but right now we are busy renovating the new facility as we look to move more of our equipment up. Initially we were operating three locations, now two, but in June we hope to be operating only one,” he further told the Business Observer.
The three-acre premises, bought for over $300 million is now home to the company’s main production facilities following a relocation from its Montgomery Avenue and Bell Road plants. At 60,000 square feet, the tea maker sought to acquire the space last year after the two plants, which together totalled approximately 35,000 square feet, became insufficient to house its growing business.
With the Temple Hall facility, the company is expecting to have that additional capacity which it needs to expand as it also becomes more efficient in logistics, inventory and material management operations.
Largely focused on exports, which now accounts for about 65 per cent of its sales in manufacturing, the company, having scaled down its real estate operation, has been making some investment in the retail business as it looks to unlock more value from its Bay City Food operated, Shoppers Delite supermarket.
Mahfood said that while there are now immediate plans to deepen its footprint in the retail/ supermarket space, the business is currently being equipped to deliver increased returns. This, following some $40 million worth of expansion activities and another $40 million in retooling done recently. Located in the heavily trafficked Chancery Street commercial hub in St Andrew, the supermarket now adds about $50 million to group bottom line annually.
“After we have completed putting in some new equipment in the business, we hope to see further growth in this area. We have made a lot of investments in equipment over the past six months across our business which we hope will put us in a better position. I’m, however, optimistic that after our third going on to last quarter in July-sept, we will begin to see the benefits,” Mahfood said of the outlook.
Up to the end of the first quarter ended December 2023, Jamteas saw its profit rebounded to total $52 million, earned on the back of increased revenues of $840 million. The performance, its directors said, came as a result of a number of positive developments across the group, owing to its successful execution on a number of strategic plans.
“As a result of our stated plan of actions, Jamaican Teas expects to finish 2024 with fewer investment properties, more liquidity, greater focus and improved profitability,” the company’s recently published annual report outlined.