Higher minimum wage complicates life for Honey Bun, but company presses ahead with expansion
Administrative expenses saw significant movement in staff costs, general insurance and depreciation for Honey Bun (1982) Limited in 2024.
In the company’s newly released annual report, for financial year ended September 30, it was noted that as a result of the increase in minimum wages and an overall inflationary increase in prices, many of the labour driven expenses increases significantly, including security which went up by 72 per cent.
Selling and distribution expenses increased by 22 per cent. Other notable increases were in the areas of repairs and maintenance and bad debt provision.
However, for the financial year ended September 30, 2024, Honey Bun achieved what was described as a record-breaking sales of J$3.84 billion surpassing prior year’s sales of $3.4 billion.
Overall revenue for the financial year grew by 13 per cent, relative to the same period last year, to close at $3.84 billion (2023: $3.41billion). Net profit after tax at year end was $230.1million ($232.1million), representing a less than 1 per cent decrease over prior year.
Selling and distribution expenses increased by 22 per cent. Other notable increases were in the areas of repairs and maintenance and bad debt provision.
However, for the financial year ended September 30, 2024, Honey Bun achieved what was described as a record-breaking sales of J$3.84 billion surpassing prior year’s sales of $3.4 billion.
Overall revenue for the financial year grew by 13 per cent, relative to the same period last year, to close at $3.84 billion (2023: $3.41billion). Net profit after tax at year end was $230.1million ($232.1million), representing a less than 1 per cent decrease over prior year.
The company is pressing ahead with growth plans, noting that its growing presence across the island allows the company to continuously develop and increase the distribution channel via economies of scale.
Executive Chairman Herbert Chong said, “This scale allows Honey Bun to invest, develop and deploy more products efficiently. For the forthcoming year additional vehicles and routes will be added to the distribution channel to serve the Jamaican public more efficiently. “
Exports for Honey Bun increased by 12 per cent over prior year. He stated, “We have increased our presence in the Canadian market through partnerships. In our strategic plans to increase our exports, we have hired a new export manager to steer our growth in the international market.
Plans for new acquisition Swirls includes opening locations island wide and eventually franchising in other Caribbean countries.
In April 2024, Honey Bun e began the development of a new production facility in Angels, St. Catherine to increase capacity . The expected completion date for the expansion is scheduled for February 2025.
The expected increase in capacity, which is projected to be 150 per cent times current capacity, will allow the company to not only better serve the unfulfilled demand of the local market but will also allow for international growth management said.
The plant will be 60,000 square feet, with new technology in in baking.
Plans are also being made to increase the capacity at Retirement Crescent in the near future although the company will relocate some lines of production to the Angels facility. This will make way for space becoming available in the current facility for growth of other lines.
Management noted that revenue increased due to “continued improvement and expansion in our distribution methodology, along with price increases during the year and improved presence in the Canadian market through partnerships.”
The challenge presented by higher costs included repairs and maintenance, bad debt provision and security. Finance cost increased by 434 per cent. In addition to leased fleet vehicles recognition due to IFRS16, the company’s Angles lease was also recognized which directly resulted in an additional $31.0 million in finance costs.
Assets increased by 51 per cent or $881.0 million dollars closing at $2.6 billion (2023: $1.74 billion). Return on assets decreased year over year at 10.6 per cent (2023: 14.2 per cent).
Recognizing the Angel’s location lease under IFRS16 resulted in an addition of $721.0 million to total asset, with no attributable income. Plant completion is expected in February 2025.
Property, plant and equipment increased by $37.0million or 5 per cent. Right of Use (IFRS16) assets increased by 1418 per cent or $732.7 million whilst investments decreased 57 per cent. As at year end, based on the supply chain delivery time frame for the equipment significant prepayments were made to secure the required equipment.
During the year, the company and company faced challenges in the form of weather, inflation and supply chain issues and had setbacks in terms of mechanical failures which saw down time on critical equipment.
Executive Chairman Herbert Chong said, “This scale allows Honey Bun to invest, develop and deploy more products efficiently. For the forthcoming year additional vehicles and routes will be added to the distribution channel to serve the Jamaican public more efficiently. “
Exports for Honey Bun increased by 12 per cent over prior year. He stated, “We have increased our presence in the Canadian market through partnerships. In our strategic plans to increase our exports, we have hired a new export manager to steer our growth in the international market.
Plans for new acquisition Swirls includes opening locations island wide and eventually franchising in other Caribbean countries.
In April 2024, Honey Bun e began the development of a new production facility in Angels, St. Catherine to increase capacity . The expected completion date for the expansion is scheduled for February 2025.
The expected increase in capacity, which is projected to be 150 per cent times current capacity, will allow the company to not only better serve the unfulfilled demand of the local market but will also allow for international growth management said.
The plant will be 60,000 square feet, with new technology in in baking.
Plans are also being made to increase the capacity at Retirement Crescent in the near future although the company will relocate some lines of production to the Angels facility. This will make way for space becoming available in the current facility for growth of other lines.
Management noted that revenue increased due to “continued improvement and expansion in our distribution methodology, along with price increases during the year and improved presence in the Canadian market through partnerships.”
The challenge presented by higher costs included repairs and maintenance, bad debt provision and security. Finance cost increased by 434 per cent. In addition to leased fleet vehicles recognition due to IFRS16, the company’s Angles lease was also recognized which directly resulted in an additional $31.0 million in finance costs.
Assets increased by 51 per cent or $881.0 million dollars closing at $2.6 billion (2023: $1.74 billion). Return on assets decreased year over year at 10.6 per cent (2023: 14.2 per cent).
Recognizing the Angel’s location lease under IFRS16 resulted in an addition of $721.0 million to total asset, with no attributable income. Plant completion is expected in February 2025.
Property, plant and equipment increased by $37.0million or 5 per cent. Right of Use (IFRS16) assets increased by 1418 per cent or $732.7 million whilst investments decreased 57 per cent. As at year end, based on the supply chain delivery time frame for the equipment significant prepayments were made to secure the required equipment.
During the year, the company and company faced challenges in the form of weather, inflation and supply chain issues and had setbacks in terms of mechanical failures which saw down time on critical equipment.
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