Ashford W. Meikle, Staff ReporterRED STRIPE Jamaica has posted a 45 per cent increase in its net profit for the six months to December 31, 2004. Compared to the previous year, the drinks company earned after-tax profits of $1.1 billion.
But, were it not for the $378 million earned from a property sale, Red Stripe would have posted a flat second quarter. Discounting the proceeds from that sale, the company would have returned a pre-tax profit of almost $884 million, a two per cent increase over the comparative period last year.
The property disposed of was sold "to Pepsi Cola Jamaica Bottling Company Limited in accordance with the option granted to that company when it acquired the soft drinks business."
MIXED RESUTLS
Overall, the results from Red Stripe's performance was mixed.
The company's sales increased by just 13 per cent to a little over $4.6 billion, fueled by the increased business in new markets in Europe as well as a price increase on its products (such as Red Stripe Light, Malta, Guinness and Heineken) late last year. According to communications director, Maxine Whittingham, the price increase was necessary because "The cumulative inflation over the time period since we last had an increase, which was over two years ago, has affected the cost of business."
Its gross profit was up five per cent, to $1.7 billion chiefly as a result of tight controls in cost of sales. The company has reduced marketing costs by three per cent, to a little over $501 million. At the same time, general, selling and administrative expenses went up by seven per cent.
Trading profit registered a two per cent increase, to $847 million, largely as a result of tight cost controls.
Though domestic sales continue to register growth, based on the numbers, Red Stripe's growth is being fuelled by its export (international) segment. For example, local, domestic revenues increased by just six per cent, to $3.8 billion). At the same time, export revenue jumped by 64 per cent, to almost $833 million. Overall, exports increased by 35 per cent.
EUROPEAN MARKET
Since last year, the company has renewed and intensified its concentration in the European market. "Red Stripe has presence in most European countries and "we are working to further accelerate its performance," said international marketing director for Red Stripe, Grace Silvera in a previous interview. "There is a growing appreciation for things Jamaican. Red Stripe appeals to the trendsetters. Our strategy will focus primarily on allowing the quality and image of this great Jamaican product to do most of the talking."
In October 2004, the company tapped into the Australian market and has described the feedback as 'encouraging'.
