CPJ bullish on business after cutting losses
Published:Saturday | October 9, 2021 | 12:08 AM
The executive chairman of Caribbean Producers Jamaica, CPJ, is sounding upbeat about the company’s year-end results, which, while still bleeding, has cut its losses in half.
The distribution and manufacturing company, which is heavily dependent on a robust tourism sector for good business, made a loss of US$2.5 million loss but that’s well shy of the US$4.35 million loss for FY 2020, Mark Hart said.
“We’re heartened by the performance, especially when you consider that nine months out of the period we had severe COVID-19 restrictions. We only got any real pick-up in the fourth quarter,” Hart said.
CPJ revenue peaked at US$109 million in FY2019, fell to US$91.7 million at the top end of the pandemic in FY2020, followed by a precipitous drop to US$58 million for the current period. Hart said that despite the declining sales, the company was able to achieve better bottom-line results through operational improvements and adjustments.
“Even though we were not doing any business during COVID, we worked harder than ever,” he said, while noting that the company continued to invest in itself, with capex of US$1.8 million deployed over 18 months in CPJ’s “re-engineering”.
“We were given all the space in the world to do everything we’ve ever dreamed that we wanted to do. This has left us with a company that is lean and very efficient and business is coming back,” he said.
IT INFRASTRUCTURE
To boost efficiency, the US$1.8 million of capital expenditure went into the company’s IT infrastructure and warehousing logistics, and improvements to the rolling stock, that is, its delivery fleet of tracks and vans.
Caribbean Producers also cut a quarter of its staff, from 450 to 340, and slashed selling and administrative costs to US$13 million, the lowest since 2015, after consistently hovering at about US$20 million.
“We are that much more efficient we can maintain that by having the right people in the right places in a more modern and process and IT-driven company,” Hart said of the changed operations.
Highlighting the changes, Hart said in the past the company suffered from issues with inventory, with high levels of spoilage and goods returned, in addition to overstocked warehouses.
Regarding the recent corrections to its logistical system: “That alone is flowing almost US$2 million to the bottom line,” he said.
COMPLEX OPERATION
“In former times we did not have the IT capacity to do demand planning or the personnel to do the global supply-chain logistics necessary for a complex operation like ours. Now we’re much more scientific in our approach.”
Hart says the company, which trades in wines and meats and sources goods from 60 countries, took lessons from the lockdown of the tourism sector and Jamaica, which left CPJ with US$25 million worth of inventory and no sales to the usual clients.
“Considering that it was a bloated inventory, in a strange way it actually served us well at the time of the lockdown because what we did was to turn that into cash,” said Hart, who has been serving an interim role as CEO following the departure of David Lowe in January 2020.
CPJ utilised social media to offer “bucket deals”. In addition, Hart said, more than a thousand persons per day streamed to their special outlet to purchase food.
“We turned $25 million into cash, took our inventory down to about US$10 million about six months ago,” in addition to collecting US$15 million in receivables, the executive chairman said.
“Because our customers value the service so much, they know that they should want to pay CPJ because when things reopen, they’re going to want credit again; likewise, we paid all our suppliers,” he added.