Consolidated Bakeries Limited (Purity) said in its 2015 report that it moved with a surgeon’s precision to cut poor-selling items from production and ramp up marketing for better performing lines. The associated one-off revenue loss, and the costs of increased marketing and sales among other factors resulted in net profit decline to $5.1 million for the year ended December 31, 2015, down from $19.22 million in 2014.
Consolidated, also known as Purity Bakery said it has already started to see results with an 11 per cent increase in gross sales.
Revenue climbed to $767.55 million from $ 742.8 million seen the year before. Sales improved despite discounting measures taken by the competition the company said in its report disseminated through the Jamaica Stock Exchange.
An even better outcome is expected in 2016 when the strategic decision to cull products , improve distribution and marketing is expected to bear fruit.
Purity which rolls out regular and speciality breads in its Valentine Drive operation in Kingston, among other edible baked products is controlled by the Chang family.
The 2015 decline in profit was explained by Purity as arising from deliberate actions to improve marketing efforts, including the deletion of stock keeping units which came with a one-off cost of $21m to revenues.
Purity also restructured staffing, adding technical personnel, and increasing sales . Additionally, it doubled spending on advertising and promotions from $8.5 million to $16.8 million, to strengthen the brands performance. An investment was also mad in fleet and trucks, including $19 million on new motor vehicles.
For consolidated, cost of sales climbed some $10 million from $488.43 million in 2014 to $498.32 million last year. Directors point out that capital base remains strong with total equity of $533 million as at December 31, 2015 and current assets exceed current liabilities by $128 million, or by more than 140 per cent.
Purity said its cash and investment position stood at $118 million at the end of 2015. Directors said the company continues to maintain 38 per cent of cash and cash equivalents in US currency to hedge against depreciation of the Jamaican dollar which also aids capital expansion.
Purity was listed on the Junior Market of the Jamaica Stock Exchange in December 2012.