Share price in Caribbean Producers Limited (CPJ), which closed at $4 per unit yesterday, reflected a seven per cent decline after the company made a preliminary disclosure on the likely impairment to net profit for the financial year ended June 30, 2016.
The pending occurrence — the company said by way of notice made to the Jamaica Stock Exchange (JSE) — was due in the main to “unregulated players in the market (who) continue to create an inequitable environment for the company to compete against products of questionable origin and repute.” New CEO David Lowe told the Jamaica Observer that the company thought it wise to warn the market that CPJ was engaged in realigning its business model with one-off provisions which would be reflected at the year end and would impact profit.
“It will be a one- off provision which will not change our core business,” he said, adding that earnings would be impacted both by the compounding effect of new costs attributed to expansion and the impact of competitors who appear to be bringing in and selling uncustomed goods, thereby undercutting price.
“While the Minster of Finance is going after them, it is a problem which needs to be addressed with urgency as the government itself will lose revenue both from the ports and from taxes. They will cannibalise smaller companies which employ people and stunt their growth “They are not playing by the rules. We welcome competition, but it cannot be that we are getting competition from such sources,” Lowe said, hinting that these were competitors with no fixed address and no warehouse which could be inspected.
The JSE notice from CPJ read, “CPJ views these issues as material primarily for the fiscal year ended June 2016, and anticipates the authorities will aggressively target the unregulated players….The new fiscal year CPJ will concentrate on rationalising non-core businesses and a realignment to address the year-on-year increase in costs associated with rapid growth and new investments while focusing on protecting profitable lines of businesses.” Lowe stated, “We are not only concerned about profit. We are concerned about food safety and consumer safety,” noting that the sellers who were making incursions on the hotel and retail market were very obviously “not playing by the rules,” offering obviously repacked foods and wines at incredible prices.
CPJ, a wholesaling, distributing and manufacturing company, is headquartered in Freeport, Montego Bay, St James. Its business includes wholesaling and distribution of foods and beverages, the distribution of non-food supplies and the manufacturing and distribution of fresh juices and meats.
The incursion from unregulated sellers, the JSE notice indicated, has resulted in a review of the implications for CPJ’s business model and a plan to take actions which will include the “write -down of inventory that has become aged or obsolete that cannot be competitive against unregulated players”, CPJ said; and make an increase in tax provision in anticipation of realignment changes to CPJ’s business model.
The Jamaica Observer