Year-To-Date Net Profit Plummets at Spur Tree Spices  

• SpurTree recorded a net profit attributable to shareholders of $3.04Mn for the quarter that ended June 30, 2023. This represents a 92.1% yoy decrease in profitability. Similarly, net profit for the six months ending June 2023 decreased by 51.2% to record a profit of $43.56Mn
• Revenue for the quarter was up by 37.9% yoy to $278.22Mn, while revenues for the six months increased by 50.8% yoy to $661.90Mn. While there was a commendable performance in traditional sectors such as seasonings and sauces, revenue for the period was negatively impacted across the group by low availability and consequent low production of ackee for sale during the quarter.
• Cost of sales saw an increase of 63.7% and 69.9% over the three-month and six-month periods respectively. This subsequently resulted in a fall in gross margin to 25.0% (from 36.8%) in Q2 and 29.3% (from 37.2%) for the first half of the year.
• Admin and other expenses for the quarter increased by 92.8% over the same period in 2022 as well as 84.8% yoy over the six months. This increase is attributed to increased salary costs arising from the addition of talent in critical areas, depreciation expenses, promotional activities in the US market to reintroduce the brand and products directly to customers post-COVID, and legal and professional fees.
• SpurTree’s stock price has decreased by 34.8% since the start of the calendar year. The stock closed Wednesday’s trading session at $2.10 and currently trades at a P/E of 35.0x which is above the Junior Market Manufacturing Sector Average of 17.3x.
• The company has highlighted that Exotic Products (a manufacturing partner to the company) is nearing completion of a second production line, enhancing its capacity to yield substantial ackee quantities during each crop. The factory will also introduce new lines of canned products, packed for Spur Tree Spices that are expected to drive growth for the company.

(Source: JSE)