Express Catering’s Profit Dips 28.8% as Revenue Declines Offset Cost Cutting

• Following a 2-month delay, Express Catering released its Audited Results for the year ending May 31, 2026, and earnings are down 28.8% to US$2.68Mn. The decline reflects a steep revenue contraction that outpaced cost containment.
• Weighed down by lower throughput at its Sangster International Airport (SIA) concession, revenues fell 26.9% to US$18.92Mn. Data from Grupo Aeroportuario del Pacífico (GAP), which operates both Jamaican airports, show SIA saw 1.93Mn passengers between November 2025 and May 2026, down from 3.01Mn in the corresponding period a year earlier. That is a 35.6% decline, with the steepest falls in November (-73.4%) and December 2025 (-43.8%) immediately after Hurricane Melissa.
• Cost of sales declined at a faster pace, down 34.4% to US$4.71Mn. As a result, gross profit fell a more modest 24.0% to US$14.21Mn and gross margin widened by 288 basis points to 75.1%. This was likely due to inherently lower sales volumes and better inventory management.
• Total operating expenses (Opex) fell 17.7% to US$9.74Mn, broadly tracking the decline in sales, with administrative expenses down 25.4% to US$5.98Mn. Declines in employee benefits (-25.5%) to US$2.42Mn, as permanent headcount was reduced to 250 from 286, lease expense (-35.6%) to US$969,815, and franchise fees (-27.0%) to US$588,770 were the primary OPEX drivers. Both of the latter two are variable costs tied to sales, meaning they contracted alongside the weaker topline.
• Depreciation and amortisation declined marginally (-1.5%), while promotional expenses rose 13.4% to US$51,759. However, Operating profit fell 34.8% to US$4.47Mn, given the sharp decline in the topline.
• Below the operating line, other income rose sharply to US$1.71Mn from US$19,198, mainly reflecting interest income of US$1.08Mn against US$11,961 in FY2025. With finance costs and FX gains flat, this softened the blow to profit before tax. Nonetheless, there was a 48.6% increase in income tax charge to US$947,961. This was driven by a deferred tax charge of US$372,883 against US$35,003 in FY2025. These factors also contributed to the lower earnings.
• Looking ahead, ECL's recovery hinges on the pace at which Sangster International traffic normalises, and the projected recovery of tourist arrivals supports further normalisation through FY2027. Jamaica's room capacity is currently around 70% of normal levels. With over 11,000 rooms returning between 2026 and 2027, full restoration is targeted for the first quarter of 2027. With Jamaica’s tourism brand still strong and room capacity restored, stopover arrivals through Sangster should rebound and with it ECL's sales. The main risks are slippages in the reopening timeline and the step-up to the full 25% tax rate once Junior Market remission ends in 2027, which could all weigh down on future earnings potential.
• ECL's share price was J$1.96 at the end of trading on Monday, an 18.3% decline since the start of the year. At this price, the stock trades at a P/E of 7.7x.

(Sources: Company Financial Statements, Grupo Aeroportuario del Pacífico, Jamaica Tourist Board & NCBCM Research)