WHEN Caribbean Producers of Jamaica (CPJ) decided to offer to the general public 142 million shares in its company in 2011, the offer was opened at 9:00 am on July 8, 2011, and closed at 9:01 am on the same day — literally in a minute. The offer was scheduled to be closed on July 15, 2011, a week after the offer’s opening, but the bids placed by the investing public vastly outweighed the amount that CPJ had requested and, therefore, carrying the offer for a week would have been no more than an irrelevant exercise.

The plan

CPJ was founded by Western Jamaica businessmen Mark Hart and Thomas Tyler in 1994 to service the hospitality industry as well as the general retail market as a food service distributor. Before the successful offer was made in July 2011, a prospectus describing the company was sent out to potential investors. In this prospectus, a 91-page document filled with dates, charts, financial reports, and corporate profiles, was a small outline of the company’s expansion plans which didn’t take up more than a fifth of the page. It read:

“Expansion of the Company:

* Outfitting an additional dedicated agro and food processing plant at Montego Freeport

* Establishing a CPJ Market retail store in Kingston that caters to smaller commercial and retail customers

* Establishing a new distribution centre in St. Lucia, where several of the large hospitality and hotel customers of the Company are currently operating, subject to the Company’s satisfactory completion of its on-going due diligence exercise”

Mission accomplished

Between the years 2011 and 2014, the Jamaican economy has made a few business strategists, chief executive officers and board members a little greyer. The greying executive is an understandable phenomenon, given all that has transpired in this period: taxes have gone up, subsidies have been cut or made unlawful, fiscal constraints tightened, new laws added to the books, and natural disasters have wreaked havoc. Add this to the uncertainty of two deals with the International Monetary Fund (IMF) and this creates circumstances that would put significant strain on anyone trying to make plans for the future. The cost of the US dollar (USD) was also uncertain over this period. Between January, 2011, and August, 2014, the cost of the USD increased 31 per cent or at an annual compound rate of seven per cent per year.

Therefore, it would not have been a total disaster had CPJ not been able to fulfil all its expansion objectives, considering the circumstances surrounding the economic climate, of course.

During Jamaica’s misadventures, CPJ was quietly going about its business and the three-pronged plan was under way. In 2012, the Company established a CPJ Market retail store in Kingston, while in 2013, it launched a new meat-processing plant at Montego Freeport in Montego Bay. Most recently, on February 4, 2014, it was announced that it had signed a shareholders’ agreement to form a joint venture with Du Boulay Bottling Company, the Coca Cola manufacturer operating in Castries, St Lucia.

According to an advisory sent to the Jamaica Stock Exchange, “The new company will be called CPJ St Lucia Ltd. and commences operations as a food service distributor in Castries, St Lucia…,”. It went on to state that “Caribbean Producers (Jamaica) Limited will retain controlling interest of this company”. Operations are expected to begin during the first quarter of the current financial year. Additionally, on May 1, 2014, the company started distribution for sealed Air Diversey care products to support its ongoing institutional business on the North Coast.

The Performance

Not only has the company seen its prospects for the future rise with each new addition to the growing CPJ brand, but there has also been some recent success. The company, which reports its financials in USD, posted a 13 per cent increase in revenue for the financial year ended June 2014. According to the company, “this is attributable to management’s on-going focus on maintaining consistent supply chain practices, as well as broadening the range of products to the market”. Therefore, the increase in product offering and more efficient management of its supply chain has led to the increase in revenue. As a result, operating profit grew 11 per cent and net profit grew nine per cent. When converted to Jamaican dollars the net profit grew in actuality by 23 per cent.

In conclusion, despite the earlier economic head winds, CPJ has navigated its sails into the right direction and the company now finds itself in a position to take advantage of the improving tourism market and its diversified product offerings. Along with its insulation from the depreciation of the Jamaican dollar, it is clear that CPJ is one of the stocks to add for the future.

Richard Deane is assistant manager, research and special projects at Mayberry Investments Ltd.