Boiler accident derails Salada earnings
The makers of Mountain Peak instant coffee, Salada Foods Jamaica Limited, ceased coffee production during much of its December first quarter due to an accident in the boiler room.
“The decline arose in October 2018 from an accident in the broiler room, wherein both boilers were damaged and had to be taken offline,” the company disclosed in its earnings report.
The repairs took longer than expected and during that time, the main boiler was offline until the end of November, Salada said.
The boiler accident led to lower revenues and a net loss for the company in the quarter.
In the December quarter, gross revenue totalled $172.3 million, which was 24 per cent lower than the previous year. The company recorded an operating loss of $15.7 million, down 138 per cent over the period, and a net loss of $23.1 million, which reversed the $26.8-million net profit a year earlier.
The company, which garnered record revenues of $1 billion for its full year, ending September 2018, expects a return to normality in the second quarter.
Salada said it produced no coffee during most of the first quarter, but that the loss of production did not necessarily affect the coffee in the trade, as its distributor had sufficient quantities to service the company’s market.
Salada, which is headed by General Manager Diana Blake Bennett, has not responded to Financial Gleaner requests for comment on the accident.
During the first quarter, the coffee company purchased 15,000 boxes of coffee from bought as part of its initiative to increase its Jamaica coffee purchases.
“We expect to reach the 25,000 target by the end of March 2019 and spend $200 million, inclusive of processing the cherries into green beans,” the company said.