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The management of airport food service provider Express Catering Limited, ECL, is upbeat about the business heading into the coming winter tourist season after posting first quarter profit of US$565,000 – roughly half pre-pandemic levels. This was a major improvement on the US$1 million loss it posted for the first quarter of 2020 and the US$1.7 million loss with which it closed its financial year at May 2021.
The stock closed up more than 13.5 per cent at $5.60 on Monday and climbed slightly higher to $5.64 Tuesday on news of the improved results. Last October, however, investors sold off shares in Express Catering to a 52-week low of $2.99. ECL still trades below its 52-week high of $6.95 which it hit in June this year.
The company, which operates food and beverage services in the departure lounge of the Sangster International Airport in Montego Bay, earned the US$565,000 net profit for its August 2021 first quarter on the back of a rise in airport passenger traffic.
A year earlier when the company suffered a net loss of US$1 million for the first quarter, the airport was operating at a significantly lower capacity due to border closures during the first wave of the coronavirus outbreak.
“We are coming back. We had a decent summer,” CEO Ian Dear said in a written comment to the Financial Gleaner.
Express Catering operates several international food franchises, including Jimmy Buffet’s Margaritaville, Moe’s Southwest Grill, International Dairy Queen, Quiznos, Auntie Anne’s, Nathan’s Hot Dogs, Cinnabon, Wendy’s, Starbucks and Domino’s. These are complemented by a number of proprietary and Jamaican food and beverage brands, including Bobsled Café, Tastee Patties, Viva Gourmet, Grab N Go, and Groovy Grouper.
The 2021 summer arrivals were roughly one-quarter less than in 2019 pre-pandemic times when arrivals hit record levels. Dear expects arrivals to continue growing going into the winter season.
“Winter season is looking strong even with all the COVID-19 challenges. We remain bullish on the future,” he added.
ECL’s outlook on arrivals for the remainder of 2021 aligns with expectations from the airport operator, MBJ Airports Limited. The operator expects arrivals at 30 per cent fewer than record levels in 2019.
According to Dear, revenues are not yet at 2019 levels, but they are moving “in the right direction”. Revenue totalled US$3.6 million for the August 2021 quarter, much higher than 2020 levels of US$444,100 but lower than 2019 levels at US$4.5 million.
The company also increased its inventory to US$478,160 reflecting increased patronage. A year earlier, the disruption led the company to slash its inventory to US$266,400. To reduce costs, ECL has negotiated adjustments to its lease with Sangster operator MBJ Airports Limited and adjusted its financing. During the August 2021 quarter, the company’s finance costs grew to US$514,650 for the quarter, up from US$314,190 a year earlier. Its total equity, however, remained largely flat at US$2.8 million from US$2.9 million in 2020, while total assets inched up US$40.5 million from $39.8 million in the previous quarter.
business@gleanerjm.com
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