Airport food service provider Express Catering Limited recorded a US$1 million net loss over its first quarter ending August, hampered by the slow tourism recovery.
The net loss flipped the US$1 million profit earned in the same period a year earlier. Its revenue sank to about one-tenth of normal levels posting US$440,000 in the quarter down from US$4.5 million a year earlier.
“We have made all efforts to contain costs while keeping compliant with COVID-19 protocols and be in a state of preparedness for when normal passenger volumes resume,” said CEO Ian Dear and director John Byles in comments appended to the earnings report.
Tourist arrivals are expected to be about 50 per cent of last year’s levels over the peak winter tourist season, but Dear was optimistic about the business prospects ahead on Tuesday, saying Jamaica remains an attractive destination for visitors in source nations despite the COVID-19 pandemic, and has been following safety protocols both within the island and within travel corridors.
“We therefore are optimistic about 2021 and beyond,” he told the Financial Gleaner.
Companies within the hospitality and tourism sector are one of the most affected by the economic effects of the pandemic. Travel to the island dropped some 90 per cent in the August quarter which negatively impacted the company. The company operates all the food and beverage services in specific areas of the Sangster International Airport in Montego Bay.
Since the onset of the pandemic, it has negotiated adjustments to its lease with Sangster operator MBJ Airports Limited.
“We have been negotiating a number of areas to assist in mitigating our ongoing expenses. MBJ Airports Limited, since the inception of the borders being closed, has worked closely with Express Catering assisting where possibly by reducing our lease and maintenance costs. This dialogue has been ongoing in light of the pandemic challenges,” Dear said.
The next task is financing to keep the business steady.
“While we intend to have further dialogue with our funding partners to date, we have had sufficient reserves to meet our obligations. It is however our intention to have further dialogue in the near future,” Dear noted.
Investors expected a difficult 2020 for Express Catering, and slashed the ECL stock price in half since the onset of the pandemic in March. ECL also lost 7.4 per cent of its value on Monday which was the first day of trading since the release of its quarterly results. It closed down at $3.24 from $3.50, but the volumes were small with 21,000 units trading. The winds changed on Tuesday, with the stock advancing 19 per cent to close at $3.86.
The disruption to the food service company’s rapidly growing business resulted in a reduction in its inventory to US$266,000 down from US$332,000 a year earlier. The losses in its operations impacted its retained earnings, which ultimately reduced group capital to US$2.9 million from US$3.97 million a year earlier.
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 establishments are complimented by a number of proprietary and Jamaican food and beverage brands, including Bobsled Café, Tastee Patties, Viva Gourmet, Grab N Go, and Groovy Grouper.
