AML Foods will invest a further $1 million in 2012 to reduce its energy costs, right on the heels of releasing its third-quarter results revealing rising sales but lower net profits. The rise on sales, for the quarter ending October 31, came just before the much-anticipated opening of Solomon's Fresh Market at the Old Fort Town Centre. The $5.3 million investment by AML Foods, which has "exceeded expectations" since its November opening, could mean even greater sales numbers for the end of 2011.
However, Gavin Watchorn, the CEO of AML Foods, identified the road works project, increased utility costs and the decreased purchasing power of consumers as reasons behind the decline in net profit. "Unfortunately, we do not see any short-term relief from increased utility costs and the incremental costs associated with them," he said. "Consequently, unless there are significant increases in economic activity and employment, Bahamian consumer spending will remain depressed."
In response, the $1 million outlay to replace older models of refrigeration and introducing energy- efficient technology is expected to help mitigate the lost revenue. AML Foods has already invested considerably in energy efficiency with the launch of Solomon's Fresh Market, bringing in skylights for natural light, light-sensitive devices that dim on and off depending on the demand and state-of-the-art freezers for food storage.
Net profit for the quarter came in at $139,000, compared with $257,000 for the same period in 2010. Sales rose by 4.29 percent to $981,000, the report said, and there was an increase in gross margin dollars of 6.41 percent, or $425,000, and by 0.59 percent as a percentage of sales.
Perhaps most significantly, general and administrative expenses grew by 5.96 percent. "While our operating profits are not yet yielding the results of this commitment, we are encouraged that our focus will benefit all of our brands," Watchorn said.
In a press release from the company, AML Foods also announced it has recently renewed its credit arrangements with the Royal Bank of Canada. The credit arrangement has been extended until August 2013 and it has secured a term loan of up to $2.5 million to assist in financing with the new store in the Old Fort Town Centre. The facility, the release said, which accrues interest at B$ prime plus 1.5 percent, is repayable over five years with repayments to commence 12 months after the drawdown. Watchorn added that AML Foods has drawn down $1 million of the facility to date.
The chairman of AML Foods, Dionisio D'Aguilar, expressed optimism and enthusiasm for the $5.3 million Solomon's Fresh Market. He said the company is listening to its customers and committed to appealing to a diverse marketplace. "We are proud with the end result of our newest format Solomon's Fresh Market, which opened on Nov. 20, in The Town Centre at Old Fort Bay," he said. "Opening sales for the new store are exceeding our projections and we expect the store to contribute to the company's future earnings."
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