3 days ago
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Honey Bun Ltd closed its September 2025 year with higher sales but a markedly thinner bottom line, as the commissioning of its new Angels, St Catherine bakery drew heavily on cash, borrowings, and operating expenses.
It was a deliberate trade-off to build capacity for growth. Revenue climbed 8.7 per cent to a record $4.18 billion, up from $3.84 billion in 2024, reflecting stronger retail and steady wholesale performance. Gross profit rose 10.2 per cent to $1.93 billion; however, operating profit fell 57 per cent to $128.6 million, and net profit dropped 52 per cent to $109.2 million, as administrative costs and selling and distribution expenses surged. Administrative expenses jumped 32 per cent to $1.07 billion, while selling and distribution rose 14 per cent to $720.8 million, compressing operating margins and earnings per share to $0.23, down from $0.49 a year earlier.
CEO Daniel Chong attributed part of the margin squeeze to broad-based inflation and wage pressures that were not fully passed through to consumers. “I can’t pinpoint anything in particular except to say that regular inflation,” he told the Financial Gleaner, adding that two minimum wage increases in the year hurt margins. “We didn’t really pass [costs] on to the consumers.”
The Angels plant, brought online in early September, was financed with a mix of internal cash and fresh debt. Honey Bun’s cash and cash equivalents fell by half to $193.4 million from $382.2 million, while property, plant and equipment nearly doubled to $1.59 billion, reflecting $958.2 million in additions and $64.4 million of capitalised interest tied to the fit-out.
The company also booked a new five-year, $350-million loan facility from Scotia, with the bulk drawn down by year end, while lease liabilities remained hefty at $709.8 million. Chong explained the financing calculus bluntly, noting that its cash reserves allowed it to reduce the level of borrowing required to build the plant. “Borrowing comes at a cost,” he said. “We had been building up our cash reserves over time for the purpose of expansion.”
Honey Bun now has “significantly more capacity” to expand. “The lack of capacity was holding the company back,” he added.
Staff costs rose 24 per cent to $1.26 billion, and average headcount jumped to 498 from 420. Chong said Honey Bun intentionally hired ahead of the Angels start date so the plant could “get on the ground running”.
That pre-hire strategy flowed into both administrative and selling and distribution line items, which together rose by $351.1 million year-over-year. Cost of sales was up $157.1 million, reflecting inputs and utilities, while administrative outlays included a sharp increase in right-of-use amortisation tied to the Angels lease.
With Angels now operational, Honey Bun has balanced its manufacturing footprint between St Catherine and Retirement Road in Kingston. “We moved some of the lines out to Angels and left some of them here,” he said about both locations. He expects the twin-plant configuration to unlock new products, tighter quality, and eventually exports.
Cash from operations improved to $639.2 million from $111.8 million, signalling stronger working-capital discipline even as capex grew.
English (US) ·