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Honey Bun earnings slide for second consecutive quarter

Published:Friday 12:12 AM

A Honey Bun sliced bun.

Pressure from rising raw material costs caused baking company Honey Bun Limited to record a decline in profit for the April-June period, making it the second consecutive quarter of decline since the start of its financial year.

Its gross margin thinned from 49 per cent to 37 per cent.

And net earnings fell 24 per cent to $49 million, but was still three times better than pre-pandemic levels.

The quarterly dip was also less painful than the 46 per cent decline in earnings in the March quarter.

CEO Michelle Chong has blamed June quarter’s performance on continuous price increases in key ingredients, mainly due to supply shortages and shipping challenges.

“Flour prices increased again in late April,” she said in the preamble to the company’s financial report.

Since the outbreak of the pandemic, Honey Bun, like other baking companies, would have been affected by a general downturn in business activities and school closures, largely as a result of COVID-19 restrictions.

But the company managed to find its way around the challenges through more direct truck sales locally and quick response to demand in main export markets in the United Kingdom, United States and Canada.

It also repackaged a few export products and launched new ones, including a cinnamon raisin loaf for the local and international markets.

Year to date, Honey Bun has invested $90.7 million in capital projects in its continued focus on improving manufacturing technologies and expanding its distribution network. Significant expenditures were made to acquire additional distribution vehicles and business intelligence upgrades, it said.

Over nine months to June, the company’s sales grew by 39 per cent to almost $2.2 billion, while profit declined by 22 per cent to $138 million.

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