Senior Research Analyst at JN Group, Fay Samuels, says Spur Tree Spices’ aggressive growth and expansion plan is paying off as the company earned over $1 billion in revenue last year. 

Spur Tree Spices manufactures and distributes a variety of wet seasonings and spices and canned ackee and callaloo, primarily for the export market. 

Speaking on Taking Stock with Kalilah Reynolds, Samuels noted that since listing on the Junior Market of the Jamaica Stock Exchange last year, the company made significant progress in expanding its distribution in overseas markets.

Apart from long-standing relationships in the US, Canada, the UK, and the Cayman Islands, the company has also expanded its exports to Central America and Australia.

Spur Tree also recently signed a deal with regional distributor Massy Group to grow its reach in the Caribbean. 

They also acquired a 51% stake in Canco Limited, which distributed canned Ackee and Callaloo under the brand Linstead Market. 

“So, the company continues to experience significant growth demonstrating the successful implementation of their ambitious growth strategies,” Samuels said.

The company reported a 62% increase in revenues from $850 million for financial year 2021 to over $1 billion in 2022.

“So Spur Tree made it into the billion-dollar revenue club in 2022,” Samuels noted.

The strong revenue performance led to a 27% increase in net profits for the year, from $91 million to $115 million. 

The Research Analyst noted that the trend continued into the first quarter of 2023.

The company recorded a 62% increase in revenues compared to the same period in 2022.

Revenues increased from $230 million in Q1 2022 to $383 million in Q1 2023.

Samuels said the revenue boost was driven by sales from their acquisitions and a reduction in the supply chain issues that impacted access to bottles and cans.

“However Spur Tree still sources most of their raw materials locally, so the high inflationary environment in Jamaica has caused the cost of their raw materials to go up substantially,” Samuels noted.

This rise in raw materials costs and growing operation costs due to the company’s rapid expansion saw net profit for the quarter dipping slightly from $50 million to $47 million. 

All in all, Samuels said that given Spur Tree’s aggressive approach to growth and the possibility to tap into underserved segments of the diaspora, she recommends Spur Tree’s stock for medium to long-term investors who are willing to hold the stock.