"We are pleased with our quarterly results as three year lows in the green coffee market continued to provide pressure on our ability to maintain gross margins on our increasing wholesale green coffee business. In addition, the low commodity prices also continued to provide pressure on our profit margins in both our private label and branded coffee divisions as we increased our promotional activity necessary to remain competitive at the supermarket shelf level. Falling commodity prices, especially in a short period of time, continue to be a risk in our business. However, we believe we have managed these conditions well as we maintained our sales and gross margins towards our targeted year-end level of nine percent. We feel these commodity headwinds are likely to end as coffee prices have well exceeded most targeted levels to the downside and are potentially poised to rise in the second half of 2013. If they do, we believe our positions in both the green coffee and retail markets will provide us with the opportunity for expanded profits as well as renewed growth in our top line revenues," said Andrew Gordon, President & CEO.
"In addition, we have launched several new initiatives this quarter which we believe will prove beneficial to our results. Revenues from our recent licensing arrangement of our Don Manuel Colombian coffee in China along with increased sales of green coffee in China, should add to our profitability and we believe the China market's potential upside remains both untapped and highly viable. Also, we recently launched our Premier Roasters 100 % Arabica Whole Bean Coffee line packed in composite cans. These 100 % Arabica products, available in light, medium and dark roasts blends, utilize some of the finest Arabica beans available from Central American harvests. We believe these new Premier Roasters 100 % Arabica coffees are the most upscale line we have ever offered for the traditional supermarket shelf. We also believe this new innovative product line, unique to almost all traditional supermarket offerings, will resonate positively with the consumer who is looking for 100 % Arabica Whole Bean product packed in a more sustainable packaging concept than currently available. The product's presentation is not only extremely appealing and more creative than traditional bulk offerings seen in most grocery stores; but will also maintain its freshness for an extended period of time because of the packaging, which is a distinct advantage for both the retailer and the end user. We remain excited and upbeat regarding the overall condition of our business and look forward to generating better and more normalized levels of earnings over the next several quarters," concluded Mr. Gordon.
The Company's Dividend Program
As previously announced, the Company's board of directors has continued to evaluate the Company's previous dividend program. Consistent with the Company's growth strategy, the Company's board of directors has elected to utilize cash flow to facilitate reinvestment in the Company in lieu of payment of quarterly dividends. "Given our growth strategy and changes in 2013 tax rates, we believe by reinvesting in the Company, we can better optimize shareholder value," Mr. Gordon stated.
About Coffee Holding
Coffee Holding is a leading integrated wholesale coffee roaster and dealer in the United States and one of the few coffee companies that offers a broad array of coffee products across the entire spectrum of consumer tastes, preferences and price points. Coffee Holding has been a family-operated business for three generations and has remained profitable through varying cycles in the coffee industry and the economy. The Company's private label and branded coffee products are sold throughout the United States, Canada and abroad to supermarkets, wholesalers, and individually owned and multi-unit retail customers.
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