Jamaica Producers posts flat profit

BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com

Friday, August 17, 2012

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JAMAICA Producers Group (JP) posted a flat second-quarter net profit despite higher revenues.

The conglomerate made $46 million after-tax for the second quarter ending June 30, 2012, compared to earnings of $47 million over the same three months last year — when excluding a one-off gain of $727 million for the sale of portfolio investments during the period.

Revenues for the June 2012 quarter, however, were marginally higher at $1.75 billion compared to the 2011 second quarter.

Jeffrey Hall, JP group managing director, said the review period presented "encouraging signs" that the company’s investment and acquisition strategy is working in the face of economic challenges in major markets, Europe and Jamaica.

"In the 12 months preceding this quarter, we undertook a series of large scale investments and acquisitions to diversify and grow our earnings base," Hall told the Jamaica Observer yesterday.

"Those new investments are performing and have led to diversity, resilience and growth to our earning base," he said.

The $13 million pre-tax profit for the JP Tropical Division in the June 2012 quarter, represents a turnaround from a $27-million loss over the corresponding period last year. Revenues jumped in the segment by 63 per cent to $486 million over the review period.

JP Tropical has benefited from the acquisition of a controlling interest in Tortuga International Holdings and a 50 per cent joint venture interest in Mavis Bank Coffee Factory, both of which made a positive year-to-date contribution to the divisional result, JP reported.

The company added that efforts to improve the productivity of traditional land holdings in St Mary have also helped the divisional result, with improved yields on its banana farms and an expanded pineapple crop.

However, strong profit growth in the JP Tropical Division was almost completely offset by difficult trading conditions in JP Europe, the company reported.

The JP Europe division comprises the firm’s fresh juice operations located in the Netherlands — representing the major share of the division’s business — and a UK-based logistics services. Its second quarter revenues fell by 14 per cent to $1.2 billion while pre-tax profits dropped by more than half to $46.9 million.

An adverse macroeconomic environment in Europe, the weak euro and high raw material costs in the juice business has impacted the division’s bottom line, the company said.

The business challenges were compounded by the fact that JP has continued to experience start-up losses associated with the introduction of a new fresh juice processing line, reported the firm.

The group’s bottom line was also dragged down by a nine per cent increase in administrative and other operating expenses to $255.3 million in the second quarter, and a 27 per cent jump in marketing, selling and distribution costs to $125.7 million.

JP said its core focus in the coming months and in 2013 is to optimise the performance of its new investments, which it said overtime should improve the stability and diversity of its earnings.

"This is an important new challenge for the Group and one that we believe will ultimately improve shareholder value and inure to the benefit of all our stakeholders," reported the company, noting that it has now "substantially completed a major cycle of investment" in each of its divisions.




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