Coffee, port drive Producers profit growth, European sales slump
Jamaica Producers Group's (JPG) stakes in coffee and cargo-handling businesses continued to drive the food and logistics conglomerate earnings in 2015.
It managed to eke out operating profit of $15 million from its core business, bettering the $2 million it reported for 2014, as it realised a $31-million increase in gross profit to $2 billion in 2015.
Still, sales dwindled last year, when gross operating revenue declined by $100 million from the year before to $8.7 billion.
Revenue rose by $217 million to $2.3 billion in Jamaica, and by $76 million to $651 million in the United States, putting the North American market on even keel with the Caribbean, which accounted for $656 million of JP's sales last year, up from $626 million in 2014.
Some 5.4 per cent depreciation of the Jamaican dollar against the greenback explained some of those gains, but appreciation in the local currency against the euro and the British pound did not account for most of the fall-off in sales in most of Europe.
Revenue from the Netherlands fell by nine per cent, from $4.7 billion to $4.3 billion, while other European countries delivered $458 million or four per cent less revenue than the year before. The United Kingdom was slightly up, from $342 million to $349 million.
The average exchange rates moved from $132 to one euro in 2014 to $130 last year, which represents 2.3 per cent appreciation, and from $184 to one pound sterling to $179, representing a 2.5 per cent appreciation.
JPG's high-pressure proce-ssing line, which will extend the shelf life of fresh fruit and vegetable juice and which was commissioned during its third quarter last year, is expected to help JP generate new business with leading retail chains in Holland, Germany, Austria, Belgium and Scandinavia.
In the meantime, share of profit in associated companies and joint ventures climbed from $342 million in 2014 to $688 million last year. Correspondingly, net profit increased from $319 million to $614 million.
Mavis Bank Coffee Factory, in which JPG has a 50 per cent stake, realised a $98-million profit in 2015, reversing a $83-million loss incurred the year before. The 42 per cent stake in Kingston Wharves added $538 million to the bottom line, up from $324 million as the cargo handler boosted its earnings by nearly 50 per cent last year.
In its profit and loss, Jamaica Producers reported an increase in gain on disposal of property, plant and equipment and investments from $171 million to $433 million. The company sold its office complex, located on Oxford Road in New Kingston, for over $300 million along with non-core equities in the first half of 2015 as part of its efforts to redeploy funds to current areas of focus.
However, restructuring cost the company $224 million.
JPG decided to exit the Clarendon operations of Four Rivers Mining, in which it has a 49 per cent stake, and concentrate production at a single site in St Mary.
"As a result, the group adjusted the carrying value of property, plant and equipment and inventory to reflect recoverable amounts," said notes to the latest audited financial statements out this week.
This led to a $178-million impairment of property, plant and equipment and a $19-million impairment of inventory.
The closure of baking facility cost $5.9 million in impairment, including staff redundancy costs, following the planned closure of a subsidiary baking facility in Jamaica as part of
its bakery consolidation programme.
The company plans to shutter the Montego Bay operations of rum cake distributor Tortuga International Holdings, in which it has a 62 per cent stake, and commission a new bakery in Kingston.
Tortuga saw its revenue grow from $796 million in 2014 to $846 million last year, but its loss rose from $4 million to $28 million.