Seprod to continue big spending on plant, products
Food manufacturing and distribution conglomerate Seprod Limited on Thursday described its outlook as positive, with plans to spend hundreds of millions on new products and plant upgrades this year.
In each of the last two years, Seprod reinvested more than $700 million in its operations, in what CEO Richard Pandohie described as the continuation of an "aggressive" programme of innovation and productivity improvement.
Of the $708 million spent by the company last year, around 55 per cent was invested in the oil and margarine business, 25 per cent in the dairy business, 15 per cent in the biscuit business, and the rest spread across the other business units. For this year, Pandohie indicated that the spend would not decline, but did not give an estimate.
Revenue grew by more than $2 billion to $15.8 billion, driven by a combination of new products, export growth, significant reduction in loss at its sugar plantation Golden Grove, a gain on its sale of select shares in its investment portfolio, and a turnaround in the distribution operation.
"The outlook for 2017 is positive, with growth expected in both revenue and operating profit," said Pandohie, adding that the continuing macroeconomic stability has given management the confidence to make investments for the long term.
"Our expectation is that the Government will continue to do its part to ensure stability and create an environment that is conducive to growth," he said.
Areas of focus for 2017 include investments in the agricultural, particularly the dairy industry, as Seprod believes that partnership with farmers throughout the country represents a key pillar for both Jamaica's and Seprod's growth ambition. It also plans to "excite" consumers with new products both within the diary and retail segments. Last year, Seprod launched lactose-free milk, heavy cream, condensed and evaporated milk.
Its exports in 2016 more than doubled due to new products in the portfolio. The conglomerate plans to expand its distribution footprint in order to get products closer to consumers.
"The innovations will continue and you will see more of it in the other business units," Pandohie said.
Over the last two years, Seprod spent more than $1.2 billion to upgrade its diary subsidiary Serge Island Dairy factory and farm operations, while investing in new oven and critical equipment at International Biscuit Limited and investing in equipment to improve the quality of the sugar produced at Golden Grove.
In 2016, Seprod outsourced its Golden Grove Estate farming operations, with third parties responsible for all the cane cultivation and harvesting.
Also in November 2015, the company acquired new products in its portfolios, including Betty milk and Supligen with the acquisition of the NestlÈ brands through Musson. Seprod produces its own dairy products under the Serge Island brand, but also manufactures Betty and Supligen on behalf of related company, the Musson Group.
Pandohie joined Seprod as CEO at the end of 2014 with a mandate to grow exports and increase local market share through import substitution. Part of that mandate came with a $5-billion programme that is ongoing across the group.