Modest turnaround at Sweet River
Sweet River Abattoir & Supplies Company made a modest turnaround, its fourth-quarter results show, and the company aims to shore up its operations by formalising contracts with its business partners.
Managing Director Valence Gifford says the company, which largely trades in pork meat, will be focus efforts this year on diversifying income streams to overcome the seasonality of the business.
Sweet River aims is to bring more certainty to the operation through formal contracts with partners, even as it set sights on new markets overseas.
"One major thrust going forward is to go into the export market, even at a regional level. This will help to smooth out our demand side, especially during the summer months that are approaching, since when school is out, the demand for pork is significantly reduced. Exports can nullify that situation, and hopefully, if not this year then certainly next year, we can get into that," Gifford told Gleaner Business.
For the quarter ending March 2017, Sweet River reported net profit of $719,000, compared to a loss of $6.98 million for the same period in 2016. It represented a 110 per cent turnaround at the bottom line.
The meat supplier recorded sales of $88 million in the quarter, up from $56 million in 2016, occasioned by a resurgence of pig supplies.
Key to the strategy is the core group of small farmers who supply pigs to the abattoir, that is, whether the animal can maintain supplies to Sweet River. Gifford says his operation has been hampered by a lack of guarantees in the past.
"We said last year and the year before that we were suffering from a downturn in the supply of animals. We have now significantly increased the number of animals slaughter and this has been matched by an increase in our highest sales on record since we became a company eight years ago," he told Gleaner Business.
In his statement to shareholders published with the fourth-quarter report, he said dialogue was ongoing to put contracts in place with all of Sweet River's markets.
"These contracts will guarantee that we maintain viable production levels on the farms, at the abattoir and to our customers.
Depending on the business partner, the contracts will have tenures of six months, one year, and three to five years, he said.
Sweet River generated annual sales of $345 million at year end March 2017, compared with $215 million in 2016. The $130 million increase was in the order of 60 per cent. Profit spiked 126 per cent, but amounted to a modest $1.76 million, up from a loss of $6.47 million, based on the unaudited results.
Gifford says the improvements came from the effect of two new hires in the form of an operations manager and a salesperson.
The company's sales team has turned its attention to a growing market segment.
"Since our inception, we were not focused on the tourism sector directly, in that we sell to large players that sell to the hotels. We were primarily focused on the processing plant, and we now recognise that with the growth in the number of rooms, and so on, there is a need to establish a direct footprint. It will take time, but we've started, and we are moving along," Gifford said.
The meat plant is operating at 60 per cent capacity with a single shift, according to Gifford. As demand grows, he said, a second shift will be added and slaughtering days increased from three to four.