Thu | Nov 23, 2017

Jamaica Producers second quarter earnings bolstered by wharf operator

Published:Wednesday | August 23, 2017 | 12:00 AM
In this March 23, file photo, Energy Minister Dr Andrew Wheatley (left) and PCJ chairman Russell Hadeed board an oil-exploration vessel docked at Kingston Wharves. Kingston Wharves Limited has boosted the results of Jamaica Producers Group since its reclassification as a subsidiary of the conglomerate in 2016.

Jamaica Producers (JP) Group reported a two-thirds spike in revenue in its second quarter, a gain that largely came not from its own operations, but the contribution of its port subsidiary.

Concurrently, more than half the profit reported by Jamaica Producers in the quarter was contributed by its logistics investments, the star of which is Kingston Wharves Limited, KWL.

Jamaica Producers owns 42 per cent of KWL shares. Last year, it reclassified the port company from an associate to a subsidiary company a move that has strengthened its own financials.

"In line with the strong performance of KWL, the largest of the group's subsidiaries, the major share of the group's profit during the period was earned in its logistics division," stated Jamaica Producers chairman Charles Johnston in comments prefacing the conglomerate's June quarter financials.

The group made $377.6 million net profit of which $158 million was apportioned to the parent company. Revenue climbed from $2.4 billion to $4 billion in the quarter.

Over six months, on a like-for-like basis, the logistics division's earnings increased 26 per cent on the prior year, while the food division declined due to the divestment of its 50 per cent share of Mavis Bank Coffee Factory Limited.

"JP and its subsidiaries will continue a programme of investment that is designed to improve its product and service offering while enhancing its operating efficiency. In line with this programme of investment, prior to the end of this year, KWL will launch new logistics facilities for the warehousing of general cargo and the storage of bulk and automotive cargo for domestic and transshipment markets," said Johnston.

KWL spent more than $660 million over six months, or about 60 per cent, more than a year ago, in order to fast-track completion of its expanded logistics facility.

The port company expects to launch the logistics facility before year end. It has been under development since 2014 and aims to double throughput to one million 20-foot container units.

Over the period, the wharf has introduced new services while widening its customer base. Additional projects currently under way include the commissioning of on-dock bulk storage facilities, a near-port global automotive centre and a terminal resurfacing and rehabilitation program, KWL stated.

For the June quarter, KWL made net profit of $413 million from $1.55 billion of revenue. Over six months, it squeezed $750 million of profit from $2.94 billion of revenue.

At Jamaica Producers, food unit JP Tropical will soon commission a modern cold-storage and ripening facility at Retirement Road in Kingston for its banana and pineapple business and will introduce a new extra-crispy variety of its St Mary's banana chips.

The conglomerate, which now operates from a corporate base in New Kingston, is developing new headquarters near the waterfront and closer to its primary operating activities.

"This will mean that we will enter the 2018 financial year operating from purpose built corporate offices in Newport West with a lower overhead cost base," Johnston said.

steven.jackson@gleanerjm.com