Seprod ramps up flour mill
Manufacturing conglomerate Seprod Limited and its American partner commissioned Jamaica's second flour mill on Tuesday, and are already looking to exports to bring in the dough for the new operation.
The mill will be pursuing a range of products to satisfy regional demand.
"Seprod and its partners are committed to growing its manufacturing base, to engage in import substitution in the domestic market - which we define to be Caricom - and growing our export business," said Seprod CEO Richard Pandohie.
Initially, the mill will pursue production of counter flour and bakery flour, primarily, and then ramp up to wholewheat flour and speciality value-added products, he said.
The investment is also expected to supplement the company's capacity to supply cornmeal throughout the Caribbean, particularly to snack manufacturers who now import cornmeal extra-regionally, according to Pandohie.
He is still not saying how much was invested in the mill, which is located in the industrial belt on the Kingston waterfront, while noting that it is "certainly one of the largest industrial investments in Jamaica in the last three decades".
Sources indicate, however, that based on size of the five silos, the footprint of the operation and the likely configuration, the investment is in the order of US$30 million.
In late 2015, Seprod sold 50 per cent of its subsidiary Jamaica Grain & Cereals Limited to Seaboard Overseas Trading Group, a division of Seaboard Corp, and its CEO David M. Dannov was named to Jamaica Grains board along with James Marks who heads a Seaboard affiliate in Haiti, and another American, Steven Bresky.
Pandohie was non-committal on the distribution arrangements for the products to be milled at the new facility, saying only that Seprod is keeping its options open.
The plant was initially expected to begin operating in September, but was hit with delays.
"We were impacted by several factors, including the recent hurricanes, unusually high levels of rainfall and other logistical issues beyond our control. Despite being disappointed with the late start, we are immensely pleased with the outcome of the project as well as with the quality of the product," Pandohie said.
Dramatic fall in profit
Meanwhile, the financial results released by Seprod this week showed a dramatic fall in profit year-to-date. For the nine months ending September, the company grew revenues by more than nine per cent to $12 billion, but profit fell 38 per cent from $943 million to $583 million.
Pandohie said the results were not unexpected, due to the one-off gains made in the previous year.
"Our year-to-date results for quarter three, as expected, are below 2016, primarily due to the one-off investment portfolio gain that occurred in the prior year. The gain in the investment portfolio was subsequently realised and a special dividend paid to shareholders in 2016. Management took the one-off investment gain for 2016 in setting expectations for the 2017 results," the Seprod boss said.
Minus the one-off effect, profit would have fallen just six per cent, he said. The company is predicting that its full-year operating results will outperform 2016.
"Management is confident that our operating profits for 2017 will exceed that of 2016, on a normalised basis, as ongoing projects come on line during quarter four," Pandohie said.