Jamaica Broilers profit plummets to five-year low
Its financial results capture two months of Jamaica’s COVID lockdown, which lasted three months and is still being unwound in phases, but even so, poultry company Jamaica Broilers Group, JBG, has already experienced substantial erasure of its bottom line to a five-year low.
The company also expects to continue feeling the effects of the virus for at least another year.
Jamaica Broiler’s profits tumbled to $1.36 billion on revenues of $55.7 billion at year ending May 2; earnings that come in a billion dollars lower than last year’s record $2.37 billion of net profit.
The last time Jamaica Broilers saw such a wide variance in annual earnings was in FY 2016, when its profit doubled to $2 billion from $1 billion in 2015. Its annual earnings remained above $2 billion each year since – until now, the year of COVID.
Back in 2016, the growth came largely from what Jamaica Broilers President and CEO Christopher Levy said was escalating demand for poultry meat among Jamaicans, to which the company responded with the acquisition of a new hatchery in St Catherine to facilitate increased production of its branded Best Dressed Chicken.
This year, a lockdown of the hotel sector and later fallout in orders from food-fast operators during the outbreak of the COVID-19 disease in Jamaica since March caused a 40 per cent decline in chicken sales for the country’s leading poultry producer.
June is also expected to reflect poorly in the company’s accounts in the first quarter ending July/early August.
“The reduction in profitability would be a direct result of COVID-19 impact on the operations, as well as some measures that we took in response to COVID-19, which would have resulted in some additional costs during the year,” said JBG Senior Vice-President for Finance Ian Parsard.
The company took the decision to slow the number of birds processed to better manage inventory, rationalise output for its Best Dressed line of products, as well as feeds, and implemented a five per cent cut in salary for all its staff. Jamaica Broilers also recorded a charge of $253.1 million for terminations under a restructuring exercise to deal with the fallout from COVID-19.
UPTICK IN SALES
Now, with a temporary suspension on agricultural imports imposed by the Government, JBG has seen an uptick in sales of both its baby chicks and chicken.
“We have seen where the demand for baby chicks has come back very strong, and that is really a good thing for the country, because we have roughly 100,000 people involved in the small farmer segment of the market,” Parsard said.
“In terms of chicken, we really hit a low in May, and since then we have seen some amount of recovery. Over the past three weeks, we have been running about 75 per cent of pre-COVID levels,” he said.
Up to May, JBG’s sales had fallen by 40 per cent. Although the company has seen some recovery of that business, Parsard said JBG might still be dealing with the impacts of the pandemic up to June 2021.
“What we are in now is what we call the COVID-19 recovery period and we expect that to run for at least a year. Thereafter the strategy will pretty much remain the same, in that we expect that the company’s growth will be led by our US operations, whether that is organic growth or other acquisitions,” he said.
While the acquisitions are not immediately on the agenda for JBG, Parsard said the company constantly has its eyes on the market for potential opportunities.
A greater focus for the company now is to minimise its operational risk in Haiti, which has suffered from that country’s political turmoil.
Haiti Broilers SA is also concerned about the value of the local currency, the gourde.
“The devaluation of the gourde at times is significant. We have a lot of birds and we may be looking at scaling down somewhat to create an operation that’s balanced. We can’t take the chance of thinking about a significant expansion of Haiti at this point in time,” Parsard said.