Susan Gordon, Business Reporter
Jeffrey Hall, CEO-designate of Jamaica Producers Group.
Serious about getting rid of non-core businesses, agro processing and distribution company, Jamaica Producers Group (JP), has off-loaded its loss-making desserts subsidiary for $400 million.
The conglomerate has sold Serious Dessert Limited, a United Kingdom-based operation, to another UK company, Noble Foods Limited, announcing the deal on Friday.
Serious Desserts, which makes products like key lime pie, cheese cake and crème brûlée, is a three-year-old company that turned over £2.9 million in 2007, or less than three per cent of group revenues - not enough to turn a profit.
"Our diversification into new product categories in recent years has meant that our core juice operation, the largest part of our business, has not enjoyed the level of focus that I believe is necessary at this time," said JP group managing director, Jeffrey Hall, commenting on the rationale for the sale.
Serious Desserts was part of JP's Serious Foods group, whose core business is juices and smoothies - a segment that JP has touted as having strong promise.
But the desserts business has never warmed up.
In 2006 and again in 2007, chairman Charles Johnston informed shareholders in statements published in the company's annual reports, that the desserts business continued to experience start-up losses, and getting to the break-even point was taking longer than expected.
The conglomerate is now piloting its companies through a reorganisation of the group.
JP, which last year reshaped its team after the retirement of managing director Dr Marshall Hall - now replaced by his son - is attempting to steer itself out of the red and back to profitability through cost cuttings, a realignment of assets through sales and new acquisitions, and containment of expenses that included a cut in management and other staff.
Last year, the company lost $479 million, which Jeffrey Hall said at the company's annual general meeting two weeks ago, was due to a dramatic 30 per cent spike in the cost of raw materials, higher fuel bill and flattened discretionary spending in the UK, where JP earns 85 per cent of total revenue.
More than 80 per cent of the group's business is in food processing and distribution.
The sale cuts JP's active subsidiaries from 30 to 29.