Business

FACED WITH reduced earnings and the prospect of wracking up more losses for the three months to May 2010, farm group Jamaica Livestock Association (JLA) was thrown a lifeline in the second quarter this year, turning a profit of J$410.7 million on the back of what appears to be a substantial gain on the sale of its Kingston-based animal feed factory and wharf in March.

The shot in the arm pumped needed cash into the debt-strapped entity and created a turnaround in profits for the representative body for livestock farmers in Jamaica, which racked up losses of J$232 million at the end of its financial year in November 2009.

And at the end of its first quarter in February, the company was still reporting a net loss position on its statement of comprehensive income.

For the second quarter, JLA revenues again dropped 27.7 per cent to J$188.6 million, compared to J$261 million for the corresponding period last year. Operating income was down even as the company managed to register some containment in expenses.

It was the sale of the company's feed plant and wharf facilities, in March, which appeared to have pushed the company back into the black.

Sale of feed plant

The JLA reported in the notes to its quarterly financial statements that its feed plant and wharf facilities had been sold, effective March 2010.

No further details of the transaction were given and Managing Director Henry Rainford was not immediately available for comment.

The company had given notice of its intention to offload the assets in its 2009 yearend statement.

It noted, then, that management had decided on a plan to dispose of the company's feed plant, wharf and grain off- loading facilities as part of a strategic plan to obtain working-capital support.

The move, notes to the financial statement reported, was also in an effort to reduce the company's high-interest debts.

The JLA's principal business is the sale of animal health products, hardware, lumber and farm equipment and supplies.

Through its hatchery, it is also the prime supplier of day-old chicks to independent poultry farmers, who produce an estimated 30 per cent to 40 per cent of Jamaica poultry meat requirements, as stated by the company's website.

The JLA currently operates 13 commercial farm-supplies outlets islandwide, and diversified and integrated its operations with the construction of a wharf and feed mill complex. The plant commenced production in April 1994.

With the sale of the assets, working capital on the company's statement of financial position moved to approximately J$64 million for the six months to May, from a negative position for the comparative period last year.

Total current liabilities in the second quarter also declined to J$191 million from J$414.8 million in the previous year.

The highest movement was reflected in a drop in bank overdraft to J$9.7 million from J$153.5 million, as well as a reduction of 76.9 per cent in long-term liabilities.

The JLA also showed an improved cash position at the end of the six months period up to May, moving to J$9.9 million, more than triple its cash at the end of the second quarter last year.

Earnings per share amounted to J$7.15 for the three months and J$6.31 over the last six month period.

sabrina.gordon@gleanerjm.com