CEO Pandohie forecasts good year for Seprod
Seprod CEO Richard Pandohie is already predicting a big year for the manufacturing conglomerate, citing both the first-quarter results and projects to be rolled out in the months ahead.
"Based on our first-quarter results, we're already ahead of target and we are very positive that we will deliver good full-year results," Pandohie said.
Seprod profit rose nearly 28 per cent in the March quarter to $283 million as sales revenue spiked. Sales climbed more than 15 per cent to $4.25 billion.
Pandohie said all segments contributed to the good results, including the once-problematic sugar manufacturing arm, Golden Grove, which he said had been "hurting shareholder value for a long time" but is doing better now.
"There have been improvements all around, but importantly, we had a major turnaround in losses related to the sugar," he said, while noting that he was aiming for break-even this year at Golden Grove.
"Our exports also went up tremendously, for that we are running at around 300 per cent. In addition, the dairy operation has been performing steadily, driven mainly by the new products," Pandohie added.
High operating expenses
Seprod continues to execute a large capital expenditure programme, which the CEO said partly explains the continued high operating expenses. He said the one-off events will soon begin to generate revenues as the projects turn over revenue.
"There are quite a few projects where we are taking a lot of expenses and they've not yet reached the stage where they are generating a lot of revenue," Pandohie said.
"There are some unusual expenses occurring, but it's part of the process of investing in the brand and building the export network."
As for its grain business, in which the company sold a stake in the operation to an unnamed joint-venture partner last year, Pandohie said an announcement is pending by September, when improvements in the grain division are expected to come on stream.
"We're very much advanced in completing the grain expansion project. This will see us creating probably the most efficient grain mill in Latin America," Pandohie said.
Last year, Seprod reported a big spike in earnings, from $560 million to $900 million, a portion of which came from the liquidation of equity investments. But now, the company is focused on core business.
"We had some gains last year that was related to the equity portfolio that we sold. We liquidated, primarily, our GraceKennedy stock. We've taken all that investment gain and put it into our operating plans for this year. So we expect to generate the same level of profitability from our operations," Pandohie said.
At year end December 2016, Seprod reported a $360-million gain on the liquidation of financial assets.