Mon | Mar 27, 2023

JFP bidding on hotel projects in the US as part of recovery

Published:Friday | February 18, 2022 | 12:15 AM
CEO of JFP Limited, Metry Seaga.
CEO of JFP Limited, Metry Seaga.

CEO of JFP Limited, Metry Seaga.
CEO of JFP Limited, Metry Seaga.

JFP Limited, which makes furniture for retail stores and hotels, said it’s currently bidding for Hyatt hotel projects in the United States, as part of a wider effort to enter markets in the Americas, as a new source of revenue.

It’s also positioning for business from local hotel operators that would normally have looked to China for supplies, but are looking elsewhere as global supply chain issues remain unresolved.

The company, formerly known as Jamaica Fibreglass Products Limited, is seeking a rebound in sales that have been weighed down by the COVID-19 pandemic. It also wants to set a new record for revenue inflows in 2022.

“We are doing quotes for the Hyatt in Jacksonville and the Hyatt in California,” said JFP CEO Metry Seaga on Thursday at an investor briefing ahead of the company’s initial public offering on Monday aimed at raising $280 million at $1 per share.

The downturn in revenue under the pandemic stemmed from clients delaying projects. The company’s pipeline of ‘signed and sealed’ contracted projects amount to $255 million and will flow into the company by the third quarter of its 2022 financial year. It would represent just a portion of top-line income, which Seaga said would also include walk-in orders and orders generated from its sales team.

“Based on the number of orders we already have, we would expect to achieve our best sales year ever and that is going to redound to our best profit ever,” said Seaga.

In addition to targeting the United States and Central America for new business, JFP said it is aiming to supply furniture for up to 10 per cent of the 7,000 new rooms coming on stream in Jamaica’s tourism sector in the next few years.

“We are confident that we can get some of that business,” he said.

The impact of the pandemic on the company’s sales and profit shows in its most recent financial results for the nine-month period ending September 2021. JFP generated pretax profit of $5 million on sales of $210 million, compared pretax profit of $87 million on sales of $312 million in the corresponding 2020 period. Additionally, its cash from operations bled $20.7 million compared to positive cash generation of $79.5 million in 2020; while its net cash position fell into deficit, closing the period at negative $15 million compared to holdings of $46.5 million the previous year.

During 2020 and parts of 2021, a main source of revenue for JFP declined heavily with the virtual closure of the restaurant and hotel sector. But since this year, JFP’s management said they started receiving inquiries from hotels and other customers that would traditionally buy from China.

“[In China] their lead time and prices are so high that we find that there is a niche developing. And we are going to be there to fill that niche,” said Seaga.

He added that global delays in the supply of goods due to shipping and commodity price hikes have resulted in the Caribbean gaining competitively over shipping from China. A container of goods from Kingston to Houston, Texas in the US, costs US$2,000 while that same container would cost US$25,000 in shipping from China, he explained. Part of the saving stems from a Caribbean/US trade duty exemption, that’s hardly used by manufacturers in the region, he added.

Aside from hotels, JFP is looking for new revenue from the restaurant and outsourcing sectors.

“The BPO sector is not a sector we are heavily involved in but it’s a sector we are working on,” said Seaga. “It is a hard nut to crack.”

The JFP IPO will be on the market from February 21 to 28. The company is going public after nearly four decades in business, having started operations in 1985.

Of the $280 million, half of the funds will go towards current shareholders, Stephen Sirgany, Richard Sirgany and Metry Seaga, who are selling a portion of their holdings, but together will continue to own 75 per cent of JFP in equals blocks of 25 per cent, after the IPO.