Jamaica Broilers profit rises despite bleed from Haiti operation
Jamaica Broilers Group,
JBG, grew earnings by 27 per cent for the financial year ended April 2022, but the performance would have been better had it not been for the excessive bleeding of the poultry producer’s Haiti operation.
Jamaica Broilers wrapped up downsizing activities in Haiti last month as part of a restructuring programme that has resulted in 60 percent of the segment’s operation being temporarily discontinued.
The Thomazeau facility that JBG once occupied in the strife-torn country is now vacant, and the remaining birds from the operation which was last year impacted by an incident on the property, are now on smaller farms that Jamaica Broilers leases throughout the country.
Haiti has become a challenging place for Jamaica Broilers to operate amid political instability that has been ongoing for more than a year, lingering effects of the pandemic, along with the country’s vulnerabilities to natural disasters. Last year, an earthquake with a magnitude of 7.2 killed 2,207 people. It followed shortly after the assassination of President Jovenel Moïse.
After months of watching how things unfolded in the country, Jamaica Broilers started making changes to contain the operation’s losses, including the appointment of Haitian sales manager Carl-Eric Staco to managing director, to plot a turnaround for the operation. Additionally, in cases where operations were impacted by external forces, the company took the decision not to replace the losses.
Up to early 2020, Jamaica Broilers’s Thomazeau operation held roughly 600,000 layers for its table egg production. That number has since been downsized to 200,000 birds, which are being grown on small farms Jamaica Broilers leases to keep operating costs down. Its Lafiteau operations continue, with limited staff on-site where possible.
“What we have done is to sort of revise the business model right now. We have downsized somewhat our farming operation, but we still continue to produce feed,” Senior Vice-President Ian Parsard told the Financial Gleaner.
Jamaica Broilers had to write off property, plant and equipment with carrying value of $141 million during the year, as a result of its decision to end production activities at the Thomazeau facility.
Its interest in Haiti Broilers SA, prior to any impairment provision for the scaled-down operation, amounted to $1.3 billion. Jamaica Broilers, in its audited accounts, said that after utilizing a discounted cash flow model, the carrying value of the interest in Haiti Broilers SA now stands at $904.2 million.
Group-wide, Jamaica Broilers produced a profit of $3 billion for FY 2022, up 27 per cent on FY 2021 performance, while revenues jumped 32 per cent year-on-year to $75.7 billion. JBG’s Jamaica operation continues to account for the lion’s share of revenue, but its US operations are growing at a faster pace.
Meanwhile, the losses from Haiti are worsening, bleeding the company of $365 million at the close of the 2022 financial year, compared to losses of $6.9 million a year earlier. There was a 67 per cent dip in year-on-year profit for JBG from its ‘other Caribbean operations’.
Still, Parsard said that despite the turbulence in the market, Jamaica Broilers has no immediate plans to exit its Haiti operations. In fact, the company has been increasing its stake.
Jamaica Broilers now owns 85.48 per cent of Haiti Broilers SA, having purchased an additional 13.84 per cent in the company last year.
“I wouldn’t say that if an offer came to the table that we wouldn’t consider it, but we are not actively looking to sell the operation right now,” Parsard told the Financial Gleaner.
“We will continue to look for any opportunities that can arise from our Haiti operations, but for now, the focus is on consolidating the operation and to observe how the revised business model works before we make any other decision,” he said.