Haitian operations limit earnings of Jamaica Broilers Group
Earnings of the Jamaica Broilers Group (JBG), rose 27 per cent year-on-year for the financial year ended April 2022, but the performance could have been better had it not been for Haiti Broilers SA's excessive bleeding.
JBG wrapped up downsizing activities in Haiti last month as part of a restructuring programme that has resulted in roughly 65 per cent of the segment's table egg operation being temporarily discontinued.
The Thomazeau facility JBG once occupied 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 the company leases throughout the country.
Haiti has become a challenging place for JBG to operate amid political instability in the country that has been ongoing for more than a year, lingering effects of the COVID-19 pandemic, along with the country's vulnerabilities to natural disasters. Last year, an earthquake with magnitude of 7.2 killed 2,207 people. It followed the assassination of President, Jovenel Moïse.
After months of watching how things unfolded in the country, JBG started making changes to contain the operation's losses, including the appointment of Haitian sales manager Carl-Eric Staco to managing director. Additionally, in cases where operations were impacted by external forces, the company took the decision not to replace the losses.
Up to early 2020, JBG'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 lands JBG 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.
JBG 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. But in its audited accounts, JBG said that after utilizing a discounted cash flow model, the carrying value of the interest in Haiti Broilers S.A now stands at $904.2 million.
Group-wide, JBG produced a profit of $3 billion for FY 2022, up 27 per cent on FY 2021 performance. 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 operation is growing at a faster pace.
The losses from its Haiti operation 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.
Meanwhile, there was a 67 per cent dip in year-on-year profit for the segment 'other Caribbean operations'.
Still, Parsard said that despite the turbulence in the market, JBG has no immediate plans of offloading some of its shares in the Haiti operation. In fact, the company has been buying more shares in the business.
JBG 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 said.
“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 continued.
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