Jamaica Broilers' Net Profit Falls to $128 Million

JAMAICA - Jamaica Broilers Group (JBG) posted a loss for its ethanol operations, while it saw dramatic declines to its poultry and feed businesses' bottom lines.
calendar icon 26 September 2011
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The group's net profit dropped from $219 million to $128 million even a revenue for the quarter ended July 30 increased by $800 million over the comparative period last year to $5.8 billion, which largely reflected increases in the price of poultry and feed.

According to Jamaica Observer, the increase was blamed on increased cost of corn which JB said moved from US$4.40 to US$7.40 per bushel.

"As these high grain costs continue we have been able to increase our operational efficiencies in an effort to mitigate against the unavoidable increase in the costs of our products," said a joint statement form chairman Robert Levy and president and CEP Christopher Levy.

Distribution costs rose from $147.1 million to $156.3 million while administrative expenses rose from $621.4 million to $736.3 million, due to "inflation increases along development costs related to the wider Caribbean including Haiti", according to the directors' statement.

Financing costs were reduced to $73 million from $95 million due to reductions in the interest rates and reduced borrowings.

JBG's ethanol business, which has been making profit throughout the tough recessionary climate over the last couple of years, posted a $3.5 million loss for its ethanol operations during the quarter ended July 30, 2011 - a reversal of the $29.2 million profit a year earlier - despite a rise in revenue from $245.2 million to $404.9 million.

"Our ethanol operations continue to produce, in a difficult market environment, based on contracts in place," said the Levys in their statement to shareholders accompanying the financial statements.

JBG's ethanol operations, or JB Ethanol, was established in 2006 to take advantage of a price differential on Brazilian ethanol exported directly to the US and product passing through a Caribbean processing facility which benefits from tax exemptions in the US under the Caribbean Basin Initiative (CBI).

The processors ethanol operations was highly profitable from the get go, except last financial year, the price of ethanol in the US (which fluctuated between US$2.50-US$2.80 a gallon, or higher than the long-run price projected by JBG of US$2.20) was still not high enough to justify higher production, or more so the price of the raw material was too high.

In July JBG's VP of finance and energy, Ian Persard said that he expected the ethanol operations in 2012 to perform similarly to 2011, and that "We expect (utilisation) to run at about 20 per cent with the active months being the summer months. We have run for almost all of June and expect for most of July

The Best Dressed Foods Division, which processes poultry and other products, and HIPRO-ACE, which sells manufactured feeds, baby chicks and other farm and household supplies, posted operating profits (before corporate expenses were deducted) of $195.1 million and $198.8 million, respectively, down from $279.2 million and $225.6 million.

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