BUSINESS: Jamaica Broilers profits affected by sliding dollar

The Jamaica Broilers Group said revenues for its third quarter ended January 26 increased by 15 per cent from J$6.1 billion to J$7 billion, but its profit was negatively impacted by the depreciation of the local currency.

Gross profit of 20.2 per cent for the quarter was 1.5 percentage points below the 21.7 per cent achieved in the corresponding quarter last year, according to the just released financials.

According to the Group, gross profits were negatively impacted by increased US dollar costs for corn and soya bean residue, its main feed ingredients.

“This, in addition to the depreciation in the value of the Jamaican currency, has resulted in continuing cost increases,” according to chairman, Robert Levy and President and Chief Executive Officer, Christopher Levy in a statement accompanying the results.

However, Jamaica Broilers said management felt constrained during the quarter from fully passing on those increased costs in selling price adjustments.

Distribution and administrative costs reflected increases when compared with the third quarter last year due to a number of unexpected items of expenditure.

The Group said that for much of the quarter, its co-generation electricity operation was out of service.

“During this time over $50 million in fixed costs were carried in administrative expenses while Jamaica Public Service invoices were charged to the Best Dressed Chicken Processing Plant,” the Group said.

The co-generation plant came back into service in mid-January.

In addition, costs were incurred in relation to organizational strengthening and an assessment, by the tax authorities, related to General Consumption Tax deferred on imports.

Jamaica Broilers said the Ethanol Division maintained production under tolling contracts at 100 per cent of capacity during the quarter.

The segment result for that division reflected a positive J$81 million for the quarter, with the year-to-date result now showing J$74 million versus negative J$7 million at the end of the second quarter.

The company said the build out of the Haiti operations was continuing with ever increasing sales of Haitian produced baby chicks, feed, layer birds, table eggs and processed chicken.

A J$48 million taxation expense for the quarter reflected a $74 million reduction when compared to the J$122 million current tax estimate for the corresponding period last year.

The tax expense in the third quarter last year was reduced by a one-off J$100 million reversal of an accrual in respect of previous years, which was no longer required, Jamaica Broilers said.

Against that background, the group recorded profits attributable to shareholders of J$284 million which equates to earnings per share of 23.69 cents, compared to J$400 million or 33.40 cents last year.

The year-to-date position amounting to J$562 million (46.85 cents per stock unit) is J$125 million or 18 per cent below the J$687 million (57.26 cents per stock unit) last year.

Jamaica Broilers said its solar energy project on contract farms was well on the way, with 45 per cent of the farms now installed and operational.

“We are looking forward to reaping the benefit from this project in the medium term,” said the report.

business@gleanerjm.com