Seprod reports record $1.28-billion Q3 profit

Seprod reports record $1.28-billion Q3 profit

By David Rose
Business Observer writer

Wednesday, October 28, 2020

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With sugar operations no longer holding down the company's bottom line, manufacturing and distribution company Seprod set a record net profit of $1.28 billion in its third quarter and $2.48 billion for the nine months which outperformed its entire 2019 financial year (FY).

As COVID-19 continues to weigh down the tourism industry, Seprod has managed to make up lost sales from increased household consumption, exports and its pharmaceutical business. This led to the company generating a record $10.05 billion in sales (revenue) — its first-ever quarter above the $10-billion mark. The major driver of this increased revenue was its distribution arm which has seen sales grow by 18 per cent to a record $21.4 billion for the nine months, while manufacturing has gone up by eight per cent to $7.26 billion.

Asked to comment on the company's performance to date and its COVID-19 response, CEO Richard Pandohie said: “Seprod has a clear strategic plan and we have executed it well. This strategy allowed us to identify value-creating activities and, of equal importance, also allowed us to make tough decisions to exit value-destroying ones. With the decisions made in prior years, we were very confident that 2020 was going to completely outperform 2019; however, it would be misleading to look at 2020 in isolation.”

Seprod, he explained, “reacted very quickly at the onset of COVID, even before it was a serious consideration in Jamaica. Of course, we had no idea that it would have escalated to this extent; however, we chose to prepare for a worst-case scenario. It has not been entirely smooth as we have had persons who sought to bypass protocols or to just simply ignore them, but we have not relented, as without a healthy and available workforce, we cannot deliver”.

Added Pandohie: “I would say COVID has forced us to accelerate the adaptation of things we should have been doing before, such as remote working of support staff, increased use of e-commerce and expanding our healthy food portfolio, such as our recently launched gluten-free flour. Innovation has been a key part of our performance in the recent years and this is critical to our growth plan.”

Part of the company's strategic growth focus has been on exports and diversifying its product range to use more locally sourced materials. Prior to Pandohie's arrival, the company's export focus was low, as it concentrated on the domestic market. Since then, Seprod has made exports a priority.

The company's exports have grown by 32 per cent to $1.51 billion for 2020 with its dairy and milled categories driving sales as the company targets Latin America and other parts of the Caribbean.

There has also been increased investment in St Thomas, which has yielded a gluten-free flour from the cassava plant. However, Seprod's joint venture Jamaica Grains and Cereals recorded a $38.45-million loss for the quarter with the company's share of loss being $19.23 million.

Although a major driver of the third quarter net profit came from the $762-million disposal of its Marcus Garvey Drive property, the company returned a significant part of that gain in a recent dividend which saw holders who owned more than 20,000 shares getting Eppley Caribbean Property Fund shares while the remaining shareholders received more cash. This resulted in dividends for 2020 standing at $1.04 billion, which is 50 per cent higher than the 2019 FY.

With one more quarter remaining and Seprod on target to achieve new heights, Pandohie believes that the company will be able to deliver stronger results, which he posits as a necessary part of the economic recovery.

“Seprod is very much a part of the Jamaican fabric and we will play our part in securing employment for our people and generating value-added growth to help with the hoped-for V-shape recovery of the economy,” he said.

“We are committed to supplying quality and affordable products to our consumers and we are committed to playing our part in supporting our most vulnerable citizens. From a business standpoint, our next major aim is to complete the warehouse and logistics centre by end Q3 2021 that will yield major improvement in our distribution productivity and efficiency.”

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