The Seprod Group-led sugar investment totalling US$2 million ($172 million) could gross $660 million in revenues for its first crop but executives cautioned that it will record a net-loss.

The company expects improvement for the next crop and will invest in new equipment and procedures aimed at improving the yields per acre.

“The problems included less biological assets than forecast and the price of the Euro was less than anticipated,” said PB Scott Seprod’s chairman at the annual general meeting on Monday in Knutsford Court Hotel in Kingston.

The Euro was forecast at $137 to $1 noted Scott but yesterday it traded at $112. Cane and sugar production fell 16 per cent below the forecast 15,000 tonnes of sugar from 193,000 tonnes of cane noted Dr Richard Jones vice chairman who also addressed the meeting. He disclosed the going price for sugar was some “$44,000 per tonne” which resulted in the Business Observer calculation of the expected revenues. The last shipment of sugar should be arriving in Europe this month executives stated.

Jones stated that the company expects to upgrade its washers, floors, centrifuges and include computerisation. The company hopes it will improve its sugar content by nine percentage points to a benchmark of 91 for the next crop.

“We have to get it to 91 next year and we are going to computerisation on the floors,” said Jones. “Everything we are doing is geared towards increasing efficiency.”

The manufacturing giant entered sugar last year after purchasing the St Thomas sugar assets from Government. In July 2009 Seprod in partnership with Fred M Jones Estate acquired the St Thomas Sugar Company from the Government. It is managed through a newly formed subsidiary, Golden Grove Sugar Company in which Seprod is majority partner holding 55 per cent and FM Jones the remaining 45 per cent. “It is a US$2 million investment in which we put in US$1.1 million,” noted Scott.

Seprod expects that the “entity will bring to the group significant foreign exchange flows in the future”, asserted Scott in his chairman’s report accompanying the annual report. On the expense side however the sugar investment was the primary reason for the jump in salaries and wages from $103.3 million in 2008 to $264.6 million in 2009. Ultimately, the sugar investment is a small part of the Seprod’s $8 billion in total assets.

For its annual results, Seprod reported a 58 per cent improvement in net profit, which totalled $1.49 billion for its financial year that ended December 31, 2009. The group saw flat revenues at $9.5 billion but benefited from slashing expenses by $400 million despite inflation. The group said that it had participated in the JDX, and that the debt exchange, which saw the Government exchange out 99 per cent of its domestic debt for new bonds at lower rates and longer maturities, had “a significant impact on the expected future cash flows form the group’s investment portfolio”.

Seprod outline in its previous financial statements that it had exchanged $685 million in Jamaican-denominated securities and US$1 million ($89 million) in US-denominated securities in the JDX.