After Seprod Limited’s acquisition of Facey Commodity Holdings Limited (FCHL) in October 2018, a fire has destroyed the main warehouse of the company which stores numerous goods it distributes across the island. As a result, the operations of Facey Commodity have been severely disrupted with billions in losses in the aftermath. The jamaica Observer’s Business Observer analyses the impact of Facey’s disruption to the Seprod group of companies and how another company recovered from their fire in May 2016.

Seprod is an 80-year-old Jamaican company involved in the manufacturing and distribution of numerous consumer products such as Supligen, Serge Island milk, Betty condensed milk, Kraft, Pfizer, Goya, and Seven Seas. Facey Commodity and its subsidiary are distributors of consumer and pharmaceutical products. Seprod generated consolidated revenue of $37.74 billion in 2020 with a record consolidated net profit of $2.85 billion. Its asset base stood at $38.08 billion and shareholders equity of $16.89 billion.

Prior to the acquisition of Facey Commodity Holdings, the parent company of Facey Commodity Company Limited, Seprod generated $16.51 billion in revenue and $735.04 million in profit attributable to shareholders in its 2017 financial year (FY). This was negatively impacted by its subsidiary Golden Grove Sugar Company Limited which brought in a net loss of $416.56 million. Seprod’s total asset base was $20 billion with equity attributable to shareholders of $9.89 billion at the end of 2017.

As per the 2018 audited financial notes, Facey Commodity Holdings reported $4.39 billion in revenue and net profit of $155.72 million for the three months ending December 31, 2018. On an annualised basis, one could estimate the contribution of Facey Commodity Holdings to be around $17.55 billion from a revenue standpoint and $622.87 billion in net profit. Musson Holdings Limited (MHL) was also acquired in the 2018 FY and reported revenue of $5 billion plus net profit of $148.77 million for the full year. Musson consists of the dairy operations for Seprod Limited.

Since the fire occurred nine days into the fourth quarter, it can be reasonably estimated that there will be no major earning contribution from this subsidiary. Seprod’s revenue in Q4 2020 was $9.08 billion with net profit from continuing operations of $318.96 million. Thus, it can be expected that profits will take a hit in the period along with an impairment provision recorded on the income statement. The online shop (Seprod Shop) has also been closed in the interim time due to the fire. However, the company’s insurance payments can offset some of the impact with Seprod expected to double down on its $2.5-billion investment in its warehouse operation. $2.86 billion in group cash and a strong leadership should see the giant return to strong form in short order.

A tweet from chief executive officer of the Seprod Group Richard Pandohie stated emphatically, “Monday morning and we are rolling. Thanks for your encouragement, Jamaica. We won’t let you down.”

The Wisynco Story

In May 2016, Wisynco Group Limited experienced a massive fire at its warehouse and distribution centre. The fire occurred a month before the end of its 2016 FY which saw it record a $1.32-billion impairment from the fire. Despite this impact on the income statement, the company received $1.43 billion in insurance proceeds related to its warehouse and inventory. They received an additional $636.47 million in the 2017 FY in further proceeds for the warehouse and business interruption.

In spite of the destruction from the fire, Wisynco’s revenue rose by nine per cent to $21.25 billion in its 2017 FY which spoke to the company’s ability to adapt from the fire. Net profit also remained flat at $2.24 billion. Wisynco was able to fully reopen the expanded Sam Mahfood Distribution Centre in September 2017 which was 18 months after the blaze. Wisynco went public in December 2017 where it was able to garner more than $18 billion in subscriptions above its $6.1 billion target. For its 2021 FY, Wisynco reported $31.82 billion in revenue and $3.07 billion in net profit which was its highest profit to date.