Net profits at the Seprod Group went down during the company’s third quarter — the period from July to September — even though the management is trumpeting that the company performed creditable.

During the September quarter, the Seprod Group recorded a 58 per cent decline in net profit. The profit declined to $495 million from $687 million recorded in the corresponding period of 2020. However, the management has explained that this decline must be put in context, as in the corresponding quarter in 2020, Seprod recorded a one-off gain of $762 million from the sale of a property.

During the quarter ended September, 30 2020, Seprod disposed of property valued at $800 million, which was paid by way of shares issued to the group by the purchaser. Aside from this one-off gain in the prior period, the net profit for the quarter represents an increase of $75 million or 18 per cent versus the corresponding period in 2020. Net profit of $1.70 billion was recorded for the first nine months of the year to the end of September, representing a decrease of $780 million or 31 per cent versus the corresponding period in 2020. With the exception of the one-off gain, the net profit for the year-to-date period represents a decline of $19 million or one per cent versus the corresponding period in 2020.

Revenues on the rise

Revenues at the company are on the rise recording growth in both the September third quarter and year-to-date period. For the third quarter, Seprod achieved revenues of $11.32 billion, an increase of $1.27 billion or 13 per cent over the corresponding period in 2020. For the January-September year-to-date period, the group achieved revenues of $31.15 billion, an increase of $2.49 billion or nine per cent over the corresponding period in 2020.

Regarding the year-to-date performance, the management of the group explains that normalising for the one-off gain in 2020, the year-to-date profit performance was down one per cent. This was an improvement compared to the second quarter year-to-date results, which was down four per cent and the first quarter year-to-date results, down 14 per cent.

The management further explain that “the deficit at the beginning of the year has been progressively reduced through realignment of the cost structure and the partial pass through of higher commodity and logistics cost via price increases. The cost of goods has climbed considerably driven by global supply chain challenges and have remained stubbornly high.”

The management highlighted that, “it is important to note that, while the cost of goods has risen by approximately 20 per cent, the company has decided to hold strain by absorbing some of the higher cost as we seek to support our consumers and customers through this challenging period.“

Significant cost at managing COVID-19 

With regard to COVID-19 management, Seprod reports that it has incurred significant cost as the group strive to create an environment that is safe for our employees, contractors, and other stakeholders, noting that it has expended resources to educate, incentivise and facilitate our employees as the company seek to convince them to get vaccinated.

At this stage, 52 per cent of the workforce is vaccinated, which is still below the target of 75 per cent. In the meantime, the management is focused on creating value by having a robust innovation pipeline, being a good corporate citizen and reorganising the business to not only survive but to thrive.

In concluding, the management adds that, “the challenges are many but so are the opportunities, and we are committed to continue our trajectory of delivering strong results and great shareholder value.”