Seprod anticipates end to supply chain disruptionsWednesday, September 22, 2021
BY KELLARAY MILES
AS logistics and supply chain disruptions continue to negatively impact the price of commodities and the operations of businesses globally, Seprod Limited said it was hoping for an end to these challenges which have also affected its bottom line.
“[The year] 2021 has been challenging. Global supply chain disruptions have affected raw and packaging material supplies for the factories, and we have also faced supply constraints for key finished goods from some of our most important principals.
“The impact on cash flow is significant; not to mention that we are simply unable to pass [on] this level of increase to the consumer during this period where disposable incomes are under pressure. I anticipate that these challenges will continue for the rest of the year and into Q1 2022; however, we are cautiously hopeful that as the global economies reopen in a more balanced way, some of these costs will reset to more reasonable levels,” said Richard Pandohie, chief executive officer (CEO) of the Seprod Group, while speaking at the company's annual general meeting held virtually on Monday last.
Pandohie, in elaborating on the challenges, said the compounding of shipping by costs by as much as 300 per cent has led to sharp rises in the cost of raw materials per containers — which skyrocketed from US$3.9 million last year to US$8.1 million this year. The manufacturing and distribution conglomerate, up to the end of its half-year mark in June, saw net profit of $1.2 billion. That was $93 million or 7 per cent down from the prior year as a result of the increase in cost of sales, which had risen by about 19 per cent to total some $14.3 billion.
“This situation is not insurmountable, and we are moving to use the lessons of the pandemic to strengthen and diversify our supply chain, strengthen our workforce, and embed even more technology in the daily business. Our results are not where I want them to be but the trajectory of the business has not changed,” the CEO stated.
The company, which has been actively working to complete its much-touted distribution campus, said that despite a stall in momentum occasioned by the pandemic and its associated impacts, plans were now underway for a delivery of its logistics hub by the first quarter of next year.
“The distribution pillar is the lifeblood of our organisation, linking our factories and the amazing brands of our principals with our customers and consumers. Right now, our distribution pillar is good but when we are done, it is going to be special,” Pandohie also said, whilst noting that the growth of its e-commerce store launched earlier this year, though still in infant stages, was seeing incremental take-up and buy-in of products from the Diaspora and countries as far away as India.
He likewise underscored the role of exports, which the company was strategically positioning to become a big part of its quantum leap into the future, noting that the company was not going to ease up on this objective on which currently a lot of work is being done.
“Our future is in export, there is no doubt about it. While it only represents 10 per cent of what we manufacture, the biggest structural change is, mentally that is what we're going for. We are setting ourselves up in order to facilitate continued export growth and to grow in markets outside of Jamaica in a sustainable way. The capex [capital expenditure] that we've done in the last four years is setting the foundations for us to be competitive and for us to do that,” added Chairman P B Scott.