Ethanol hurts profit but US to boost it

Jamaica Broilers’ ethanol plant

Jamaica Broilers profit was hit hard from losses in the ethanol operation, as the sector plummeted from a profit last in 2013 of $16 million from sales of $248 million to a loss of $89 million from revenues of only $16 million.
The results for the first quarter to August, also suffered from increased taxation of $6 million and finance cost of $21 million, resulting in profit after tax declining moderately to $111 million versus $128 million last year. After factoring amounts due to shareholders in subsidiaries, the decline in profits for the group widened, with profit of $114 million, down from $140 million in 2013. Ethanol was not the only area that delivered losses. The category Other operations, saw a negative turn-around from a profit of $39 million in 2013 on revenues of $310 million the division made a loss of $21 million on revenues to third parties of $373 million to August.
The US operations was the crown jewel for the quarter with much improved numbers. Revenues in the division from third parties jumped from $805 million to $1.58 billion and contributed $287 million in segment profit compared with $76 million in 2013 and profit of $333 million for the 2014 fiscal year. The change was substantially due to the acquisition in 2013 of the poultry operations in the USA.
The Best Dressed foods division contributed revenues of $3.82 billion up from $3.5 billion in 2013 and segment profit of $235 million in 2014 versus $234 million in 2013 and the HIPRO-ACE division’s revenue was $2.1 billion down from $2.16 billion in 2013 with profit of $157 million for the 2014 period compared with $149 million in 2013.
The company’s management reported that they are “ responding to approaches from a number of parties who have expressed interest in entering new fuel processing contracts.” With the price of oil at $81 per barrel and prediction that it may go lower, the question to be asked is will there be short term viability of this operation?
Cash down borrowings up| Broilers saw a big increase in inventories over the August 2014 level a as well as for the April year end rising from $3.5 billion a year ago and $3.7 as of April to $4.8 billion for a billion dollar increase. Cash and equivalent dropped from $1.42 billion in 2013 to just under $1.2 billion, amounts tied up in receivables was slightly down to $2.7 billion and borrowings climbed to $6.7 billion from $5.3 billion in 2013.
For the year to April the ethanol division made a loss of $66 million and the Other operation, reported a profit of $452 million having made a profit of $340 million in the last period of the fiscal year. Some of the inputs into chicken processing have declined on the world market and therefore could lead to increased profit margins that along with what should be a substantially, increased profit from the US operations, should see profits for the current year rising well above the 80 cents per share or $957 million made in 2014.