Jamaica Producers profit down

Jamaica Producers Group (JP) continues to struggle in its fight of the economic elements buffeting the markets in which it operates as the group generated just 5 percent more revenues in the first quarter this year of $1.96 billion over the same period in 2013. Net profit attributable to JP’s shareholders was $34 million, a reduction from $85 million in the same period last year.
JP Europe division earned revenues of $1.29 billion in the March quarter, representing a 7 percent reduction from the prior year. The division earned first quarter pre-tax profits of $21 million compared to $60 million in the 2013 first quarter. JP Tropical Division significantly improved its performance relative to the prior year as the first quarter loss for the division of $55 million in 2013 was reduced to a loss of just $6 million for the 2014 quarter. The Corporate segment recorded a profit of $31 million for the 2014 quarter down from a profit of $125 million for the 2013 period.
Gross profit rose to $428 million from $389 million in 2013 but increased marketing, selling and distribution costs rose to $135 million from $126 million and administrative and other operating expenses of $313 million versus $276 million in 2013 helped to worsen operating results. Lower profit from share of associated companies and joint ventures of $68.6 million compared to $99.6 million in 2013 and an $81 million drop from gain on disposal of property, plant and equipment and investments which fell to only $17 million helped to pressure net results for the quarter lower. The performance was helped somewhat by absence of restructuring cost during the recent period, in 2013 such cost amounting to $36 million was incurred in the 2014 quarter.
The stock sells for $18.26 each and the book value is $31 each but it is difficult to see earnings for the current year reaching a level to justify the stock price at current levels.
The JP Tropical division benefitted from a 45 percent increase in revenues driven in part by the restoration of the banana and pineapple farms after Hurricane Sandy and increased sales of JP tropical snacks in Jamaica and internationally. Management expect to support the recovery of JP Tropical Foods business with a recent board decision to significantly increase the acreage under cultivation of both pineapples and cassava. These projects will be concentrated in St. Mary and will be executed over the course of 18 months. The commitment to expand agricultural activity in St. Mary will also result in increased output from the St. Mary-based snack factory and bammy production unit as well from fresh produce depots that the group is in the process of establishing in Kingston, Annotto Bay, Mandeville and Montego Bay.
Tortuga International Holdings experienced improved results relative to the prior year as a result of strong cruise ship arrivals in various Caribbean markets and the introduction of a series of new products that build on its heritage and connection to rum-based confectionary. The business was bolstered by cost-cutting initiatives in our bakery in Barbados and the strengthening of the overall sales team with new personnel.