Seprod could ditch loss making Duckenfield sugar operations.
Duckenfield sugar factory in St Thomas faces closure, unless the government steps in to alleviate the problems. IC Insider.com understands a major part of the issue is a cess placed on locally produced sugar that cost the industry almost a billion per year.
The industry that is struggling to be viable is not in a position to bear the cost of the cess. Duckenfield has racked up a huge amount of losses since it was taken over by Seprod.
Seprod who operates the St Thomas based Duckenfield factory, stated in a release accompanying their six months results as they bemoan the impact that continuous losses at the factory has on the results of the group.
The report singed by the Chief executive, Richard Pandohie and Vice Chairman, Peter John Thwaites states, “Unfortunately, the Group would have had much better results had it not been for the $220 million loss in the sugar operation for the period. Management has exhausted almost all options to make these operations achieve even a breakeven status and we are committed to, in very short order, eliminating these nine years of erosion in shareholders’ value.”
For the six months ended June 2018, Seprod generated revenues of $10.44 billion, an increase of J$2.07 billion or 25 percent over the corresponding period in 2017. Net profit increased 29 percent for the period to $598 million in the 2017 period. The 2018 results are bolstered by the transfer of the former Jamaican dairy operations of Nestle within the Group effective January, this year.
Sugar cane under production in Jamaica
These operations, located in Bog Walk, St. Catherine, produce Supligen and Betty products, as well as co-manufacture products for international customers. In 2017, these operations were operated by Seprod under a management services contract and were not included in the Group’s results. The directors’ report stated that, “had these operations been included in the Group’s results in 2017, the increase in revenues for the six months ended 30 June 2018 would have been $1.20 billion or 13 percent and the increase in net profit would have been $77 million or 15 percent.”
For the June quarter, revenues rose 33 percent to $5.48 billion with gross profit rising sharply to 36 percent from 24 percent in 2017, with gross profit hitting $1.96 billion and profit after tax coming in at $325 million attributable to Seprod shareholders, 37 percent ahead of the 2017 out turn.
