Ethanol

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.

Jamaica Broiler paid J$1.18 billion for US operation

Jamaica Broiler paid J$1.18 billion for England Packaging Company Inc, the group’s US acquisition last year and $111 million for the Hamilton Smoke House, a meat processing operation locally.
According to the company’s latest audited accounts, the two new operations contributed revenues of $1.78 billion and profits of $140 million to the group results for 2014. If they were owned from the start of the fiscal year, they would have accounted for revenues of $2.22 billion and profits of $202.6 million.
Segments| Best Dressed Foods contributed sales of $15.47 billion and segment profit of $1.25 billion, for 2014 fiscal year, Hipro-Ace, $8.85 billion in revenues, and segment profit of $798 million. Ethanol made a loss of $66 million from revenues of $578 million, the US operations reported a profit of $333 million from revenues of $4.7 billion and other revenues accounted for $1.25 billion and profit of $453 million.
In the prior year, Best Dressed Foods contributed sales of $13.2 billion and segment profit of $929 million, Hipro-Ace, $8.75 billion in revenues and higher segment profit of $910 million. Ethanol made a profit of $21 million from revenues of $1.73 million, the US operations reported a profit of only $21 million from revenues of $1.7 billion and other revenues contributed $920 million and profit of $335 million. Segment profit is arrived at before group charges and finance cost.
Full year|Jamaica Broiler reported lower profits for the year ended April 2014 from revenues of $30.85 billion, up from $26.5 billion in 2013, for a 16 percent revenue growth. Some of the growth in revenue came from the acquired companies but ethanol robbed the group of a larger revenue increase and better profit.
Gross profit| Gross profit increased from $5.5 billion, to $6.7 billion as gross profit margin climbed from 25.93 percent, to 27.88 percent in 2014. Gross profit grew by 23 percent but administrative cost jumped by nearly a third or $1 billion to negate the improved contribution in gross profit. In the end finance cost rose by $100 million and dragged profit down to $919 million versus $1 billion in 2013, resulting in earnings per share of 79.8 cents. The increase finance cost is due primarily to a shrinkage in cash funds of $1.14 billion and increased borrowings of $757 million.
The stock last traded at $4.57, giving it a PE of 5.7 based on the 2014 results, but IC Insider is forecasting $1.13 per shares earnings for the 2015 fiscal year, which would put the PE at just 4, based on these forecasted earnings.