Jamaica Producers Group made a $76.3 million after-tax loss on continuing operations in its last quarter to October 7, on improved revenues of $4.1 billion, but was catapulted back into black by a one-time gain of $2.34 billion booked from the disposal of a United Kingdom based subsidiary.
"The decision to sell the Group's interest in JPFD was taken after careful review by the board of the ongoing prospects for the distribution of fresh produce to UK supermarkets," said JP group chairman Charles Jonhston in a statement to shareholders.
The company immediately wrapped up full acquisition of two other U.K. companies, Simply Organic Limited and RAM Shipping Services Limited, for £2.9 million ($342m), plus an additional £1.4 million ($165m) payable only if agreed profit levels are maintained.
Simply Organic produces a range of meals, while RAM is involved in cargo handling for shipment between the U.K. and the Caribbean.
Johnston, in his statement said the company in its look ahead, sees growth prospects for the company both as a banana producer, having commenced operation "on a limited scale" in Honduras, as well as in shipping and logistics, which its acquisition of RAM is meant to facilitate.
"We are mindful that the management arrangements we had in place for a vertically integrated banana business are unlikely to be suited to a business that has agricultural production as its principal line," said Johnston.
"Accordingly, we are subjecting the division to a detailed review with the expectation that a revised operating structure will be put in place in 2007."
The sale of its 65 per cent stake in JP Fruit Distributors to minority partner Dole, resulted in net profits of $2.19 billion for the group, and returns to stockholders of $11.85 per share for the quarter (2005: $167.2m net profit; EPS 62 cents).
The company, in the notes to its accounts, said $69 million of the losses in the October quarter were attributable to its discontinued operations.
"The business has faced a substantial increase in input costs over the past year. We responded to the challenge and our underlying margins improved towards the end of the second quarter," said Johnston.
"The benefits did not flow to the bottomline in the third quarter, because the United Kingdom experienced an exceptionally hot summer, which while good for demand, adversely affected efficiency in one of our plants. We are taking corrective action to prevent a recurrence."
JP's 40-week or 10-month figures were a bit rosier. Gross profits were up by almost $500 million on $10.1 billion of revenues. The sales gains were further eroded by a $300 million increase in administrative expenses to $1.3 billion and a $240 million depression of 'other income'.
JP made after tax profit on continuing operations of $59 million, but the outturn was about half its position in the comparative period of 2005 when it made $104.7 million from $8 billion of sales.
Net profit in the current 10 month period was recorded at $2.47 billion, resulting in earnings per share of $13.05 (2005: $265m net profit; EPS $1.06).
JP said its Fresh and Processed Foods divisional pre-tax profit from continuing operations was up 53 per cent to $127.1 million in the 40-week period.
The juice and smoothie business performed below expectations, but achieved a year over year increase in profits, said Johnston, noting that the 2005 results "included the cost of a product-tampering incident", which he left unexplained.
Email: lavern.clarke@gleanerjm.com.
