Jeffrey Hall, group managing director of JP Group, speaks to shareholders in this June 2007 Gleaner photo. At right is chairman Charlie Johnston. - File

Jamaica Producers Group (JP) swung to losses of $479 million last year, but only after drawing on $249 million of tax credits, chiefly on the back of substantial losses in its dominant prepared, foods business.

But, bananas, whose continued tug of war with nature continues to deplete earnings in that segment, also posted another poor year.

Last year, in the wake of another devastating storm that wiped out crops islandwide, the group reported a $427 million or near 16 per cent drop in banana revenues to $2.26 billion at financial year end December 31, 2007, down from the $2.69 billion earned from continuing operations in 2006.

Still, the conglomerate emerged with marginally higher revenues of $13.85 billion last year, compared to $13.35 billion in the prior period, an increase of 2.8 per cent, as its 'fresh and processed foods' segment gained momentum.

The division reported turnover of $11.3 billion, up eight per cent on the $10.5 billion made the year before. But foods was also the biggest drain on JP's operations, losing $711 million in a wipe-out of the $199 million made by the segment in 2006.

Overall, the company made pre-tax losses of $728 million - $97 million of which was from bananas.

Profits doubled

Corporate, its third segment, doubled profits to $80 million.

Now the Jeffrey Hall, led Jamaica Producers Group is looking to prepared foods, including the highly competitive juice and smoothies market in the United Kingdom, as growth centres for the business. The segment also includes snacks, desserts, soups and ready meals.

Producers says its analysis indicates tremendous opportunities in its core juice and smoothies market for a company that among other things, is innovative, willing to invest the required capital to achieve efficiency and quality output, and has a tight rein on costs.

"We believe that our turnaround plan will meet these conditions," said chairman Charlie Johnston's accompanying statement to the accounts.

Product innovation, the company said, is key in markets like the UK, which often reject price increases.

"As such, this business must achieve profitable growth," said JP, by creating unique product blends, entering into strategic alliances with leading brands, and building out new markets outside the UK.

But the company also said changing the product mix in the juice and smoothies segment would take time.

The company's turnaround plan was put into effect in October 2007 but had begun taking shape shortly after the late 2006 sale of its majority interest in JP Fruit Distributors to minority partner Dole Foods.

$206 million after tax

The transaction pumped up JP's profits by $2.3 billion, in a year when the conglomerate reported bottom-line profit of $2.6 billion. Trimmed of those one-off gains, the company, in 2006, would have made $206 million after tax.

Last year's losses depleted shareholder equity by $390 million to $9 billion, and took a thin slice off its balance sheet from $10.9 million to $10.6 billion in the current period.

JP has declared itself dissatisfied with its 2007 performance but also signalled confidence in the plans crafted to effect a turnaround.

The company, which was on the verge of pulling back from its banana business after last September's devastating hurricane laid its farms bare, now says it will replant after Government-committed financing, under a programme that absorbs some of the financial risks faced by producers, is received.

"Our group expects to take up our share of the proceeds of this industry-wide credit facility in 2008 and, on this basis, has commenced reinvesting in banana farming in Jamaica," said JP.

The credit facility referenced is expected to provide US$4 million to resuscitate the industry.

business@gleanerjm.com

Jamaica Producers

Year end at Dec. 31, 2007

Revenues $13.85 billion

Net Profit -$479 million

EPS -$2.72

Net Assets $10.64 billion

Equity $9.08 billion

Book value $48.56 per share

Market price $37 per share

Market value $6.9 billion