Europe pays off in sales for JP
Published:Friday | May 21, 2010 | 12:00 AM
Jamaica Producers (JP) Group's refocus on markets in Europe beyond bananas has positioned the company for turnover and profit growth when others in its class are struggling to maintain sales in an income-depressed domestic market.
The constraints on the Jamaican market have seen JP positioning for growth in other overseas markets, for which it says it is now exploring new products for placement across the region and in North America.
The conglomerate, in its first quarter, racked up sales of J$1.58 billion, a near 20 per cent jump from J$1.3 billion made in the comparative period a year ago.
Its cost of sales rose nominally, but was handled more efficiently this period. Proportionately, JP retained more than 26 cents of each revenue dollar as gross profit for the quarter ending April 3, 2010, compared to 19 cents a year ago - enough to offset the growth in marketing, distribution and operating expenses, and double operating profit.
The conglomerate's earnings before interest and taxes, or EBIT, rose from J$47 million to J$95 million this quarter.
Net of taxes, bottom-line profit grew 65 per cent, from J$41 million to J$68 million.
JP Europe Division accounted for 77 per cent of sales and 67 per cent of pre-tax profit, much of it attributable to its fresh juice business in The Netherlands.
"We were pleased that the positive performance for our juice business reflected both a return to growth in sales volumes as well as the ongoing impact of our programmes to improve cost control and operating efficiency," saidChairman Charles Johnston in his statement to shareholders.
JP has been favoured in the April quarter by currency movements, with the euro, sterling and US dollar all appreciating against the JMD. The company, however, expects some of those gains to disappear in the second quarter with the euro under pressure, and as the JMD stabilises and strengthens on the local spot market.
"We remain alert to the potential adverse impact of currency weakness in Europe and softening consumer confidence in Jamaica, and our business plan has proved to be robust despite these challenges," Johnston.
JP Tropical Division, the unit that handles snacks and fresh produce, also grew sales by 20 per cent to J$352 million, a performance the company attributes to "increased investment in strong brand development and consumer marketing".
Profit before taxes also doubled to J$19 million.
The company reported a small J$1.3 million loss on its investment in an unnamed joint-venture business. The company, however, is a joint-venture partner in a snack-making operation in The Dominican Republic.
During its April quarter, JP launched a campaign to grow local consumption of fresh bananas, with involvement of celebrity Olympians Shelly-Ann Fraser and Asafa Powell.
Sales of bananas rose 32 per cent.
But the company cautioned that the Jamaican market is still not performing at par, and that its focus would remain on overseas sales.
"Although we continue to achieve strong growth for our core products in Jamaica, we are mindful that this will ultimately be constrained by the size of the market," Johnston said.
"We are acting now to expand our product range and to develop new markets in the Caribbean, Central America and the United States."