Seprod to invest $600m in 2010

Sabrina Gordon, Business reporter

Seprod Limited, the foods and household manufacturer that has recently been investing heavily in agriculture, is to spend more than $600 million on capital projects this year, including ventures into bee and sheep rearing, the company's managing director, Byron Thompson, disclosed on Monday.

"We are trying a little bit of apiculture," Thompson told stockholders at their annual general meeting. "We use up quite a bit of honey in our biscuit operations and expect to see some progress in that area going forward."

For now, Sep-rod's sheep farming is something of a novelty - and a decidedly low-tech way to keep the company's mango orchard in St Thomas weeded and manicured.

Explained Thompson: "We have over 350 acres of mangoes, and we have found that we are spending a lot of money to cut the weeds, so have decided to use sheep as lawn mowers and at the same time generate some revenue from this venture. It is early days, but so far, they have been giving a good account of themselves."

Thompson was unavailable yesterday to elaborate on the projects. But Seprod, controlled by the Musson Group, emerged, since its acquisition by the late Despond Blades, as a bold investor, willing to put capital in what might be viewed as risky agro-based projects.

Capital projects

Last year, for instance, the company spent $463 million on capital projects, up from $269 million a year earlier.

Some of the capital expenditure for 2010 is expected to include Seprod's portion of additional refurbishing costs for the Duckenfield sugar factory it bought from the government last year with the Fred M Jones Company. Seprod owns 55 per cent of the sugar plant.

Seprod's second-quarter financials are not yet available, but while Thompson said Duckenfield is not performing to expectations, he indicated that the sugar operation contributed an estimated $581 million to group revenue in the first half of the year.

In the first quarter, Seprod reported revenue of $2.7 billion, up eight per cent on the corresponding quarter in 2009, but profit fell 41 per cent to $267,8 million. That was on the back of revenue of $9.5 billion and profit of $1.4 billion last year.

Thompson said that the group was working towards improvement, including the sugar operation.

"That operation has not done as well as we would like ... . We know why it has not done well and we are taking steps to correct the ills, and hopefully for the next crop, we will see some improvements," he said.

It is, however, not only with sugar, sheep or bees that Seprod has been busy recently.

"During the year, we commissioned a new state-of-the-art bleach plant, so we are now manufacturing our bleach and we are in the process of manufacturing bleach for other third-party brands," Thompson told shareholders.

Prior to the setting up of the plant, Seprod had to import bleach from Trinidad and Tobago for distribution on the local market. Now, with the plant, the company will be able to produce and bottle its own under the Cannon brand.

He added: "We continue in our oils and fats segment to develop new formulations to satisfy our industrial customers. We have also put a new syrup on the market, and during the coming quarter, we expect to launch a few new products such as soy drink, and some revised fruit-drink formulations."

sabrina.gordon@gleanerjm.com

Seprod to invest $600m in 2010