JP profit down in 3Q
Published:Friday | November 26, 2010 | 12:00 AM
Jamaica Producers Group's (JP) third-quarter profit dipped by nearly 44 per cent to J$32 million, but the company says the results look bad only because its bottom line in the previous year was fattened by a one-off gain of J$51.7 million from assets offloaded by the agroprocessing group.
Absent that gain, pre-tax profit would have seen a small uptick of J$8 million in the quarter ending October 2, 2010.
Additionally, this review period covered 13 weeks of operations, three fewer than last year's third quarter.
The quarter's results were depressed by the seasonal decline in the sales of snacks during the school summer holidays, JP said.
The weaker third-quarter performance, notwithstanding, JP was able to improve its net profit for the 39 weeks, or 10 months ending October 2, by J$78.7 million, or 50.2 per cent, on sales of J$4.5 billion.
Significantly, while the profits were up, revenue for the 39 weeks declined by 5.5 per cent, when compared to the corresponding period in 2009.
For this year's shorter third quarter, JP reported revenue of J$1.36 billion, a drop of 29 per cent when seen against the 16 weeks in 2009, with which it is compared. But while the net out-turn from the 2010 period was down, operating profit during the 13 weeks of operation, at J$33 million, better than last year's out-turn of J$26.9 million.
In his report to shareholders, JP's Chairman Charles Johnston stressed that the third quarter was normally the "most challenging" for the agroprocessing company.
"... Our sales volumes for both juice and tropical snacks tend to decrease during the school summer holidays and we tend to face seasonally higher overall costs for citrus, our single-largest raw material item," he said.
Negative impact
More broadly, JP's revenue and profit have been negatively impacted by the downturn in the European economy, from which the company gets a large slice of its earnings, as well as the appreciation of the Jamaican dollar in recent months against other currencies, in particular for JP, the euro.
"The majority of our group revenues are generated in euros and, as such, this weakening of the euro relative to the Jamaican dollar depressed revenues," Johnston said.
The company's European division had revenues of J$3.46 million - 77.4 per cent of overall sales - for 39 weeks to October 2, compared to J$3.7 billion for the same period in 2009. Profit for the 2020 period was J$173.9 million, against J$150.3 million last year.
"Our juice business achieved this improved year-to-date profit performance despite the recent effects of increased raw material costs linked to the fresh-fruit ingredients used in our juices,"
While the logistics operation continues to show flat year-to-date revenues and earnings, it is expected to contribute positively to the group's overall results for the fiscal year.