… But revenues down two per cent as COVID-19 bites

Jamaica Producers Group is reporting a big jump of 80 per cent in shareholders’ profit for 2020 even with the company taking some hits during the year because of COVID-19 pandemic.

The consolidated net profits of the group for 2020 were $3.7 billion of which net profit attributable to shareholders was $2.2 billion, an increase of 80 per cent over the prior year. As at the end of the year, the group had shareholders’ equity of $16.1 billion, reflecting an increase of 17 per cent relative to the equity at the beginning of the year.

However, consolidated revenues were down two per cent to $21.0 billion. This was primarily due to the impact of the COVID-19 pandemic across operations.

Jamaica Producers Group Chairman Charles Johnston reported that the management was very optimistic about the prospects for 2021, saying: “We expect new attractive investment opportunities in our core business lines to become available to the group in the current trading environment.”

According to Johnston, “the improved results in part reflect our decision to realise gains from the partial sale of our interest in SAJE Logistics Infrastructure in order to put the group in a strong position to seize prospects that align more directly with our strategic priorities”.

JP Logistics & Infrastructure Division accounts for the larger share of the group’s net assets and, in turn, its profits.

Reduction in profits at JP Logistics & Infrastructure Division

The division, comprising Kingston Wharves Limited and JP Shipping Services Limited, generated 2020 profit before finance cost and taxation of $2.9 billion, a 10 per cent reduction relative to the prior year. Divisional revenues of $8.3 billion were down six per cent relative to the prior year.

During the year, Kingston Wharves experienced reduced volumes of cargo to Jamaica and other tourism-dependent Caribbean markets that the company serves. There was also  reduced trade in consumer goods, as well as the deferral of some domestic capital purchases.

This was only partially offset by growth in aspects of the broader transshipment business and improved profitability of the group’s logistics service. Notwithstanding the general adverse economic impact of COVID-19, JP Shipping Services Limited experienced improved profitability in part due to the improved functionality and service standards of the new JP Shipping Caribbean Logistics Centre in London.

This location consolidates and ships commercial cargo, personal effects and vehicles to Jamaica and other CARICOM countries from the United Kingdom on a weekly or fortnightly basis. JP Food & Drink, the group’s Food & Drink division, is the largest contributor to the revenues of the group.

The division experienced modest revenue growth of one per cent to $12.7 billion but faced a reduction of profits. Profit before finance cost and taxation amounted to $101 million for 2020.

Increased raw material costs hit Food & Drink Division

In 2020, the division was affected by increased raw material costs and significant disruptions to its customers across Europe who operate in the food service or convenience category. This exacerbated the general challenges with the efficient management of short shelf-life production and supply chains during the worst moments of the COVID-19 pandemic in Europe.

However, this was only partially offset by growth in volumes sold to mainstream supermarkets that generally specialise in consumer staples. The group is expecting trading conditions to improve as lockdowns and other restrictions associated with the pandemic are eased in the second half of 2021.

The division experienced improved productivity and overall results on its banana and pineapple farms in Jamaica. This was offset by significant challenges with distribution and demand in the Jamaican vendor and convenience trade for both snacks and fresh fruit as a result of the COVID-19 pandemic.