Haitian operations a drag on last quarter finances
Jamaica Broilers Group (JBG) saw its net profit going down by 28 per cent for the last quarter ended July 31, 2021.
Net profit for the period amounted to $275 million, down from the $382.64 million registered for the comparable quarter in 2020, primarily due to a 13 per cent reduction in gross margin ratio, as a result of the rapid increases experienced procuring raw materials during the quarter. This rapid increases is due to the continued impact of the COVID-19 pandemic.
Despite the exponential rise in raw material and shipping costs, JBG has been taking steps to manage costs while not passing on the full increases to customers. During the prior year, at the onset of the COVID-19 pandemic, the company took aggressive steps to minimise the financial impact from the drastic loss of revenue, which it was experiencing and anticipating.
These steps involved a reduction in salaries paid to staff and a proactive curtailing of variable expenditures which resulted in lower overheads during that quarter in the 2020-2021 financial year.
Revenues and gross profit going up
On the positive side, Group revenues for the first quarter amounted to $17.6 billion, a 40 per cent increase above the $12.6 billion achieved in the corresponding quarter of the previous year. Gross profit for the quarter was $3.6 billion, a 22 per cent increase over the previous year.
The Jamaican operations of JBG reported a segment result of $665 million, which was $65 million or nine per cent below last year’s segment result of $730 million. This decrease was attributed mainly to the rapid increase in international grain prices and shipping costs.
Total revenue for the Jamaican operations showed an increase of 41 per cent, while the American operations turned out to be the life saviour for the JBG. JBG American operations reported a segment result of $580 million, which was an 84 per cent increase over the prior year’s result of $316 million.
This increase was primarily driven by the increased production and sales in the Best Dressed Chicken line of products. The operations have also seen an increase in the sales of feed and fertile eggs, signaling a strong rebound from the effects of the pandemic experienced in the previous year.
Haitian operations remains a cause for concern
The Haiti operations reported a segment loss of $48 million compared to prior year profit of $11 million, a reduction of $59 million. Total revenue reduced by eight per cent.
JBG said Haiti continues to experience economic and political instability which continues to impact its Haiti operations.
The Group’s operations produced an operating profit of $725 million, a decrease of 15 per cent from the prior year. The JBG Directors advised shareholders, “we remain hopeful that as our vaccination rate improves and the impact of the COVID-19 pandemic can be lessened, our markets will see a formidable rebound and our dedicated staff and contractors will always be ready to deliver reliable service and quality products to our customers”.