Business
JM | Aug 8, 2022

Seprod continues to bolster its profitability

/ Our Today

administrator
The Felix Fox Boulevard headquarters of Seprod Limited in downtown Kingston, Jamaica. (Photo contributed)

Durrant Pate/Contributor

Seprod continues to improve its profitability attaining net profit of J$1.58 billion for the June 2022 quarter, an increase of J$372 million or 31 per cent over the prior period.

The company reports that, “the percentage growth in net profit is less than that of the revenue growth as the company continues to absorb some of the cost increases, rather than passing through the full extent of these cost increases to consumers.”

Overall, the global market remains volatile but we believe that we may be at, or close to, peak prices on certain key raw materials, which creates the potential for some cost retreat by the fourth quarter. The June second quarter achieved revenues of J$16 billion, an increase of J$5.75 billion or 56 per cent over the corresponding period in 2021.

The net profit was J$984 million, an increase of J$323 million or 49 per cent over the prior period. The year-to-date performance (January-June 2022) achieved revenues of J$27.81 billion, an increase of J$7.98 billion or 40 per cdnt over the corresponding period in 2021.

Growth drivers

According to the conglomerate, this 40 per cent increase in year-over-year revenue growth, “was driven by the contribution of the Bryden Group for the month of June 2022, robust export growth, improved product mix, improved production of fresh milk at the dairy farms, launch of new snack line and price increases.“

The percentage growth in net profit is less than that of the revenue growth as the company continues to absorb some of the cost increases, rather than passing through the full extent of these cost increases to consumers.

‘Cost of Sales’ rose 44 per cent from $14.39 billion in 2021 to J$20.78 billion for the six months ended June 30, 2022. Consequently, gross profit increased 29 per cent to close at J$7.03 billion (2021: J$5.44 billion), while the second quarter gross profit amounted to J$4.09 billion (2021: J$2.76 billion).

However, other operating income for the period totalled J$518.69 million relative to J$178.26 million in 2021, a 191 per cent increase year over year while other operating expenses increased by 30 per cent to close the six months period at J$4.72 billion (2021: J$3.62 billion). Consequently, operating profit rose by 41 per cent to J$2.83 billion (2021: J$2.00 billion) for the six months ended June 2022. While for the quarter, operating profit grew by 74 per cent to J$1.83 billion (2021: J$1.06 billion).

A Seprod Group worker inspecting products after the initial manufacture process in March 2021. (Photo: Facebook @SeprodGroup)

Finance costs totalled J$819.86 million (2021: J$501.02 million), a 64 per cent increase when compared to the same period last year. The company reported a share of results of the ‘Joint Venture’ amounting to J$55.26 million relative to J$32.23 million reported in 2021.

Pre-tax profits climbed by 35 per cent to J$2.07 billion in comparison to a profit of J$1.53 billion booked in the same period last year. However, for the quarter, pre-tax profit amounted to J$1.33 billion relative to J$839.66 million booked in 2021.

Taxation of J$433.37 million was reported for the six months period relative to J$286.52 million booked in 2021. As at June 30, 2022, Seprod’s total assets increased to J$78.07 billion from J$39.13 billion a year ago.

The upward movement was due to an increase in ‘Property, Plant &  Equipment’ and ‘Inventories’ which closed the period at J$20.12 billion (2021: J$7.15 billion) and $17.85 billion (2021: $7.84 billion), respectively. Shareholders’ equity for the period was J$27.51 billion relative to J$17.96 billion last year.

As such, resulting in a book value per share of J$37.50 relative to J$24.48 last year.

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