Haiti Broilers Expected to Reach Profit by Q405 July 2013
HAITI - Jamaica Broilers Group (JBG) expects its Haitian operation to become profitable this financial year.
JBG at the end of April wrapped up a full year of operating in the neighbouring Caribbean island on its own, through subsidiary company Haiti Broilers. Initially established in 2010 as part of a joint venture arrangement, the Haitian operation has evolved from simply importing and distributing animal feed and chicks to a wide- ranging one, with a production facility in the country that consists of a feed mill, hatchery and poultry farm.
"We saw some improvements in the results in Haiti," Ian Parsard, JBG's senior vice president for operations and finance, told the Jamaica Observer as he discussed the group's performance for the year ending 27 April 2013.
"We have some ways to go to move it into a break-even position but we expect to do that sometime this financial year," Parsad added. "I would say, by the time we get to quarter three, we are expected to reach break even and then move into some level of profit in the last quarter."
Effective 29 April 2012, on the execution of a shareholders' agreement, the joint venture arrangement was dissolved and the operations transferred to Haiti Broilers, in which JBG holds a controlling 68 per cent interest. At the end of the 2012 financial year, JBG's share of the revenue in Haiti was $107.6 million on losses of $186.2 million.
JBG's performance in Haiti for the 2013 financial year is included under its "other" segment, a combination of numerous services outside the firm's core business in Jamaica, including a breeder operation in the US. That segment turned around from a $29.4 negative result at the end of April 2012 to a positive $355.9 million for the financial year under review.
Donald Patterson, vice-president of accounting and information system at JBG, said in May that Haiti's huge demand for eggs was a major factor behind the company's success in the country.
"In Haiti the cheapest form of protein for them is the egg. They actually consume over a million eggs per day. We in Jamaica, our consumption is no more than maybe one or two eggs per week on average," Mr Patterson said.
"Down there you have 10 million people and they are going through a million eggs per day. So we see the egg business as one with great potential and by the end of April of 2014 we expect to be producing, perhaps, eight to 10 per cent of the daily needs in Haiti. So we are looking forward to great things," he noted.
Meanwhile, JBG reported solid results for the 2013 financial year, with total revenues growing by 12 per cent to $26.5 billion on net profits of $1.03 billion, 10 per cent more than the prior financial year.
There was positive development in its ethanol operations, with revenues jumping by more than 58 per cent to $1.9 billion. The segment result was a positive $335.8 million, more than four times the $62.8 million result the year prior.
"We had tolling contracts on the books and we executed quite a bit of ethanol contracts last year," Mr Parsard noted.
While sales increased by six per cent to $13.4 billion in the Best Dressed Foods division, which sells processed poultry and other products, the segment's positive result of $929 million was eight per cent less than the prior year. The company's other major division, Hi-Pro Ace, which sells manufactured feeds, baby chicks and other farm and household supplies, saw its result fall by 19 per cent to $910.5 million despite revenues being marginally higher at $8.9 billion.
Mr Parsard blamed the fall-off in those segments to challenges in the Jamaican economy.
"The costs were on the move with movements in the exchange rate and movements in grain prices; and, because we understand that the consumers were under pressure, we were not able to take the kind of price increases that would have maintained margins at the same level in 2012," Mr Parsard said.
"So, the challenges are there in the economy, but all in all I think the core businesses held their own," he added.
Going forward, JBG remains positive despite the clear challenges in the economy.
"We think our core business is very strong and we continue to expect good results," he said, noting that the company is "very excited" about what's happening in terms of its overseas operations, including Haiti, and "other opportunities in the business" that they are looking at.
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