Drop in Profits for Jamaica Broilers13 March 2014
JAMAICA - Jamaica Broilers posted a 36 per cent fall in third quarter profits as a result of higher operating costs and weaker consumer buying power in a tough domestic economy.
According to Jamaica Observer, the company reported a net profit of $182 million for the period ending 25 January 2014 compared to $284 million over the corresponding period a year earlier. Revenues for the quarter amounted to $7.8 billion or 10 per cent more than year earlier levels.
In comments accompanying the financial report, the company stated that difficult conditions in the domestic economy, including currency devaluation, have impacted the performance of its flagship processed poultry division as well as the Hipro Ace segment, which sells farm and household supplies.
"Our Best Dressed and Hipro-Ace divisions have performed as anticipated, given the market environment with the rapid depreciation of the Jamaican currency in the recent quarters and sluggish demand, given lower disposable incomes," the company said. "In this market environment, we decided not to effect all the upward selling price adjustments that would cover increases in operating costs."
Distribution and selling expenses jumped by 27 per cent while administrative and other expenses increased by 6.3 per cent. The company said that the increased distribution, administration and selling costs reflect inflation increases along with costs related to organisational strengthening and significantly increased operations in the US operations, which the company identified as a star performer.
The US operations involve the production and sale of fertile eggs and procurement services for customers in North America, Central America and the Caribbean. The company has doubled revenues in the division to $4.8 million year to date, with its segment result increasing more than nine-fold to $283.3 million.
"We are encouraged by the ongoing improvement in the performance of our US operations," the company said. "With the expanded fertile egg production in Georgia and inclusion of the recently acquired England Farms in Arkansas, these operations continue to contribute in a meaningful way to our results."
Jamaica Broilers' finance costs jumped by 90 per cent over the review period to $108.5 million. The company stated that the financing of the US operations and currency depreciation have led to increased working capital funding requirements.
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