Published: Wednesday June 18, 2008
In 10 months, Jamaica Broilers Group's nascent ethanol business has blossomed into a $6 billion revenue turner for the poultry producer, and a golden opportunity to grow sales and profits.
For a second day this week, the JBG stock closed higher on the Jamaica Stock Exchange, ending Monday at $5.76 on a 46 cents capital gain, after hitting a high of $5.90 in intra-day trading; and closing six cents higher at $5.82 on Tuesday.
Ethanol, at year-end May 3, 2008, contributed $321 million to the earnings of the Robert Levy-led group to closely rival the feed segment, all within the company's fourth quarter, when half or $3 billion of JB Ethanol Limited's sales into its US market were recorded.
With the exception of its fish business, the group's performance improved across all business segments. Poultry remained its core business and the most lucrative with $8 billion of sales and a $1.15 billion contribution to operating profit.
Feed and farm supplies, whose turnover Broilers said, was helped "nominally" by increases in world grain prices, notched up sales of $5 billion and profits of $445 million on thje back of increased prices to the market, according to group financial controller Ian Parsard.
Withstood many challenges
"This 50th year of operation was an important one for the group in which we withstood many challenges presented to us subsequent to our entry into ethanol processing and exporting," said president and CEO Levy and chairman R Danny Williams in a statement to shareholders.
Having overcome those challenges, which includes rising world commodity prices, and second quarter glitches in its ethanol contract, the company in existence since 1958 is reporting one of its best years of performance.
The year-end numbers reported by Jamaica Broilers are telling:
Group turnover was up 78 per cent, year on year, from $11.5 billion to $20.5 billion.
Gross profits hit $3.3 billion, up 26 per cent.
Operating profit grew 56 per cent to close the year at $1.2 billion.
And net profit, though diluted by a four fold growth in debt servicing charges of $338 million for the company, still ran 36 per cent higher, from half a billion dollars in 2007 to $696 million in the current period to return earnings per share of 58 cents, up from 47 cents.
Operating expenses were also up in the year, by 14 per cent.
The company's fish business lost $79 million in the year, not its worst performance - losses have hit $100 million in the past - but still a substantial decline from 2007 when the losses had been narrowed to $23 million."The fish operation faced new challenges in 2007/08, effectively reversing the gains that we made in 2006/07," said Parsard on Tuesday.
"The management team at Aquaculture continues to implement significant changes to the operations and business model and is confident that the fish operations will be profitable in 2008/09," he told Wednesday Business.
Broilers said the segment was hit both by rising feed prices and a "resistance by the market to price increases" in overseas markets.
In the periods ahead, the performance of corn prices, which hit a record US$7 per bushel last week, are expected to pose new challenges for the group, whose production costs in the 2007/08 year breached $17 billion.
Source: Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080618/business/business6.html
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