Published: Friday May 9, 2008
Lawrence Duprey has taken a seat on the board of Lascelles deMercado, a Jamaican company soon to be absorbed into his CL Financial Group as a subsidiary.
The announcement made via a stock market filing, came at the same time that Lascelles released its second quarter results, reporting weaker profits to the Jamaica Stock Exchange.
CL's spirits company, Angostura Limited, has already paid out US$308 million or US$4.50 per share to Lascelles shareholders on the all-cash deal, which is to close within three years contingent on a final payout of another US$4.50 to US$6.15 per share.
The balance of the offer is due by January 28, 2011.
Lascelles group managing director William McConnell has said nothing would change at the company until the deal is fully consummated.
Synergise
But the idea is to synergise its spirits business, especially Wray and Nephew Limited, with that of Angostura.
Duprey, the chairman of Angostura and CL Financial and a self-styled 'economic natioanlist', was made a director of Lascelles on April 30, a decision taken at a board meeting that day.
A vacancy was created last December with the passing of Richard Ashenheim.
George Ashenheim remains the chairman.
Lascelles, a profitable blue chip company listed on the Jamaica Stock Exchange, made more than $2.6 billion in after-tax profit in 2007.
But its performance year to date has fallen off relative to last year, with its second quarter results of $242 million at March 31, reflecting a 31 per cent drop in net profit from $350 million in the March 2007 period.
Its six-month results were also off, but only marginally, down from $1.2 billion to $1.18 billion in the current period - the result of significantly higher production costs and bigger administration, selling and marketing spend.
The company remains highly liquid with $9 billion of working capital, and is now capitalised at $24 billion, up by $4 billion from a year ago.
Source: Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080509/business/business7.html
Friday, May 9, 2008
Jamaica Producers looks to an angel of mercy
Published: Friday May 9, 2008
Jamaica Producers had a very tough first quarter, reporting a loss of J$312.7 million on sales of J$3 billion. Taking the more conservative approach of excluding the stock units held by their Employee Stock Ownership Plan (ESOP), this translated into a loss per share of J$1.84 for the quarter ended March 22, 2008, or more than three times the loss of sixty cents per share of their corresponding first quarter of 2007.
The conservative break up value of conglomerate Jamaica Producers (JP) could be in the J$60 per share region based on the strength of its equity holdings in GraceKennedy, its United Kingdom juice operations and the value of lands held in Jamaica. President and Chief Executive Officer of Stocks & Securities Ltd (SSL), Mark Croskery explains:
"The value of the 187-million JP shares outstanding represents a conservative intrinsic value of J$62.48 per share, not inclusive of cash holdings or any other intangible value, nor its shipping and logistics division." He adds that, "The recent Lascelles de Mercado deal is a clear example of the value of specific Jamaican Companies (publicly listed on the JSE) and that with "Caribbeanization" and Globalisation that more and more external investors are looking at Jamaican companies and slowly but surely creating a very serious mergers and acquisition market in Jamaica and the Caribbean."
Croskery notes that despite the value that can be unlocked by JP's executives, over the last 52 weeks of trading, the market continues to price the stock in the J$25-$41 price range. He explains why. "What is clear is that there is significant value present but without significant changes, it will not be realised. The recent mammoth loses might bring about these changes."
In Jamaica Producer's Chairman's statement, Chairman Charles Johnston described 2008 as " undoubtedly one of the most challenging periods in the recent history of the Group."
According to Johnston, Jamaica Producer's first response appears to have been to accelerate its ongoing effort to reduce overheads, through "reduced headcount, frozen salaries, delayed salary increases throughout the group."
Unlocking value
Returning to the valuation of the conglomerate, Croskery points to important value drivers. First, JP owns 32 million units of Grace Shares. "Grace's results have rebounded very strongly during the course of last year. Also, the supply of this stock is very limited and many players are interested in buying. And with the Lascelles deal being done, funds will go into a blue chip of this nature naturally." Added to the mix, Croskery notes that, "Grace in itself could also be a takeover candidate." With that in mind, Croskery states, "Let us conservatively use a market price for the Grace shares of $90 per share to value these shares and so 32 million share are worth $2.88 billion."
Looking at the United Kingdom operations at Serious Food Co and Sunjuice, Croskery explains, "The revenue is US$60 million on an annual basis and we can conservatively value this at 0.75 times to sales multiple, even though it as currently a significant net loss business, but had a net profit margin of 2.50 per cent to 5 per cent two to three fiscal years ago.
And many business like this, sell for 2 times price/sales multiples in other countries." And so, Croskery values this business line at J$8.52 billion (using exchange rate of $71). And then there is the farm lands. He notes that, "Although valued significantly higher, we can place a value of US$4 million or J$284 million."
Taking the three segments discussed, Croskery notes that, "The above represents $11.684 Billion in potential value without even considering cash or other fixed income investments on the balance sheet."
JP/GK merger?
Although JP is a prime takeover/break up candidate, Croskery does not believe the buyer will be a local company. There had been talk that Grace would buy out the UK division of the firm but Grace executives were unavailable for comment up to press time. "We at SSL do not view Grace as a buyer of this business. Firstly, we would view this deal as being too big for them and they recently completed the WT Foods deal which was sizable also." Croskey sees the buyer as another juice manufacturer who could leverage the existing UK market that JP has developed.
He adds that, "When the argument comes that a business with negative earnings is not worth it, we don't buy into this as the ales are very significant as the net margins were very attractive up to 2twoyears ago."Nevertheless, Croskery says that he is advising his clients to hold the stock and to buy at $30 per share or below.
Turning to strategic alliances
According to Jamaica Producer's CEO Jeffrey Hall the group now intends to "develop strategic alliances with world class brands and supermarket retailers to drive growth in their fresh fruit and smoothie business particularly in Europe.
"This differs from the previous strategy of trying to create their own brand, as the focus will instead be to align with the successful brands of companies who bring marketing expertise.
JP's CEO added that while the group will still maintain its house brand to supply food service operations their greater focus will allow JP to keep costs low as to compete with the other low cost private labels for juice.JP is facing a particularly difficult situation because of the UK's very highly concentrated supermarket sector which has a high degree of market power relative to their privater label suppliers such as JP.
According to Hall, there has been a less than five per cent price increase in the retail selling price of food over the same 18-month period in the UK.Arguing that JP "can restore profitability by systematically adjusting prices or exiting unprofitable lines of business," Hall stresses his confidence that " we can drive growth in other markets in Europe and in our core juice and smoothie lines."
Bananas
In his Chairman's statement Johnston noted: "During the quarter, we had no revenues from banana exports or snack food production in Jamaica. Moreover, we had to scale back our shipping and freight forwarding activities that typically rely on the backhaul opportunities that are created by our banana export business."
Hurricane Dean drove the decline in revenues from the banana segment, which plunged 55.2 per cent to J$242 million from J$540 million the previous year. JP's banana farms were practically wiped out, and full production will not resume until the third quarter in 2008.
Source:
Dennise Williams and Keith Collister
The Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20080508T210000-0500_135420_OBS_JAMAICA_PRODUCERS_LOOKS_TO_AN_ANGEL_OF_MERCY_.asp
Jamaica Producers had a very tough first quarter, reporting a loss of J$312.7 million on sales of J$3 billion. Taking the more conservative approach of excluding the stock units held by their Employee Stock Ownership Plan (ESOP), this translated into a loss per share of J$1.84 for the quarter ended March 22, 2008, or more than three times the loss of sixty cents per share of their corresponding first quarter of 2007.
The conservative break up value of conglomerate Jamaica Producers (JP) could be in the J$60 per share region based on the strength of its equity holdings in GraceKennedy, its United Kingdom juice operations and the value of lands held in Jamaica. President and Chief Executive Officer of Stocks & Securities Ltd (SSL), Mark Croskery explains:
"The value of the 187-million JP shares outstanding represents a conservative intrinsic value of J$62.48 per share, not inclusive of cash holdings or any other intangible value, nor its shipping and logistics division." He adds that, "The recent Lascelles de Mercado deal is a clear example of the value of specific Jamaican Companies (publicly listed on the JSE) and that with "Caribbeanization" and Globalisation that more and more external investors are looking at Jamaican companies and slowly but surely creating a very serious mergers and acquisition market in Jamaica and the Caribbean."
Croskery notes that despite the value that can be unlocked by JP's executives, over the last 52 weeks of trading, the market continues to price the stock in the J$25-$41 price range. He explains why. "What is clear is that there is significant value present but without significant changes, it will not be realised. The recent mammoth loses might bring about these changes."
In Jamaica Producer's Chairman's statement, Chairman Charles Johnston described 2008 as " undoubtedly one of the most challenging periods in the recent history of the Group."
According to Johnston, Jamaica Producer's first response appears to have been to accelerate its ongoing effort to reduce overheads, through "reduced headcount, frozen salaries, delayed salary increases throughout the group."
Unlocking value
Returning to the valuation of the conglomerate, Croskery points to important value drivers. First, JP owns 32 million units of Grace Shares. "Grace's results have rebounded very strongly during the course of last year. Also, the supply of this stock is very limited and many players are interested in buying. And with the Lascelles deal being done, funds will go into a blue chip of this nature naturally." Added to the mix, Croskery notes that, "Grace in itself could also be a takeover candidate." With that in mind, Croskery states, "Let us conservatively use a market price for the Grace shares of $90 per share to value these shares and so 32 million share are worth $2.88 billion."
Looking at the United Kingdom operations at Serious Food Co and Sunjuice, Croskery explains, "The revenue is US$60 million on an annual basis and we can conservatively value this at 0.75 times to sales multiple, even though it as currently a significant net loss business, but had a net profit margin of 2.50 per cent to 5 per cent two to three fiscal years ago.
And many business like this, sell for 2 times price/sales multiples in other countries." And so, Croskery values this business line at J$8.52 billion (using exchange rate of $71). And then there is the farm lands. He notes that, "Although valued significantly higher, we can place a value of US$4 million or J$284 million."
Taking the three segments discussed, Croskery notes that, "The above represents $11.684 Billion in potential value without even considering cash or other fixed income investments on the balance sheet."
JP/GK merger?
Although JP is a prime takeover/break up candidate, Croskery does not believe the buyer will be a local company. There had been talk that Grace would buy out the UK division of the firm but Grace executives were unavailable for comment up to press time. "We at SSL do not view Grace as a buyer of this business. Firstly, we would view this deal as being too big for them and they recently completed the WT Foods deal which was sizable also." Croskey sees the buyer as another juice manufacturer who could leverage the existing UK market that JP has developed.
He adds that, "When the argument comes that a business with negative earnings is not worth it, we don't buy into this as the ales are very significant as the net margins were very attractive up to 2twoyears ago."Nevertheless, Croskery says that he is advising his clients to hold the stock and to buy at $30 per share or below.
Turning to strategic alliances
According to Jamaica Producer's CEO Jeffrey Hall the group now intends to "develop strategic alliances with world class brands and supermarket retailers to drive growth in their fresh fruit and smoothie business particularly in Europe.
"This differs from the previous strategy of trying to create their own brand, as the focus will instead be to align with the successful brands of companies who bring marketing expertise.
JP's CEO added that while the group will still maintain its house brand to supply food service operations their greater focus will allow JP to keep costs low as to compete with the other low cost private labels for juice.JP is facing a particularly difficult situation because of the UK's very highly concentrated supermarket sector which has a high degree of market power relative to their privater label suppliers such as JP.
According to Hall, there has been a less than five per cent price increase in the retail selling price of food over the same 18-month period in the UK.Arguing that JP "can restore profitability by systematically adjusting prices or exiting unprofitable lines of business," Hall stresses his confidence that " we can drive growth in other markets in Europe and in our core juice and smoothie lines."
Bananas
In his Chairman's statement Johnston noted: "During the quarter, we had no revenues from banana exports or snack food production in Jamaica. Moreover, we had to scale back our shipping and freight forwarding activities that typically rely on the backhaul opportunities that are created by our banana export business."
Hurricane Dean drove the decline in revenues from the banana segment, which plunged 55.2 per cent to J$242 million from J$540 million the previous year. JP's banana farms were practically wiped out, and full production will not resume until the third quarter in 2008.
Source:
Dennise Williams and Keith Collister
The Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20080508T210000-0500_135420_OBS_JAMAICA_PRODUCERS_LOOKS_TO_AN_ANGEL_OF_MERCY_.asp
LOJ is no more - To be rebranded Sagicor Life Jamaica
Published: Friday May 9, 2008
The brand Life of Jamaica (LOJ), the most visible name in the life and health insurance industry, will be no more after 38 years in the operation with the passage of a resolution at the company's annual general meeting to give it a new identity.
LOJ will now be known as Sagicor Life Jamaica, giving effect to plans put in train years ago when the insurance giant was acquired by Barbadian financial conglomerate Sagicor.
The rebranding was set to take place initially in 2004, but was delayed due to reasons that were not disclosed by the company, but was said to be linked to resistance by shareholders at losing a name that was seen then as distinctly Jamaican.
But a day ahead of the AGM, sources told the Financial Gleaner that "the company is now at the point to execute the decision that was taken at the AGM in May 2004".
One slight change
A new vote by the shareholders was required because of one slight change in the name that was voted on four years ago.
The company has scheduled a press conference for today, to include Chairman Dodridge Miller of Sagicor Barbados, to more clearly outline plans for the rebranding and its implications.
Sources say LOJ will be moving immediately to file the necessary documentation with the Companies Office of Jamaica for approval of the name change.
The company will then have to relist on the Jamaica Stock Exchange under its new name.
The exact cost that would be incurred in such a rebranding exercise was not disclosed, but company insiders say it would be a 'significant' sum.
Costly exercise
Elements of what is expected to be a costly exercise for the company will be done on four platforms, which include the cost for changing of stationery and signage, both internal and external, the adjustments of information systems and mode of communication.
The company will also be adopting the colours of its parent.
All the subsidiaries of LOJ are expected to be rebranded under the new name Sagicor Life Jamaica but associated companies such as Pan Caribbean Financial Services and Employer Benefit Adminis-trator Limited will retain theirs, for now, but continue to carry the tagline 'a member of the Sagicor Group'.
Source:
Sabrina Gordon
Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080509/business/business2.html
sabrina.gordon@gleanerjm.com
The brand Life of Jamaica (LOJ), the most visible name in the life and health insurance industry, will be no more after 38 years in the operation with the passage of a resolution at the company's annual general meeting to give it a new identity.
LOJ will now be known as Sagicor Life Jamaica, giving effect to plans put in train years ago when the insurance giant was acquired by Barbadian financial conglomerate Sagicor.
The rebranding was set to take place initially in 2004, but was delayed due to reasons that were not disclosed by the company, but was said to be linked to resistance by shareholders at losing a name that was seen then as distinctly Jamaican.
But a day ahead of the AGM, sources told the Financial Gleaner that "the company is now at the point to execute the decision that was taken at the AGM in May 2004".
One slight change
A new vote by the shareholders was required because of one slight change in the name that was voted on four years ago.
The company has scheduled a press conference for today, to include Chairman Dodridge Miller of Sagicor Barbados, to more clearly outline plans for the rebranding and its implications.
Sources say LOJ will be moving immediately to file the necessary documentation with the Companies Office of Jamaica for approval of the name change.
The company will then have to relist on the Jamaica Stock Exchange under its new name.
The exact cost that would be incurred in such a rebranding exercise was not disclosed, but company insiders say it would be a 'significant' sum.
Costly exercise
Elements of what is expected to be a costly exercise for the company will be done on four platforms, which include the cost for changing of stationery and signage, both internal and external, the adjustments of information systems and mode of communication.
The company will also be adopting the colours of its parent.
All the subsidiaries of LOJ are expected to be rebranded under the new name Sagicor Life Jamaica but associated companies such as Pan Caribbean Financial Services and Employer Benefit Adminis-trator Limited will retain theirs, for now, but continue to carry the tagline 'a member of the Sagicor Group'.
Source:
Sabrina Gordon
Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080509/business/business2.html
sabrina.gordon@gleanerjm.com
Despite competition RML holds onto market share
Published: Friday May 9, 2008
General manager of Readymix West Indies Limited (RML) Manan Deo, said yesterday his company uses only local labour for its projects despite a shortage of labour in T&T.
Deo made the statement while reporting to the company’s shareholders at its 49th annual general meeting at the Centre of Excellence, Macoya.
He said RML sources its labour from local communities.
“Generally we have been able to obtain our complement of labour in Trinidad. We look at that skillset that is required and by and large from the communities that we operate in we have been able to source our labour,” he said.
Deo said there was no significant change in RML’s marketing and share of the market for the financial year 2008.
He said while the overall market size grew from 2006 to 2007, RML’s share of the market remained basically unchanged.
However, Deo said RML must maintain and improve its share of the market this year and in the future in the face of increasing competition.
“In Trinidad we expect new competitors in the market...We have had more than 10 competitors for the last few years. One of the major ways in which we increase the share of the market is through quality.
“To deal with the competition we have strengthened our marketing department in terms of how we relate to our customers. The number of customer service representatives or co-ordinators, they target these projects...so that we sell our projects...not only do we want to defend our market share, we want to improve our market share,” he said.
Deo said heavy traffic jams have not affected the operations of the company because of its flexible operations.
“Our major plant is in Laventille, what we have to start to do is to start before the traffic and go on to 8 pm. We have to work with the needs of our customers,” he said.
Deo said that for the rest of 2008 the company’s plans are on course in the areas of growth for T&T and its St Maarten operations and the completion of the Waterfront Development Project.
“Every project has a finite life and we started the Waterfront Project at the end of 2005 and basically it has come to an end and basically we move on to another project.
“We believe that once we address these issues from the side of the market, from the marketing side, from the distribution side...we’ll be able to ensure our shareholders and directors of growth and performance,” he said.
Source:
Trinidad Guardian Newspapers
Raphael John Lall
http://www.guardian.co.tt/business2.html
General manager of Readymix West Indies Limited (RML) Manan Deo, said yesterday his company uses only local labour for its projects despite a shortage of labour in T&T.
Deo made the statement while reporting to the company’s shareholders at its 49th annual general meeting at the Centre of Excellence, Macoya.
He said RML sources its labour from local communities.
“Generally we have been able to obtain our complement of labour in Trinidad. We look at that skillset that is required and by and large from the communities that we operate in we have been able to source our labour,” he said.
Deo said there was no significant change in RML’s marketing and share of the market for the financial year 2008.
He said while the overall market size grew from 2006 to 2007, RML’s share of the market remained basically unchanged.
However, Deo said RML must maintain and improve its share of the market this year and in the future in the face of increasing competition.
“In Trinidad we expect new competitors in the market...We have had more than 10 competitors for the last few years. One of the major ways in which we increase the share of the market is through quality.
“To deal with the competition we have strengthened our marketing department in terms of how we relate to our customers. The number of customer service representatives or co-ordinators, they target these projects...so that we sell our projects...not only do we want to defend our market share, we want to improve our market share,” he said.
Deo said heavy traffic jams have not affected the operations of the company because of its flexible operations.
“Our major plant is in Laventille, what we have to start to do is to start before the traffic and go on to 8 pm. We have to work with the needs of our customers,” he said.
Deo said that for the rest of 2008 the company’s plans are on course in the areas of growth for T&T and its St Maarten operations and the completion of the Waterfront Development Project.
“Every project has a finite life and we started the Waterfront Project at the end of 2005 and basically it has come to an end and basically we move on to another project.
“We believe that once we address these issues from the side of the market, from the marketing side, from the distribution side...we’ll be able to ensure our shareholders and directors of growth and performance,” he said.
Source:
Trinidad Guardian Newspapers
Raphael John Lall
http://www.guardian.co.tt/business2.html
Thursday, May 8, 2008
Guiseppi leaves RBTT Merchant Bank
Published: Thursday April 8, 2008
Career banker Lyndon Guiseppi is no longer head of the RBTT Merchant Bank.
RBTT Group chief executive Suresh Sookoo confirmed in a statement that Filippo Alario has been appointed acting managing director of RBTT Merchant Bank, "following the departure" of Guiseppi.
His departure comes amid a takeover of the RBTT banking group by the Royal Bank of Canada, that country's largest commercial bank.
RBTT Financial has applied to suspend trading of its shares on the local stock market to facilitate the acquisition by RBC and the distribution of cash and RBC stock for RBTT shares. The transaction is expected to be completed by the end of May or mid-June.
A spokesperson for RBTT said yesterday that Guiseppi's departure at the bank had "absolutely nothing" to do with the amalgamation of RBTT and RBC.
Alario has worked as deputy managing director at the merchant bank for the past three years. Guiseppi, an economist, led RBTT's corporate banking division from 1997 and worked in senior positions at a number of local banks before he took over as managing director of RBTT Merchant Bank.
About Guiseppi's departure, RBTT's Sookoo said in a statement: "I wish to thank Lyndon for his contribution to RBTT and wish him well in all future endeavours."
Source:
Trinidad Express Newspapers
Curtis Rampersad
http://www.trinidadexpress.com/index.pl/article_news?id=161320129
Career banker Lyndon Guiseppi is no longer head of the RBTT Merchant Bank.
RBTT Group chief executive Suresh Sookoo confirmed in a statement that Filippo Alario has been appointed acting managing director of RBTT Merchant Bank, "following the departure" of Guiseppi.
His departure comes amid a takeover of the RBTT banking group by the Royal Bank of Canada, that country's largest commercial bank.
RBTT Financial has applied to suspend trading of its shares on the local stock market to facilitate the acquisition by RBC and the distribution of cash and RBC stock for RBTT shares. The transaction is expected to be completed by the end of May or mid-June.
A spokesperson for RBTT said yesterday that Guiseppi's departure at the bank had "absolutely nothing" to do with the amalgamation of RBTT and RBC.
Alario has worked as deputy managing director at the merchant bank for the past three years. Guiseppi, an economist, led RBTT's corporate banking division from 1997 and worked in senior positions at a number of local banks before he took over as managing director of RBTT Merchant Bank.
About Guiseppi's departure, RBTT's Sookoo said in a statement: "I wish to thank Lyndon for his contribution to RBTT and wish him well in all future endeavours."
Source:
Trinidad Express Newspapers
Curtis Rampersad
http://www.trinidadexpress.com/index.pl/article_news?id=161320129
Wednesday, May 7, 2008
Republic Bank posts $629m profit
Published: Wednesday May 7, 2008
The Republic Bank Group has recorded profit attributable to shareholders of TT$629.7 million for the half-year ended March 31st, 2008.
Chairman of the Bank, Ronald F. de C. Harford, in commenting on the performance over the first six months stated that, "The Group has reported a very creditable growth in core earnings of 23 per cent for the six months ending 31st March 2008 when compared to the corresponding period last year. Moreover, total assets are now $39.3 billion, a 5 per cent increase over the six-month period."
The Chairman revealed that the half year profit attributable to shareholders of $629.7 million included an after tax gain of $82 million from the allocation of shares in Visa Inc. Harford compared this to the March 2007 profit of $813.9 million, which included the $370 million gain from the sale of shareholding in FirstCaribbean International Bank. The Group's core earnings therefore which exclude these exceptional items, were $547.6 million at 31st March 2008 versus $443.8 million at 31st March 2007.
The Board of Directors of Republic Bank has approved a half year dividend of $1.15 per share, a 22 per cent increase over 2007 which will be paid to shareholders on May 29, 2008.
Source: Trinidad and Tobago Express Newspapers
http://www.trinidadexpress.com/index.pl/article_business_mag?id=161319552
The Republic Bank Group has recorded profit attributable to shareholders of TT$629.7 million for the half-year ended March 31st, 2008.
Chairman of the Bank, Ronald F. de C. Harford, in commenting on the performance over the first six months stated that, "The Group has reported a very creditable growth in core earnings of 23 per cent for the six months ending 31st March 2008 when compared to the corresponding period last year. Moreover, total assets are now $39.3 billion, a 5 per cent increase over the six-month period."
The Chairman revealed that the half year profit attributable to shareholders of $629.7 million included an after tax gain of $82 million from the allocation of shares in Visa Inc. Harford compared this to the March 2007 profit of $813.9 million, which included the $370 million gain from the sale of shareholding in FirstCaribbean International Bank. The Group's core earnings therefore which exclude these exceptional items, were $547.6 million at 31st March 2008 versus $443.8 million at 31st March 2007.
The Board of Directors of Republic Bank has approved a half year dividend of $1.15 per share, a 22 per cent increase over 2007 which will be paid to shareholders on May 29, 2008.
Source: Trinidad and Tobago Express Newspapers
http://www.trinidadexpress.com/index.pl/article_business_mag?id=161319552
Jamaica Producers Group (JP) willing to sell pieces of the business
Published: Wednesday May 7, 2008
Jamaica Producers Group (JP) has warned shareholders to brace for the possible divestment or closure of parts of the business that might be sacrificed to return the company to profitability.
But JP has also signalled that new acquisitions - the type that strengthen its 'core business' - are a possibility, with the same objective of breathing new life into the conglomerate.
"Shareholders should be aware that in order to ensure a return to profitability and to grow our group, we must consider the sale, closure or restructuring of material parts of our business," said chairman Charles Johnston, "even as we pursue acquisitions to strengthen our core."
Johnston's comment accompanied JP's March quarter report of a $312.7 million net loss by the group, which followed a $728 million pre-tax loss last year ($479 miller net of tax credits).
But on Tuesday, JP refused to expound on its divestment/acquisition programme, even though group financial controller Paul Samuels advised that the company pretty much knew what had to be done, having almost wrapped up its analysis.
To signal its intent now, he said, would be to give away too much to rivals, but also breach market rules on information sharing and put the listed company in trouble.
"You have to take the statement as indicated," said Samuels. "We are always on the look out for strategic alliances and acquisitions that make sense."
But the company also might have to find "alternative use for some assets," he told Wednesday Business.
Jamaica Producers' troubles prior to now have centred around its banana business. But within the March quarter the company, like everyone else, has been hit with the added misfortune of high energy and raw material prices, as well as the rising price of food.
Falling banana revenues
That has hurt its juice and smoothies business, a segment in which it does not determine price as its products are sold largely under United Kingdom store brands.
Banana, which in the current quarter was only eight per cent of total revenues of $3 billion, seems the most likely area to be chopped.
But Samuels said JP would be giving banana production another chance, now that Government has followed through on its promise to provide backing for growers.
"It is something that contributes significantly to communities in the areas where we operate - we are not just going to walk away from it - but revenues by comparison are lopsided," said the financial controller.
The US$4 million loan, he said, comes with the attractive rider that, if another storm hits and wipes out crops financed by the funds, the government would waive repayment.
The loan is repayable over five years at seven per cent per annum, but with a one-year moratorium on the principal.
JP has already began replanting its farms, but says the fields will not reach full production until the third quarter. The company's shipping operation, which is dependent on the health of the fruit, was devoid of its usual business in the March quarter.
"During the quarter, we had no revenues from banana exports or snack food production in Jamaica," said Chairman Charles Johnston. "More-over, we had to scale back our shipping and freight forwarding activities that typically rely on the backhaul opportunities that are created by our banana export business," he said in a statement filed with the group's accounts.
Expensive to do business
Together, world market events and a storm that happened eight months ago have taken a toll on the conglomerate's revenues, while at the same time making it more expensive to do business.
In the process, JP's losses have tripled in the first quarter to $312.7 million, compared to a $102 million loss in the March 2007 period.
But the conglomerate, to reassure shareholders, played up its balance sheet which remains capitalised at more than $9 billion against long-term liabilities of $1.5 billion, and reflects working capital of $3.2 billion. Within the reporting quarter, its...
"This initiative is ongoing," said Johnston, signalling that more cuts are pending. "We have reduced head count, frozen salaries, delayed salary increases throughout the group."
Diversification
But the company is also refining its customer and product mix, and diversifying geographically in the hopes of diminishing its risk to storms.
"The whole purpose of Dominican Republic," said Samuels, "is diversification."
The company has a joint venture snack business in operation there, to complement its home-based operations. The idea, said Samuels, is that when Jamaica is down, DR can take up the slack, and vice versa. There will be no shift of the Jamaican operation there, he said.
JP also has banana farms in Honduras, and its fruit and smoothie juice business centred in the United Kingdom.
Source:
Lavern Clarke
Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080507/business/business1.html
lavern.clarke@gleanerjm.com
Jamaica Producers Group (JP) has warned shareholders to brace for the possible divestment or closure of parts of the business that might be sacrificed to return the company to profitability.
But JP has also signalled that new acquisitions - the type that strengthen its 'core business' - are a possibility, with the same objective of breathing new life into the conglomerate.
"Shareholders should be aware that in order to ensure a return to profitability and to grow our group, we must consider the sale, closure or restructuring of material parts of our business," said chairman Charles Johnston, "even as we pursue acquisitions to strengthen our core."
Johnston's comment accompanied JP's March quarter report of a $312.7 million net loss by the group, which followed a $728 million pre-tax loss last year ($479 miller net of tax credits).
But on Tuesday, JP refused to expound on its divestment/acquisition programme, even though group financial controller Paul Samuels advised that the company pretty much knew what had to be done, having almost wrapped up its analysis.
To signal its intent now, he said, would be to give away too much to rivals, but also breach market rules on information sharing and put the listed company in trouble.
"You have to take the statement as indicated," said Samuels. "We are always on the look out for strategic alliances and acquisitions that make sense."
But the company also might have to find "alternative use for some assets," he told Wednesday Business.
Jamaica Producers' troubles prior to now have centred around its banana business. But within the March quarter the company, like everyone else, has been hit with the added misfortune of high energy and raw material prices, as well as the rising price of food.
Falling banana revenues
That has hurt its juice and smoothies business, a segment in which it does not determine price as its products are sold largely under United Kingdom store brands.
Banana, which in the current quarter was only eight per cent of total revenues of $3 billion, seems the most likely area to be chopped.
But Samuels said JP would be giving banana production another chance, now that Government has followed through on its promise to provide backing for growers.
"It is something that contributes significantly to communities in the areas where we operate - we are not just going to walk away from it - but revenues by comparison are lopsided," said the financial controller.
The US$4 million loan, he said, comes with the attractive rider that, if another storm hits and wipes out crops financed by the funds, the government would waive repayment.
The loan is repayable over five years at seven per cent per annum, but with a one-year moratorium on the principal.
JP has already began replanting its farms, but says the fields will not reach full production until the third quarter. The company's shipping operation, which is dependent on the health of the fruit, was devoid of its usual business in the March quarter.
"During the quarter, we had no revenues from banana exports or snack food production in Jamaica," said Chairman Charles Johnston. "More-over, we had to scale back our shipping and freight forwarding activities that typically rely on the backhaul opportunities that are created by our banana export business," he said in a statement filed with the group's accounts.
Expensive to do business
Together, world market events and a storm that happened eight months ago have taken a toll on the conglomerate's revenues, while at the same time making it more expensive to do business.
In the process, JP's losses have tripled in the first quarter to $312.7 million, compared to a $102 million loss in the March 2007 period.
But the conglomerate, to reassure shareholders, played up its balance sheet which remains capitalised at more than $9 billion against long-term liabilities of $1.5 billion, and reflects working capital of $3.2 billion. Within the reporting quarter, its...
"This initiative is ongoing," said Johnston, signalling that more cuts are pending. "We have reduced head count, frozen salaries, delayed salary increases throughout the group."
Diversification
But the company is also refining its customer and product mix, and diversifying geographically in the hopes of diminishing its risk to storms.
"The whole purpose of Dominican Republic," said Samuels, "is diversification."
The company has a joint venture snack business in operation there, to complement its home-based operations. The idea, said Samuels, is that when Jamaica is down, DR can take up the slack, and vice versa. There will be no shift of the Jamaican operation there, he said.
JP also has banana farms in Honduras, and its fruit and smoothie juice business centred in the United Kingdom.
Source:
Lavern Clarke
Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080507/business/business1.html
lavern.clarke@gleanerjm.com
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