C.H Johnston Chairman Jamaica Producers Group Limited has released the following report for the 26-week period ended July 2, 2022 (the “First Half”).
Jamaica Producers Group Limited delivered strong results for 6-month period ended July 2022 earning consolidated net profits of $1.6 billion from revenues of $14.4 billion.
JP increased revenues by 26% over the prior year, with sales and earnings growth in both our business segments – Logistics & Infrastructure (“L&I”) and Food & Drink (“F&D”).
Year-to-date net profit attributable to shareholders was $864 million, an increase of 42% over the prior year.
JP Logistics & Infrastructure
The L&I Division is a diversified, multinational logistics group and accounts for the major share of the Group’s net assets and, in turn, its profits.
The Division includes our interests in port terminal operations, warehousing and third-party logistics services (Kingston Wharves Limited), freight consolidation and forwarding (JP Shipping Services and Miami Freight & Shipping) and liner services (Geest Line). The Group’s logistics services all have a Caribbean connection but collectively serve a wide range of global markets.
The L&I Division generated profit before finance cost and taxation for the 2022 First
Half of $1.9 billion, a 13% increase over the prior year. Divisional revenues of $5.7 billion were up 24% over the same period in the prior year.
The improved performance reflects our strategy to build a diversified Caribbean logistics platform through business development initiatives, capacity expansion and select acquisitions. Our recently acquired UK-based joint venture shipping line — Geest Line — and US-based freight consolidation business — Miami Freight & Shipping – both contributed to the improved profitability of the Division.
JP Food & Drink
JP’s F&D Division is the largest contributor to the revenues of the Group. The Division earned year-to-date profits before finance cost and taxation for the First Half of $283 million on revenues of $8.6 billion. Earnings increased 72% and revenue increased 27% relative to the prior year.
The F&D Division comprises our portfolio of businesses that are engaged in farming, manufacturing, distribution and retail of a wide range of food and drink. The Division has production facilities in Europe (the Netherlands and Spain) and the Caribbean (Jamaica and the Dominican Republic) and operates a distribution centre in the United States. Our JP Farms business continues to lead in banana and pineapple production in Jamaica.
Our range of specialty food and drink products includes fresh juices, tropical snacks, frozen foods, fresh fruit and Caribbean rum-based baked goods. A.L. Hoogesteger Fresh Specialist B.V. (“Hoogesteger”) is the largest contributor to the revenues and profits of the Division. This business is a market leader in fresh juice in Northern Europe and serves as a co-packer of juice for major supermarket and food service entities in the Netherlands, Belgium, Scandinavia and Switzerland.
During the year, the Division experienced material increases in costs associated with raw material commodities, personnel and logistics. These cost increases must be recovered, to the extent possible, through increases in selling prices. The initiative to adjust prices to align with market conditions is now well underway, but during the First Half we experienced some margin compression in the instances where we delayed price increases to balance any uncertainty in demand or limits to consumer confidence. However, the adverse impact of reduced margins was more than offset by the benefit of solid volume growth.
Outlook
Jamaica Producers Group Limited has been organised to generate revenues from a diverse range of business lines and, importantly, a diverse range of markets. Our Food & Drink business includes premium and travel retail products, as well as everyday snacks and basic food items. These businesses are aligned to general consumer trends such as the focus on health, convenience and provenance, and they serve markets as diverse as the Caribbean and Caribbean diaspora, Northern Europe, North America and Caribbean travel retail and hospitality.
Our logistics businesses, also operating in Europe, the USA and the Caribbean, handle a wide range of commodities and service a large number of origin and destination markets. Services provided range from shipping and freight forwarding to stevedoring, terminal operations, cold storage and logistics.
We see the diversity of our business as a strength. We are of the view, however, that inflation, supply chain shocks and disruptions to business confidence arising out of war, health-related restrictions, logistics challenges and adverse macroeconomic conditions all present general business challenges in the short term.
Our strategy is to build on our core business capabilities in Food & Drink and Logistics & Infrastructure through active engagement and strategic alignment with key customers, efficiency enhancing capital investment projects and selective acquisitions. Core capital investments in our terminal, cranes and warehousing at Kingston Wharves are designed to expand capacity, gain market share and drive efficiency in our logistics businesses.
Investment in food grade packaging lines, information technology systems, efficiency and hygiene, and health and safety are all expected to bolster the Food &Drink Division in the months ahead.
Based on our acquisition strategy, we will continue to identify other logistics services that support trade with the Caribbean, and Food & Drink businesses in markets that present definite new growth opportunities for the Group.
With shareholders’ equity of $18.4 billion (an increase of 9% relative to the prior year) and cash and investments of $10.9 billion, we believe that the JP Group has the balance sheet strength to support this strategy.