JBG reports 28% decrease in first quarter net profit

September 13, 2021

Jamaica Broilers Group (JBG) for the three months ended July 31, 2021 reported total revenues of $17.61 billion, a 40% increase on the $12.58 billion reported in 2020. Total revenue was broken down as follows. Of total revenues:

    •  The Jamaica Operations contributed $9.90 billion, a 41% increase compared to $7.01 billion for the same period of 2020. The Company noted that the Jamaican Operations were impacted by, “rapid increase in international grain prices and shipping costs.”
    • US Operations recorded an increase of 42% to total $7.28 billion relative to $5.11 billion last year. According to the company, “Our US Operations reported a segment result of $580 million, which was an 84% increase over the prior year’s result of $316 million. This increase was primarily driven by the increased
    • production and sales in the Best Dressed Chicken line of products. The operations have also seen an increase in the sales of feed and fertile eggs, signaling a strong rebound from the effects of the pandemic experienced in the previous year.”
    • Haiti Operating contributed $425.71 million, a decline of 8% when compared to $462.65 million. “Haiti continues to experience economic and political instability which continues to impact our Haiti Operations,” according to JBG.

Cost of Sales rose by 46% to $14.02 billion from $9.63 billion in 2020. As such, gross profit for the first quarter reflected an increase of 22% to close at $3.59 billion versus $2.95 billion booked for the corresponding period in 2020.

Other income decreased 44% from $271.33 million for the first quarter of 2020 to $150.65 million in 2021. Distribution costs increased 35% to close at $631.17 million relative to $467.21 million recorded for the prior year’s comparable period, while administration and other expenses rose by 25% to $2.38 billion (2020: $1.90 billion). Management noted, “During the prior year, at the onset of the COVID-19 pandemic, the company took aggressive steps to minimise the financial impact from the drastic loss of revenue which the company was experiencing and anticipating. These steps involved a reduction in salaries paid to staff and a proactive curtailing of variable expenditures which resulted in lower overheads during that quarter in the 2020/2021 financial year.”

Operating profit for the period decreased by 15%, totalling $725.09 million relative to $851.09 million last year.

JBG reported a 7% decrease in finance costs to $329.97 million relative to $356.72 million in 2020.

Profit before taxation increased for the period amounting to $395.12 million (2020: $494.38 million). Tax charges for the quarter totalled $119.64 million (2020: $111.73 million). As such, net profit amounted to $275.48 million (2020: $382.64 million).

JBG reported that, “This decline is primarily due to a 13% reduction in our gross margin ratio due to the rapid increases experienced procuring raw materials during the quarter due to the continued impact of the COVID-19 pandemic. Despite the exponential rise in raw material and shipping costs, the company has been taking steps to manage costs while not passing on the full increases to our customers.”

Total comprehensive income for the first quarter amounted to $232.29 million relative to $628.77 million. Net profit attributable to shareholders amounted to $290.33 million relative to $414.06 million booking for the comparable period in 2020.

Consequently, earnings per share totalled $0.24 relative to $0.35 booked for the first quarter of 2020. The trailing twelve months EPS amounted to $1.84. The total shares used in our calculation amounted to 1,199,276,400 units. Notably, JBG closed the trading period on September 10, 2021 at a price of $32.93 with a corresponding P/E of 17.86 times.

Balance sheet at a glance:-

Total assets amounted to $52.92 billion as at July 31, 2021 relative to $44.03 billion a year prior. The increase in total assets was due mainly an increase in ‘Inventories’ and ‘Biological assets’ which rose 45% and 28%, respectively to $12.76 billion (2020: $8.77 billion) and $11.48 billion (2020: $8.97 billion), respectively.

Shareholder’s equity amounted to $18.99 billion (2020: $16.56 billion) with a book value per share of $15.83 (2020: $13.81).

Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view (s) expressed by that research analyst in this research report.

Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.