Date: August 14, 2019
Jamaica Producers Group Limited (JP), for the six months ended June 30, 2019, experienced a 9% increase in revenue to total $10.16 billion compared to the $9.29 billion reported in 2018. The company posted second quarter revenue of $5.37 billion a 12% increase on 2018’s $4.81 billion.
The Group mentioned that, “During the second quarter, JP completed the sale of 30% of JP Snacks Caribbean Limited, the holding company for the JP snack food operations (which includes the JP St Mary’s brand) to Wisynco Group Limited (‘Wisynco’) for approximately $740 million. We expect sales growth to arise from more streamlined distribution and, importantly, from ongoing new product development in tropical snacks.”
The Food & Drink Division contributed a 9% increase in revenue to total $5.95 billion relative to the $5.46 billion reported in 2018. Management noted that, “During the second quarter and year-to-date, the Division benefitted from a solid result in our European juice business, improved yields on our banana farms in Jamaica and growth in regional consumer and travel retail markets in which our JP St Mary’s and Tortuga brands trade.”
Logistics and Infrastructure increased 10% year over year to total $4.21 billion (2018: $3.83 billion). JP stated that, “During the second quarter, Kingston Wharves benefited from growing volumes of project cargo as well as bulk, breakbulk and automotive shipments to Jamaica and the region.”
The Corporate Services division earned $44.51 million relative to $51.24 million in 2018, a 13% decrease.
The cost of sales for the six months increased by 3% to total $6.65 billion compared to $6.43 billion reported for the comparable period in 2018. As a result, Gross Profits increased to total $3.50 billion, a 23% growth on the $2.85 billion documented in 2018. Gross profit for the second quarter amounted $1.85 billion compared to $1.52 billion booked for the same quarter of 2018. Other income increased to $162.68 million, a 6% growth relative to $153.45 million booked in the prior corresponding period.
JP’s marketing, selling and distribution expenses rose 12% to close at $1.83 billion, this compares to $1.64 billion booked a year earlier. JP also recorded a share of profit in joint venture and associated company of $5.83 million, relative to profit of $33.02 million in the previous year.
Finance cost was reported at $156.21 million for the period relative to the $187.98 million reported in 2018. This resulted in a profit before taxation of $1.68 billion for the period (2018: $1.21 billion). Profit before tax for the second quarter totalled $1.02 billion versus $739.11 million reported for the same quarter of 2018.
The company incurred tax charges of $341.85 million (2018: $317.78 million). Consequently, Net Profit for the period rose 50% to $1.34 billion (2017: $896.43 million). Notably, net profit attributable to stockholders totalled $629.29 million; this compared to $414.59 million a 52% rise. Net Profit attributable to shareholders for the quarter climbed 52% to total $398.91 million relative to the $262.97 million 2018.
Earnings per share for the period amounted to $0.56 (2018: $0.37). EPS for the quarter amounted to $0.36 (2018: $0.23), while the twelve-month trailing earnings per share amounted to $0.92. The number of shares utilized in the computations amounted to 1,122,144,036 units. JP stock last traded on August 13, 2019 at $28.66.
The Group highlighted that, “Our food and 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 diaspora, Northern Europe and the full range US cruise and stopover tourist destinations in the Caribbean, Mexico and Florida.”
JP further added, “Our logistics businesses, also operating in Europe and the Caribbean, handle a wide range of cargo types and service a large number of origin and destination markets. Services provided range from freight forwarding to stevedoring, terminal operations, cold storage and logistics. We view the diversity of our business as a strength. We are of the view, however, that emerging forces could test the resilience of our business model in the months ahead. These include increasingly volatile global exchange rates and protectionist movements that may dampen global trade and, in turn, affect consumer and business confidence.”
Balance Sheet Highlights:
As at June 30, 2019, the company’s assets totalled $37.89 billion, 12% more than its value of $33.76 billion a year ago. This increase in total assets was due largely to increases in ‘Rights-of- use assets’ and ‘Securities Purchased Under Resale Agreements’ which amounted to $1.53 billion (2018: nil) and $5.23 billion (2018: $4.25 billion), respectively.
The company ended the period with equity attributable to equity holders of the parent in the amount of $13.49 billion relative to $11.64 billion in 2017. The company now has a book value per share of $12.02 versus $10.37 in 2018.
Management stated, “Under International Financial Reporting Standards, the gain associated with the sale of shares in JP Snacks Caribbean Limited to Wisynco is directly credited to JP shareholders’ equity and is not reflected in the results shown in the Group Statement of Profit or Loss. This gain (which amounted to $575 million) contributed to a $1.4 billion, or 11% increase in JP shareholders’ equity since the start of the year.”
Analyst Certification -This research report is for information purposes only and should not be construed as a recommendation. 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.
