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Jamaica Broilers - battered but not bowed

Published on 21 July, 2006, Last updated at 08:33 GMT

21st July, 2006: JAMAICA - The Caribbean's largest broiling operations, Jamaica Broilers, had a rough year in 2005, largely due to the hurricanes that have bedeviled the region and efforts to inject a better performance from its fish division.

A fall in profits but..

For the year ended April 29, 2006, profit after tax attributable to shareholders came to J$489 million, a significant fall-off from the J$722 million recorded in the previous year.

However, back in 2005, Jamaica Broilers' profits were boosted by a US$2 million settlement in its lawsuit brought against the majority partner of EAL/ERI Co-generation Partners LP, and its parent company and the sale of some investment property, namely the Hope Road plant for J$111 million. It was also compensated by business interruption claim proceeds, which came to J$210 million. It must be made clear here that this cannot be considered exceptional income.

Revenue of almost J$10 billion

Total revenue for the period under review was close to the J$10 billion mark, an 8 per cent increase on the previous year's J$9.14 billion.

Distribution costs increased from J$239 million to J$322 million. Many Jamaican companies have struggled with increasing operational costs, with utilities proving to be a decisive factor here. Jamaica Broilers is no exception although the group did a good job containing administrative and other expenses, which moved marginally from J$1.48 billion to J$1.5 billion.

A jump in net assets

Net assets employed came to J$4.9 billion, a J$1.1 billion increase on the J$3.8 billion posted for the year ended April 2005. For the year ended April 2006, Jamaica Broilers saw a notable increase in its fixed assets, which moved from J$1.7 billion the previous year to J$2.6 billion for the year under review. The group has delivered on shareholder value as a result of bringing to book the gains made from the Cogeneration settlement. Shareholder value has moved from J$3.2 billion in the previous year to J$4.3 billion This now means that shareholders can now see close to a dollar a share.

Boost in pension fund surplus

Jamaica Broilers saw its pension fund surplus grow from J$218 million in the previous year to J$298 million for the current year-end. However new international accounting standards means that this J$80 million cannot be booked to the profit and loss account.

Despite losses fish operations gain momentum

Jamaica Broilers' operations consists mainly of poultry, feed and farm supplies, and its fish business. Their poultry operation is the key revenue earner. Of the J$10 billion revenue figure posted for the year, the poultry operation contributed J$5.5 billion. Feed and farm supplies revenues for the year came to J$3.1 billion. The fish operations has moved up a gear or two. Last year, it posted revenues of J$347 million. For the period under review, that figure has increased to J$520 million. With the hurricanes playing havoc on the business over the last year, a secondary revenue stream would seem to be the answer. However, despite an increase in revenues, the fish operations made a loss of J$126 million for the year ended April 29,2006. As a result the decision has been taken to stop selling fish products to fast food chains such as KFC and Burger King.

Now with a J$1 billion in cash, Jamaica Broilers buoyant liquidity position means that it is in a position to look at alternative investments.

Speaking with Caribbean Business Report, Jamaica Broilers' President and CEO, Robert Levy, said: "For the upcoming first quarter we expect some very good performances from our various divisions, particularly agriculture."


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