Over a year ago, Seprod Limited struck a deal with Musson Group to acquire its consumer goods distribution operation. The results are now in.
At year-end 2019, revenues from continuing operations for Seprod were J$34.35 billion, an increase of J$11.85 billion or 53 per cent year on year.
In total, net profit from continuing operations for the manufacturing and distribution company in 2019 was J$1.99 billion, an increase of J$510 million or an increase of 34 per cent on 2018’s figure.
However, losses attributed to Golden Grove sugar factory had a significant impact on Seprod’s financial performance.
Overall, the acquisition of the Facey Consumer Division in Q4 2018 and an increase in the export business drove profit over the 12 months ended December 2019, directors said in a statement attached to preliminary financials.
Under the deal with Musson, Seprod acquired warehousing space and real estate at 53 and 61 Newport Boulevard, Newport West, Kingston, as well as some food brands. The deal was expected to lift earnings and cash flow.
Directors stated that the increase in profit was due to “efficiencies gained from internal reorganisations of the ingredients and the distribution businesses, and from the consolidation of the dairy business.”
During 2019, management closed the Golden Grove sugar factory. Losses from this discontinued operation (inclusive of redundancy payments and estimated impairment losses) amounted to J$814 million.
Directors said in the preliminary year-end report that the closure is expected to positively impact the Group’s return on equity and its cash flows in the future.
Results were altogether impacted by the one-off costs related to the Golden Grove closure and to the dairy consolidation.
In 2016 Seprod purchased a dairy-processing factory in Bog Walk from Nestlé and then closed its own factory in St Thomas and integrated operations in Bog Walk.
The year 2019 has been one of consolidation for the Seprod Group directors said in the year-end report, making the point that the Group was not positioned “to generate sustainable value creation for 2020 and beyond.”