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Profit up 80 per cent at Jamaica Producers despite revenue fall

Jamaica Producers Group earned consolidated revenues of $21.0 billion for the year ended December 31, 2020. 

Revenues were down two per cent, primarily due to the impact of the COVID-19 pandemic, but net profits were $3.7 billion of which net profit attributable to shareholders was $2.2 billion, an increase of 80 per cent over the prior year. 

The Group had shareholders’ equity of $16.1 billion at year-end, reflecting an increase of 17 per cent relative to the equity of the Group at the beginning of 2020. 

In fourth quarter results, management stated, “We expect new attractive investment opportunities in our core business lines to become available to the Group in the current trading environment.” 

“…we are confident that the country can generate growth and we consider ourselves well positioned to participate in this important opportunity.”

– Jamaica Producers management in quarterly results

It said the improved results in part reflect the decision to realise gains from the partial sale of the company’s interest in SAJE Logistics Infrastructure Limited, a real estate and investment company.

This was done to put the Group in a strong position to seize prospects that align more directly with strategic priorities. 

The Logistics & Infrastructure Division accounts for the larger share of the Group’s net assets and, in turn, its profits. 

The division generated 2020 profit before finance cost and taxation of $2.9 billion, a 10 per cent reduction over the prior year. 

Divisional revenues of $8.3 billion were down 6 per cent relative to the prior year. 

During the year, Kingston Wharves experienced reduced volumes of cargo to Jamaica and other tourism-dependent Caribbean markets.

Management said, “We observed reduced trade in consumer goods, as well as the deferral of some domestic capital purchases.”

This was only partially offset by growth in aspects of our broader trans-shipment business and improved profitability of the company’s logistics service. 

JP’s Food & Drink Division is the largest contributor to the revenues of the Group. The division experienced modest revenue growth of one per cent to $12.7 billion but faced a reduction of profits. 

Profit before finance cost and taxation amounted to $101 million for 2020. 

Management said it expects trading conditions to improve as lockdowns and other restrictions associated with the pandemic are eased in the second half of 2021. 

They noted that all of the company’s Caribbean business succeeded in identifying and developing new opportunities for growth in North America. 

“Although this was not sufficient to overcome the setbacks from COVID-19, the bold initiatives to pivot to these large new commercial opportunities now present a constructive platform for long-term profitable growth.”

Tortuga International secured important new listings in the US market for an extended range of cakes using spirits such as bourbon and whiskey alongside the traditional rum cake. 

JP Snacks Caribbean experienced growth in West Indian and Latin diaspora markets in the United States. JP Farms also showed steady export growth of bananas to the Canadian market. 

Management concluded, “The COVID-19 pandemic has definitely had a short term adverse impact on parts of our portfolio of food businesses, but the business as a whole remains structurally sound and capable of adjusting well and returning to sustainable long-term earnings growth.

“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 … As Jamaica’s policies towards trade and investment become more flexible and open, we are confident that the country can generate growth and we consider ourselves well positioned to participate in this important opportunity.”