Jamaica Producers innovates as profit slides
Chairman of Jamaica Producers Group, Charles Johnston.
Jamaica Producers Group (JPG) Limited is restructuring operations in response to the challenges of COVID-19.
“We took definite steps to restructure and reduce our cost base and at the same time, develop new sales channels – particularly for those segments of our business that were most dependent on travel retail and hospitality,” JPG’s chairman, Charles Johnston said in a statement attached to the company’s results the second quarter ended June 2020.
Jamaica Producers recorded net profit of $378.6 million during the review quarter, a 54 per cent decline compared to the $831.8 million in the comparative quarter of 2019.
Revenues for the second quarter ended June 2020 totalled $4.3 billion, down from $5.3 billion in the corresponding period last year.
Johnston said the performance of the group was adversely impacted by the COVID-19 pandemic.
Restructuring has produced some results so far, he indicated, citing increased sales of Tortuga rum cakes in e-commerce and US mainstream retail channels.
During the second quarter, the group experienced reduced volumes in shipping related to challenges in organising shipments (consolidated cargo) due to lockdowns in the US and the UK.
The company also saw deferred purchases of some classes of durable goods such as vehicles and heavy equipment and goods that directly service affected industries such as tourism.
Johnston said the response was to implement a series of measures and technological solutions to better facilitate the clearing and handling of cargo under the current conditions.
“We have also taken steps to reduce costs and maintain our strong competitive position in the market for the services we offer,” he outlined.
Over the medium term, Johnston said focus will also be put on improving specialised capability for handling a wider range of cargo types.
“This has led to business growth in the past and we expect this to continue,” the executive chairman stated.
The group operates internationally and many of the countries in which the group operates had their most severe health effects and lock downs associated with the pandemic during the reporting period.
The Logistics and Infrastructure Division generated a 2020 year-to-date profit before finance cost and taxation of $1.3 billion from revenues of $3.8 billion.
Divisional profits before finance cost and taxation were down 16 per cent relative to the comparable period in 2019.
The segment includes Kingston Wharves Limited, JP Shipping Services Limited (which operates logistics and shipping services between Caribbean ports and the United Kingdom) and a 32 per cent shareholding in SAJE Logistics and Infrastructure Limited (a property and investment holding company).
JP Food & Drink JP’s Food and Drink Division is the largest contributor to the revenues of the Group.
The division earned year-to date revenues of $5.8 billion, down three per cent relative to the first six months of the prior year.
Profits before finance cost and taxation for the division were $116 million, compared to $438 million in the prior year.
Johnston said that the COVID-19 pandemic “has had slightly different implications for each of our businesses and has affected their performance and the outlook for the remainder of the year in different ways.”
“Our food businesses have managed to maintain core sales to supermarkets for ‘take home’ consumption. However, our sales to food service channels, convenience or roadside channels (in the Caribbean), travel retail and the hospitality sector were adversely affected in the second quarter.”
Johnston said that these challenges are likely to continue during the worst of the COVID-19 pandemic, “but we do not believe them to be permanent in nature, and we remain confident that our largest customers remain committed to our product offerings.”