Home' Trinidad and Tobago Guardian : September 28th 2017 Contents Jamaica Broilers Group
Ltd ( JBG) is principally
active in the poultry and
allied agricultural busi-
In the irst quarter of iscal
2017, it sold its ethanol plant (for a
combination of cash and a seller's
loan) and focussed its efforts on
increasing the pro itability of its
Haitian and Jamaican operations.
Also, in the USA, its 2016 acqui-
sition of Welp Hatchery, which
was renamed International Poul-
try Breeders, Iowa, enhanced its
revenues in that market.
Let us now review JBG's results to
April 29, 2017.
Total assets advanced by 12.7
per cent to close at J$27.47 billion
from J$24.38 billion.
Long-term assets closed at
J$10.94 billion from J$11.93 billion.
Within this category, property,
plant and equipment contracted
to J$7.06 billion from J$10.5 bil-
lion. The largest contraction was
recorded under plant, machin-
ery and equipment, which fell to
J$3.46 billion from J$6.69 billion;
this reduction mainly reflected the
sale of the ethanol plant.
A new item, loans receivable of
J$2.05 billion, represents the long-
term portion of a loan which is re-
payable in June 2023; the current
portion is J$501 million, which
included interest receivable of
almost J$159 million. As part of
the sale agreement for the etha-
nol facility, this loan was granted
at 8 per cent interest and annual
principal repayments are set at
Post-employment bene its as-
sets climbed to J$691.1 million
from J$180.1 million. This repre-
sents the excess of the fair value of
the pension plan's assets of J$4.27
billion over the present value of its
obligations of J$3.58 billion. The
plan owns shares in the company's
stock valued at J$204 million.
Current assets rose to J$16.52
billion from J$12.45 billion. Within
this grouping, inventory of J$5.16
billion was the largest component.
At the gross level, spares and in-
ventories for resale increased to
J$3.1 billion from J$2.5 billion. In
contrast, grain and feed ingredi-
ents declined to J$1.2 billion from
Biological assets expanded to
J$4.46 billion from J$2.95 billion.
The entire increase was shown
under poultry, which climbed to
J$4.4 billion from J$2.9 billion.
The cattle component was little
changed at J$39 million.
Receivables advanced to J$3.57
billion from J$3.28 billion. Net
trade receivables closed at J$2.44
billion from J$2.37 billion. How-
ever, prepayments climbed to
J$453 million from J$322 million
while sums due from contract
farmers slipped to J$272 million
from J$287 million.
The group's holdings in invest-
ment funds are classi ied as inan-
cial assets at fair value through
pro it or loss; this value improved
to J$761 million from J$701 million.
Cash and short-term invest-
ments expanded to J$2.0 billion
from J$1.2 billion.
The largest component, cash
at bank and in hand, climbed to
J$1.67 billion from J$0.79 billion.
Among other variables, in 2016,
the acquisition of the Welp Hatch-
ery consumed J$982.8 million.
In contrast, in 2017, the cash
proceeds from the sale of the eth-
anol plant and ERI Services (St
Lucia) contributed J$461.9 million
to its coffers.
Total liabilities increased to
J$13.05 billion from J$11.28 billion
or by 15.7 per cent. Total borrow-
ings climbed to J$7.70 billion from
J$7.08 billion. Long-term borrow-
ings rose marginally to J$5.2 bil-
lion from J$5.1 billion.
Current borrowings grew to
J$2.50 billion from J$1.98 billion.
Here, the current portion of long-
term debt declined to J$554.1
million from J$632.2 million. In
contrast, bank overdrafts and
other short-term borrowings in-
creased to J$1.9 billion from J$1.3
Current payables soared to
J$4.41 billion from J$3.21 billion.
Trade payables climbed to J$3.2
billion from J$2.0 billion. In addi-
tion, accrued charges increased
to J$759 million from J$550 mil-
lion. In contrast, "other" payables
declined to J$281.6 million from
Current taxes payable fell to
J$179.3 million from J$482.2 mil-
lion. On the other hand, deferred
income taxes increased to J$729.8
million from J$485.3 million. Con-
tributing to the latter was the in-
crease in the re-measurement of
the retirement bene it assets.
Total equity improved to J$14.42
billion from J$13.10 billion. Exclud-
ing non-controlling interests of
J$22.8 million, shareholders' eq-
uity closed at J$14.44 billion from
Retained earnings increased to
J$12.5 billion from J$10.33 billion.
The opening balance bene itted
from the current year's pro it of
J$2.23 billion along with the J$360
million of comprehensive income,
which related to the re-measure-
ment of retirement bene it assets.
The major reduction was J$420
million in dividends to stockhold-
ers. Reserves fell to J$1.17 billion
from J$2.06 billion. The princi-
pal reduction of J$835 million re-
flected the exchange differences
on translating foreign operations
along with J$56 million in realised
Share capital was unmoved at
J$765.1 million and the weighted
average number of shares in issue
was stable at 1,199,277,000; con-
sequently, the book value of each
share improved to J$12.04 from
April 2016's J$10.93.
Income, pro it
Revenues improved by 15.4
per cent to J$44.44 billion from
Meanwhile, cost of sales in-
creased by 15.8 per cent to J$32.6
billion from J$28.2 billion. These
changes resulted in gross pro it
rising by 14.3 per cent to J$11.85
billion from J$10.37 billion.
Contributing to the higher cost
of sales was the increase in the
value of inventories recognised as
expense, which climbed to J$23.9
billion from J$20.9 billion, or by
14.2 per cent.
In addition, fuel costs soared by
17.8 per cent to J$567 million from
Both distribution costs and ad-
ministration and other expenses
increased; the former rose to
J$1.58 billion from J$1.21 billion
while the latter registered at J$7.37
billion from J$6.13 billion.
Influencing these increases
were higher staff costs, which ad-
vanced by 20.8 per cent, moving
from J$6.96 billion to J$8.42 bil-
lion. Meanwhile, other expenses
climbed by 31.7 per cent to J$2.95
billion from J$2.24 billion while
outlays for trucking ended at J$1.27
billion from J$1.12 billion.
These changes saw operating
pro it slip to J$3.23 billion from
Finance income climbed to
J$379.4 million from J$159 million.
Following the granting of a loan
for the sale of assets, the major
contributor was interest income,
which moved from zero to J$165.3
million. In addition, foreign ex-
change gains improved to J$214
million from J$159 million.
Finance costs fell to J$647.2 mil-
lion from J$693.8 million. Helping
this result was lower foreign ex-
change losses, which contracted
to J$20 million from J$97 million.
However, in line with larger debt,
interest expenses rose to J$610.3
million from J$545.6 million.
Other expenses and amortisation
of debt inancing fees declined to
J$17 million from J$51 million.
These variations resulted in pre-
tax pro it improving to J$2.97 bil-
lion from 2016's J$2.77 billion.
The effective tax rate declined to
23.6 per cent from 24.3 per cent;
even so, the tax cost increased to
J$701 million from J$672 million.
This result translated to EPS of
J$1.86 compared with the previous
EPS from continuing operations
improved from J$1.76 to J$1.85
while EPS from discontinued op-
erations registered at J$0.01 com-
pared with a loss of J$0.31 in 2016.
Revenues from its Jamaican
operations increased by 12.5 per
cent, however, pro it contribution
declined by almost 20 per cent.
This adverse movement was influ-
enced by several factors.
The oversupply of protein prod-
ucts in the market helped sup-
press margins at its Best Dressed
Chicken division, which operates
in both Jamaica and the Cayman
Islands. The Hamilton's Smoke-
house segment also experienced
Over the period January to Au-
gust 2017, additional investments
were made in Best Dressed Feed
Mill so as to enable it to respond
to increased consumer demand.
Following the end of a two-year
drought, Hi-Pro Farm Supplies
bene itted from higher sales of fer-
tiliser, chemicals and equipment.
The USA operations registered
23 per cent revenue expansion
accompanied by a 26 per cent im-
provement in gross pro it. This re-
sult was helped by the acquisition
in 2016 of Welp Hatchery.
Although Avian Influenza is a
major threat to the US poultry in-
dustry, its USA operations remain
free from that danger.
At the Haitian operations, reve-
nues grew by 23.5 per cent while
pro it exploded by 271.5 per
cent. This result was driven by
increased production and sales
of eggs; higher production con-
tributes to greater ef iciencies
through the feed mill, hatchery
and general overheads. Increased
egg production will continue into
the current iscal period.
Q1 results to
Revenues for the irst quarter
grew by 14.7 per cent, moving from
J$10 billion to J$11.5 billion. On the
other hand, net pro its attribut-
able to shareholders declined to
J$197.7 million from J$400 million.
Consequently, EPS contracted
to J$0.165 from J$0.33.
All country segments recorded
top-line growth. At the Jamaican
operations, several one-off fac-
tors restrained pro it growth; the
rebalancing of poultry inventory
and third-party storage issues
contributed to higher distribution
costs. In addition, production vol-
umes were lower.
At Haiti Broilers SA, higher pro-
duction and sale of table eggs saw
revenues expand by 47 per cent
while pro it swelled by 61 per cent
to J$121 million. That company
now commands 30 per cent of the
local market compared with 22
per cent previously.
The US operations' main prod-
ucts are fertile eggs and baby
chicks. Here, revenues grew by
27 per cent while gross pro it im-
proved by seven per cent.
Share price and
JBG's share price closed at
J$14.36 on April 29, 2016. It sub-
sequently fell to a low of J$14.03
on October 28, 2016, from which
level it recovered and then ended
at J$16.97 on April 28, 2017. That
movement reflected a one-year
appreciation of 18.2 per cent. The
price then spiked to J$19.99 on
May 17, 2017, but traded at J$16.50
on September 20, 2017.
Dividends to shareholders im-
proved from J$0.26 for iscal 2016
to J$0.35 for iscal 2017. At the
recent price of J$16.50, the yield
is 2.1 per cent. That price also re-
flects a P/E multiple of 8.87 and a
price to book value of 1.37.
In next week's article, we will spotlight
the Insurance Corporation of Barbados Ltd
Thursday, September 28, 2017
JGB's Haitian operations record robust growth
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