Seprod prospers despite poor economic conditions

Chairman of the Seprod Group, Desmond Blades (left) and managing director, Byron Thompson discuss the contents of a document during the company's annual general meeting at the Jamaica Conference Centre, downtown Kingston on Monday. - Norman Grindley

CHAIRMAN OF the Seprod Group, Desmond Blades, said that although strong competition in the market forced the prices of many of its products down during the last financial year, the company saw a 32 per cent increase in its operating profit.

"This is a commendable achievement," said Mr. Blades, in the company's 2000 report to shareholders released at the annual general meeting at the Jamaica Conference Centre, downtown Kingston earlier this week.

Mr. Blades, although noting that a major concern was "that there was little or no growth in the economy" last year, said there were encouraging signs for the future.

"By April 2002," he said, "we hope the long-awaited legislation would have been introduced that will eventually see the complete removal of tax on dividends paid by public listed companies."

In addition, said Mr. Blades, the authorities have set a 14 per cent interest rate target to be achieved by year end, and with the Net International Reserves at an all time high, the likelihood is that the target will be achieved.

Inflation should continue to inch downward and move closer to that of Jamaica's trading partners, said the Seprod chairman, suggesting that "if these economic fundamentals are achieved, the prospect for sustained investment and economic growth would be good. Given this scenario, the Group should continue to perform well."

Group managing director and chief executive officer, Byron Thompson, said that despite "little or no real growth in the economy" during the year, the Group recorded net sales of $2.165 billion, an increase of $264 million or 13.9 per cent over the figures for 1999. In the process, the Group also increased its market share, although at a slightly lower gross margin.

Core business activities generated operating profit of $108.9 million, compared with $82.5 million in 1999. Mr. Thompson said the increased profit was attributed mainly to the implementation of various cost reduction strategies, increased labour productivity and earnings from Jamaica Edible Oils and Fats Company. Seprod acquired Jamaica Edible Oils in June 2000, following its May 2000 acquisition, in association with the Musson Group, of 50 per cent of the ordinary share capital of Facey Commodity, which included the merchandise and pharmaceutical businesses, for about $400 million.

Mr. Thompson said net profit attributable to shareholders declined marginally from $361.3 million in 1999 to $359.4 million last year and resulted in a corresponding marginal decline in earnings per stock share from $1.31 to $1.30. The company's net worth increased from $7.13 per share to $8.33 per share, and according to the managing director, the other financial ratios - liquidity, leverage and profitability - show that the Group continued to demonstrate good financial strength.

He said Seprod's manufacturing subsidiaries performed well both in terms of revenue and profit because of the introduction of new technology, increased efficiency and increased labour productivity in the plants. The merchandise subsidiary also showed solid growth in sales and profitability, an improved position attributable to a restructuring exercise during the second half of the year, a stronger customer base and the introduction of a range of new third party products.

Seprod has continued the improvement of its plants and equipment, spending about $60 million during the year, of which $20 million have been capitalised, Mr. Thompson said. The planned replacement of the company's deodoriser, the main item of the capital expenditure for the year, has been postponed and will now start during the course of this year for completion by early 2002, he said.

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