By Ashford W. Meikle, Staff ReporterTHE SEPROD Group has posted a respectable 20 per cent increase in sales for its audited financial year ending December 31, 2003. The group's turnover increased from $2.37 billion to $2.8 billion.
A Jamaica Stock Exchange listed company, Seprod manufactures and exports cooking oils, margarine and corn-based products. Some of its more popular brands include the Chef, Uncle Sam and Lider brands of oils, Chiffon and Lider and Dairy Maid margarines and the Daffodil and Pronto line of cornmeal products.
REVENUE GROWTH
To its credit, the company has maintained a tight lid on cost of sales, which also increased by 20 per cent. This was achieved in spite of a 14.1 per cent inflation rate and a 14 per cent depreciation of the Jamaican dollar between January and December last year. Based on the 20 per cent increase in cost of sales, gross profit increased by 19 per cent, from $474 million to $566 million.
Seprod has proven to be increasingly efficient at maintaining a cap on expenses. Combined, administrative and operating expenses and distribution costs had a respectable 12 per cent increase, moving from $359 million in 2002 to $403 million in 2003. With a 14 per cent increase in other operating income and the controlled administrative expenses, the group was able to record a 36 per cent increase in operating profit, which appreciated from $142 million to $193 million.
There was a 53 per cent increase in finance income. However, this was not enough to halt the three per cent decline in net profits after tax (NPAT). NPAT was reduced because of the decline in profits from associated companies.
In his report, Group Chairman A. Desmond Blades attributed the decrease to "the disappointing performance by the recently acquired Coca-Cola manufacturing facility." Now that the company has decided to cease manufacturing the drink and focus on importing instead, the situation could be reversed next year with the elimination of overheads.
Last year, the earnings per share declined two per cent over the figure for the previous year; In 2002 the EPS was 84 cents while in 2003 it dropped to 82 cents.
In spite of the challenging past year, If the unaudited results of the group for the period ending March 31, 2004 are anything to go by, Seprod ought to return a stellar performance this year.
Group sales are up by 32 per cent, increasing to $833 million from $631 million. It has returned a 36 per cent increase in its gross profits while operating profit has increased by 129 per cent. The increase in operating profit is attributable to the minuscule increase of seven per cent in administrative and distribution costs as well as a 205 per cent increase in other operating income.
With a 82 per cent increase in finance income and a 75 per cent increase in profits from related companies, Seprod's NPAT grew to $129 million from $70 million, a 84 per cent increase.
There are a number of factors at play which auger well for Seprod. The group has invested in new plant machinery, notably a deodoriser unit. According to Group Managing Director Byron E. Thompson, "with this unit in operation we have been producing better quality finished products, achieving reduced energy cost, improving yields on raw material usage and increasing labour productivity."
The company has also started pre-certification activities for the Hazard Analysis Critical Control Point (HACCP) to prepare for certification in 2004. In May this year the company in a 50/50 partnership with the Musson Group acquired the Xerox operations in Aruba and Curaçao. This diversification of its operations will no doubt provide valuable hard currency earnings.
Seprod will hold its 65th annual general meeting on August 9 at the Jamaica Conference Centre.
