Jamaica Broilers reports 21% growth in sales but 9% reduction in profit due to increased raw material costs

Jamaica Broilers Group

The Jamaica Broilers Group is reporting an 8% increase in gross profits to $1.12 billion for its second quarter ended October 29, 2011. This is an increase from the $1.04 billion reported last year. The results were released December 12, 2011.

The Jamaica Broilers according to The Gleaner controls about 40 per cent of the local chicken market, processing about 12,000 chickens per hour, or about 100,000 per day.

Its closest rival, Caribbean Broilers, handles up to 80,000 birds per day, taking control of about 35-40 per cent of the market.

The Jamaica Broilers Group saw a $15 million or 9.49% reduction in profits to $158 million compared to $173 million reported last year.

Increased Sales, But Higher Raw Material Costs
The Jamaica Broilers Group Ltd is reporting a $1.0 billion growth in sales, a 21% increase from $4.8 billion to $5.8 billion. However they are lamenting a 72% increase in the cost of one of their primary raw materials, corn, which saw an increase from US$4.50 per bushel last year to US$7.75 in this quarter. To offset this increase, they consequently increased their selling prices but were unable to cover the increase due to a reduction in poultry sales, increased fuel cost and higher levels of imported poultry.

Other Expenses
The results for this quarter also include an expense of $48 million relating to mark-to-market write down for investments in a subsidiary, due to “volatility in the global financial markets”.

There was also a $4 million (0.5%) increase in Distribution and Administration costs compared to the previous quarter due to inflation and costs related to expanding to Haiti and the wider Caribbean.

One improvement was seen in the reduction of finance costs which declined $22 million to $77 million corresponding quarter last year due to a reduction in interest rates.

For the six month period, the Jamaica Broilers Group Ltd net profits fell 27.12% to $286.13 million despite an 18.3% rise in revenue to $11.6 billion. Jamaica Broilers Group Ltd recently declared a dividend of $0.06 per Share, Payable on December 2, 2011 to Shareholders on Record as at November 15, 2011.

Continued Innovation
Despite the reduction in profits however, the company continues to innovate and just recently launched its line of Free Range Chickens, refering to birds that have access to the outdoors, spending four hours per day outside.

Confident that its latest product will do well on the local market, vice-president of Best Dressed Chicken Operations, David Mair, says the strategic move to launch a product of this kind is moving in sync with a growing worldwide niche. Additionally, he noted it as a move to offer consumers another option under the company’s brand.

The Best Dressed Free Range Chickens are hormone free, have an all grain diet, are hand fed, have a longer growing cycle, and are raised in a low-stress environment.

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