Food and ethanol producer, Jamaica Broilers Group (JBG), expects an energised financial year having secured a market for its ethanol production.
Concurrently, JBG expects to break even on its ‘US$10 million’Haiti investment by November.
It follows on a two per cent reduction in annual profit at J$936.2 million for the period ending April 2012 due to higher feed costs affecting its poultry division, a J$200 million hit from its insurance investment and reduced ethanol sales.
Last week the group announced that it secured contracts that would hike ethanol production volumes by 200 per cent.
“The increased business is mainly attributable to favourable developments in market conditions which range from reduced cost of Brazilian hydrous ethanol and increased price of fuel grade ethanol in the USA,” said JBG in a market filing with the Jamaica Stock Exchange.
The ethanol division posted flat sales of J$1.19 billion for its financial year just ended.
The doubling in volumes would represent the first major jump since the industry stalled three years ago. JB Ethanol sales hit J$7.3 billion in 2009, then plummeted to J$3.6 billion in 2010.
JBG secures raw material contracts from Brazil and sells the finished fuel grade product to the US. However, the price for raw material – hydrous alcohol from Brazil – hit a record high, negatively impacting Broilers’ profit margin in the process.
Meantime, JBG president Chris Levy has described the poultry group’s performance as “basically flat”.
“If it wasn’t for ‘mark-to-market’ we would be in a considerable better position than last year,” said Levy referring to the effect of the fair value accounting on an overseas investment.
“Basically, an investment that we made in Atlantic United Insurance Company (AUI), that investment lost J$200 million,” said Levy. AUI is incorporated in St Lucia with business offices in Cayman Islands.
The group made operating profit of J$2.16 billion. In the three main operating segments, the Best Dressed Foods division earned J$1.01 billion or 17 per cent less than a year ago, ethanol made nearly a third less profit at J$62.7 million, but Hi-Pro/Ace division increased profit by 25 per cent to J$1.12 billion.
JBG operates in Jamaica, United States, Cayman, St Lucia and Haiti.
Levy said that despite the current loss for its Haiti operations at over J$100 million for the year, it expects to break even before the year closes.