With freight costs rapidly increasing, escalating inflation and rising commodity prices, regional manufacturing and distributing food conglomerate Seprod, headquartered in Jamaica, has seen some contraction of its business.

The ongoing COVID-19 pandemic continues to reduce revenues and profits on many companies including Seprod.

Speaking at today’s (September 20) AGM held virtually, Seprod’s CEO Richard Pandohie said last year saw the group delivering its best performance. However, this year has been challenging with global supply chain disruptions affecting raw and material packaging supplies for its factories. It has also faced supply constraints for key finished goods from some of its most important principals.

“Additionally the prices for key commodities have skyrocketed to multi-year highs which have been compounded by shipping costs of more than 300 per cent. For example, one of the raw materials we have to bring in cost us US$3.9 million per container last year. This year, that same quantity in the same container costs US$8.1 million. The impact on cash flow is significant not to mention that we are simply unable to pass on this level of increase to consumers whose disposable incomes are under pressure. I anticipate that these challenges will continue for the rest of the year and into Q1, 2022,” he began.

“However we are cautiously hopeful that as the global economies reopen in a more balanced way, some of these costs will reset to more reasonable levels,” explained Pandohie.

For the six month period ended June 2021, the Seprod Group achieved revenues of J$19.8 billion, an increase of 7 per cent on the corresponding period of 2020. However, its key sales declined with net profit coming in at J$1.2 billion, a drop of 7 per cent on the same period for 2020. Seprod has seen its costs rise higher than its price-to-trade.

“Our results are not where we want them to be, but the trajectory of the business has not changed. Seprod continues to be a solid blue-chip stock giving capital appreciation and good dividends. Over the last six years to December 31, 2020, our normalised earnings per share have grown by 62 per cent. The Seprod share price has moved from J$13.70 to J$64.70. The company has increased dividend payments with a cumulative payout of J$8.50 over this period. We have come a long way in a short time,” said Seprod’s CEO.

Chairman of the Seprod Group, P.B. Scott declared: “There is no doubt about it, our future is in exports. While exports only represent 10 per cent of Seprod’s manufacturing, the biggest structural change is mentally that is what we are going for. We are setting ourselves up to facilitate continued sustainable export growth. We have to grow in markets outside of Jamaica.

“The capital expenditure we have done over the last four years is setting the foundation for us to be very competitive. We now have first-rate facilities that are comparable to the best dairy facilities in New Zealand. From an infrastructural point of view, there is no reason why we can’t be competitive. Our branding is getting better and more distinctive. Our value proposition in many markets is improving.”

Byron Thompson and Melanie Subratie were duly re-elected as directors of Seprod. Price Waterhouse Coopers will continue as the Group’s auditors for the ensuing year.