Jun 2011 Financial News

JP to inject gains from GK shares into expansion programme

Jun 12, 2011

Having offloaded approximately $6 million worth of shares in GraceKennedy (GK), Jamaica Producers Limited (JP) is looking to use the funds and capital gains from the transaction in a number of projects this year.

The disclosure was made on Friday at JP's annual general meeting (AGM), held at the company's Oxford Road offices. Jeffrey Hall, group managing director, said the sale of shares is in line with the company's objective of putting its financial assets to work.

"We have made a sale of shares in Grace to finance our wider capital and expansion programme over a period of time," Hall told Sunday Finance. "The major thing is that our critical focus, having established what we consider to be a platform for growth, is we intend to shift some of our passive investments in shares and other securities, into active operating investments and we are focusing on two broad areas: One is our specific food businesses and we are also focusing on opportunities that leverage our existing underlying core assets," he said.

Among the investments is the Mavis Bank coffee factory, which is being divested by Government. Hall confirmed that the company is in talks with the government to purchase the factory facilities, but would not say at what cost and whether JP would fully integrate the production and sale of coffee into its operations.

"The Government of Jamaica is privatising the Mavis Bank coffee factory and the initial transaction is the purchase of that factory. Obviously we have to, as we have always done in all of our new businesses, ask ourselves where is the best place to operate along the chain from growing all the way to operating in the market to value added. We will do this if and when we get into the coffee businesses. But in the first instance the transaction of which we speak is to purchase the factory only," Hall told Sunday Finance.

He however told shareholders at the AGM that the company is in the process of assessing investments at various stages, including internal capital projects such as the 'fresh micropulse' project which would cost the company approximately $100 million.

"The projects that we have available for investment are at various stages. Some are in an active late stage like Mavis Bank and some of them are in the very early stages. And some of them are internal capital projects," Hall said.

Hall also unveiled one of JP's newest initiatives, its branded super sized pineapples, which are now available in the supermarkets. He said the company would do for the pineapple market what it has done for ripe bananas. The fruit is now an official part of JP's Simply Fresh line.

The investments have so far paid of for the JP Group, which recorded $302 million profit for year ended December 31, 2010, a 44 per cent improvement over the $209.7 million reported in 2009. JP Europe, led by its Hoogesteger fresh juice business contributed 77 per cent of the results, JP Tropical contributed 20 per cent and JP Corporate, three per cent. JP spent $146.9 million in 2010 on new filling and packaging equipment for the plant in Europe in an effort to boost growth and operational efficiencies.

In the JP Tropical division, business from ripe bananas grew 23.7 per cent following the "Peel the Benefits" campaign launched by the company during the year. However, overall segment revenues showed a 2.2 per cent decline, primarily as a result of the discontinued operations in Honduras. Absent this, revenues would have been up 10.3 per cent.

The JP Corporate segment, which comprises income from interest and investments, recorded $82 million in profit, up 76.5 per cent over 2009. Profit growth in this segment was driven by the gains realised from equity investments. At the 2010 year end, the segment manages $1.9 billion of non-current investments and $1.14 billion in short term investments and Group cash holdings.


Source:
BY ALICIA ROACHE
roachea@jamaicaobserver.com
Sunday Finance reporter
Jamaica Observer
Sunday June 12, 2011

http://www.jamaicaobserver.com/business/JP-to-inject-gains-from-GK-shares-into-expansion-programme_8993589#ixzz1PAKYkrHw