Fuelled by cash from disposals, JP gives generously to shareholders

Food and logistics conglomerate Jamaica Producers Group, JP, will pay out $224 million in dividends to shareholders in mid-January, its largest since 2015.

The distribution at 20 cents per share represents a yield of under 1.0 per cent on the stock price, which closed at $21.36 on Wednesday. The JP stock is trading off its January high of $28.50 but is doing better than when the pandemic was detected in March. The stock then fell to $15.

Sagicor Pooled Equity Fund, the single largest shareholder in JP, will receive around 10 per cent of the distribution, or $22.44 million.

“JP is continuing to pay dividends in line with the performance and the availability of cash to fund ongoing investments. The improved dividends are in line with the results of these variables,” said Managing Director Jeffrey Hall.

Jamaica Producers typically issues dividend once per year, each January, but this time the distribution will come from capital gains arising in part from the partial sale of Jamaica Producers’ stake in its snacks venture to Wisynco Group, rather than from ordinary income as would be done for normal dividends, Hall told the Financial Gleaner.

Wisynco acquired a 30 per cent stake in JP Snacks Caribbean Limited, maker of St Mary’s snacks, in a $720-million deal in 2019 under which it would also distribute the snacks. Jamaica Producers booked a gain of $565 million from the sale.

Jamaica Producers closed financial year 2019 with a decade-high cash haul of $1.4 billion, due to the snacks deal.

Hall said the increased dividend was not a response to COVID-19’s impact on the JP stock price, which is currently trading one-third lower than its January highs, but rather reflected the group’s improved performance.

“JP has been increasing dividends steadily for years prior to COVID-19, in line with business performance. JP’s overall business model, including harvesting the gains on strategic investments, has allowed us to continue to do this, notwithstanding the pandemic,” he said.

In the past four years, 2016 to 2019, Jamaica Producers declared 12 cents as capital distribution, 10 cents as capital distribution, 12 cents as dividend and 15 cents as dividend to shareholders, in the respective periods. In 2015, the dividend was twice as large as this year’s declaration, at 40 cents per share, but the record within this decade was a 50 cent distribution declared in 2011 and paid in January 2012.

The main activities of the company and its subsidiaries are port terminal operations, logistics, food and juice manufacturing, fruit and crop cultivation, marketing and distribution of fresh produce, land management, and the holding of investments.

Over nine months, JP earned revenue of $14.8 billion, down from $15.4 billion a year earlier, but grew its profit to $3.2 billion from $2.1 billion a year earlier. Its cash remained flat at $923 million, compared to $927 million a year earlier.

The September quarter contributed profit of $2.2 billion, three times the earnings recorded in the same three-month period of 2019, which returned $730 million in profit for the group. The increase was mainly due to JP’s sale of a 22 per cent stake in property management company SAJE Logistics Infrastructure Limited in a deal valued at $1.9 billion.

“The group recorded a gain on disposal of $575m on the equity part of the transaction,” JP said in its third-quarter financial report. The conglomerate retains a 9.5 per cent interest in SAJE through port subsidiary Kingston Wharves Limited.

steven.jackson@gleanerjm.com