ON THE COVER
Seprod doubling down on exports to hit new revenue target
Goal: US$1b in turnover in two years Considering spirits Ja market as new frontier
Published:Friday | December 1, 2023 | 12:08 AMSteven Jackson - Senior Business Reporter
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Seprod Limited plans to become a US$1-billion, revenue-generating company in about two years, which requires doubling its annual sales. The food manufacturing and distribution company, which produces brands such as Chiffon margarine, Betty...
Seprod Limited plans to become a US$1-billion, revenue-generating company in about two years, which requires doubling its annual sales.
The food manufacturing and distribution company, which produces brands such as Chiffon margarine, Betty condensed milk, Supligen, and Serge Island milk products, expects to grow annual revenue from $78 billion in 2022, or US$500 million, to $115 billion in 2023 and then to $139 billion in 2024. Thereafter, its aim is to surpass $155 billion, which equates to US$1 billion at present exchange rates.
Those numbers seem lofty, but its revenue from January to September 2023 grew 60 per cent over last year to hit $82.2 billion (US$530 million) arching towards that goal. That’s due to Seprod’s acquisition of another large distribution outfit in Trinidad, AS Bryden & Sons Holdings Limited, that’s been around for a century.
Seprod has since listed AS Bryden on the Jamaica Stock Exchange, effective November 10.
Seprod has previously spoken of its growth ambitions, but on Wednesday during a public appearance by CEO Richard Pandohie, the company upsized its target for this year from the initial US$650 million in its last annual report to US$700 million.
“In US dollar terms, this year we will be about US$700 million, but our objective is to be in the US$1-billion mark in two years or thereabouts,” Pandohie said as the featured guest at the monthly Mayberry Investor Forum.
It is unusual for local companies to give an outlook, but Seprod did so when it was concluding its acquisition of AS Bryden. At the time, the Trinidad company’s addition to Seprod Group was projected to grow annual sales to US$500 million.
That target has already been surpassed, and Pandohie is now focused on a new horizon of US$1 billion.
“We are going to deliver those numbers,” said Pandohie, explaining that Seprod intends to hit the target through exports and synergies with AS Byrden.
“It presents so much synergistic opportunities. They are primarily a distribution company with a little bit of manufacturing, and we can replace a significant amount of their extra-regional imports with local production from within Jamaica. That would be a huge driver for us,” he said.
In 2022, Seprod paid $7.1 billion for AS Bryden, which was worth J$6.1 billion in net assets. To finance the deal, Seprod used loans worth $3.9 billion and $3.2 billion of preference shares.
The ASBH stock, which was introduced to the JSE Main Market at a price of $22.50 per share, is now trading above $29, valuing the company at $50 billion at midweek. The ASBH 6.0% preference shares were also listed on November 10 on the JSE USD market at an introductory price of US$1 but haven’t traded since.
Seprod is in the process of executing a “US$30-million warehouse” project in Trinidad. Construction will begin in December.
AS Bryden is mostly a distribution entity that also sells premium liquor and spirits such as Moet and Hennessy. The acquisition will allow Seprod to enter the alcohol market in Trinidad, with the possibility of doing the same for Jamaica wherever Seprod detects a “gap in the market”, Pandohie said.
Seprod owns 60 per cent of AS Bryden, and “it’s just a matter of time” before it seeks to acquire more shares, he added.
Exports for Seprod are expected to grow 30 to 40 per cent this year, and projected to generate revenue of $4.7 billion. That would more than triple the company’s export performance since the pandemic from a turnover of $1.3 billion in 2019.
“We are going to focus on exports. We are looking for the synergies and going to extricate them,” Pandohie reaffirmed.
Hitting the 2024 projections for revenue and profit would quadruple the amounts earned in 2019, the year prior to the onset of the pandemic. In 2019, revenue was $32.7 billion and profit $1.3 billion. The projection for 2023 sees revenue at $115 billion and profit at $5.5 billion; while for 2024, revenue is forecast at $131 billion and earnings at $6.7 billion.
Seprod’s net value, or shareholder equity, is currently estimated at $29.7 billion, putting its market value of $53 billion, at 1.8 times its book value.