Seprod scores big on exports
Published:Friday | February 23, 2024 | 12:18 AMNeville Graham - Business Reporter
MANUFACTURING AND distribution company Seprod is doubling down on its export strategy as it targets 30 per cent of its production base for exports by December 2025.
In its just-released fourth-quarter report, the company scored big in 2024, with a 45 per cent increase in exports.
CEO Richard Pandohie says exports as a percentage of manufacturing are currently 21 per cent. He noted that it will take a lot of work to achieve their goal, but a further 44 per cent boost in total exports could take Seprod to the 30 per cent target.
“Last year’s growth came by expanding in the Caribbean, Central America, and the UK. The USA was a challenge as our partners there reduced their inventory holding, that being held at a higher level during (the) COVID pandemic. Most of the growth came from co-manufacturing opportunities, primarily with respect to margarine, condensed milk, and other dairy products,” Pandohie told the Financial Gleaner when contacted.
For the 12-month period ended December 2023, the Seprod Group achieved revenues of $113.04 billion, an increase of $34.61 billion or 44 per cent over the corresponding period in 2022. Pandohie says continued growth in the business since Seprod acquired AS Bryden Holdings in June 2022 had a lot to do with the growth.
He says there was also the 45 per cent increase in export sales and significant progress in the modernisation of the company’s margarine plant, which has led to improved availability of key shortening and margarine products.
Pandohie says the modernisation of the margarine plant was more like building a brand-new facility. He says the plant is now able to make varied types of margarine products, both dairy and non-dairy. This, he said, has opened up co-manufacturing opportunities for the company while having the capability and capacity to bring new products to consumers in the Gold Seal and Chiffon brands.
“It has been a long time since we have not invested behind these brands and make them more relevant to new and previous consumers,” Pandohie said.
He says with the margarine plant 82 per cent complete, there is additional equipment to be installed by September 2024 based on the timeline from the equipment suppliers in Europe.
Seprod has also installed an additional 500 metric tonnes of storage capacity, which will facilitate reduced changeovers, allow more continuous production, and improve the work-life balance of team members, Pandohie said.
The 44 per cent increase in revenues had the damper of a 50 per cent increase in direct expenses. Pandohie says this was caused by margin compression at subsidiary AS Bryden Holdings as they de-stocked household and hardware inventory and some food lines at a discounted value. This was done to normalise inventory levels, which were kept at a higher amount due to supply-chain challenges and abnormal consumer demand.
Despite the margin compression, net profit still came out at $5.45 billion. This was $2.53 billion or 87 per cent more than the 12-month period for 2022.
Still, Pandohie sees the export segment as the star performer. He says Seprod will be extracting synergies from the Bryden acquisition by replacing some of their extra-regional imports by goods manufactured in Jamaica.
“We are also pushing to expand our footprint in non-traditional markets by capitalising on the popularity of Brand Jamaica and the various trade deals signed by the Government, especially in Europe and Japan. We also want to explore partnerships with other regional businesses, where we can co-manufacture for them,” Pandohie said.
“Our preference is to collaborate with other regional manufacturers and distributors to create a win-win scenario. It is in our collective interest to support value-added regional growth,” he added.