Seprod investing US$6m in beverage factory upgrade
Published:Friday | May 24, 2024 | 12:08 AM
Seprod Limited will spend nearly $1 billion to upgrade its beverage facility in Bog Walk, St Catherine.
It will allow the company to meet rising demand for the Swizzle, Cool Fruit, Monster Milk and Supligen brands, said Seprod CEO Richard Pandohie.
“Total spend of US$6 million” will be invested in new processing equipment, the purchase of new packaging equipment, and civil works, said Pandohie.
Work is in progress with the completion date set for November. The expansion will result in the installation of a faster, more efficient new line. Pandohie said that it will require only eight additional staff to operate but will serve to increase output by 300 per cent.
“We will be able to meet all existing demand and will have enough capacity for new business,” he said.
Seprod’s revenues climbed to $28.6 billion in the March quarter, marking a six per cent increase over the similar period in 2023. Despite this revenue growth, the company’s net profit fell to $1.2 billion, an 11 per cent decline from the same period last year.
Factors contributing to this decline were higher interest rates, which led to an increase in the spend to service the company debts and pressured the company’s profit margins.
The Bryden Group, Seprod’s Trinidadian subsidiary, faced higher effective tax rates due to changes in the business mix and the expiration of certain tax benefits that were available to it in the previous year. In Jamaica, severe drought significantly impacted Seprod’s dairy farm operations, increasing costs and reducing profitability in this segment. And the pharmaceutical business was affected by supply-chain disruptions from some of Seprod’s principals, adding to the operational challenges.
The company faced increased costs related to insurance, security, transportation, and other operational expenses, further eroding profit margins.
“We remain confident that despite geopolitical and local head winds, the Seprod Group will deliver an outstanding performance in 2024,” the company said in its earnings report for the March first quarter.
Seprod’s revenue growth was primarily driven by a resurgence in margarine production, which normalised following the completion of plant upgrades. This allowed the company to regain market share.
Exports also performed robustly, with sales growing by 27 per cent compared to the previous year. However, the Bryden Group experienced a decline in revenue from premium beverages due to a shorter carnival season in Trinidad & Tobago impacting overall sales.