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Disappointing Q2 for Broiler Company

by 5m Editor
3 December 2008, at 9:45am

JAMAICA - Jamaica Broiler Group has reported a loss for the second quarter of 2008 although its broiler business remained profitable.

Forced to pay higher prices for grain and hit by falling ethanol prices, Jamaica's top poultry producer, the Jamaica Broilers Group, stumbled badly in its second quarter into a loss of just under $150 million off revenues of $6.8 billion, according to Jamaica Gleaner.


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"Poultry, though it remained the most profitable segment in the period, performed more poorly than last year because of a 22 per cent increase in the cost of production."

But the company says contracted purchases and sale of ethanol in the November and December period is sufficient for it to predict a rebound in the third quarter.

The second quarter loss for the three month period ending November 1, which amounted to a net $121 million after tax credits, was insufficient to erase all gains year to date.

Broilers ended the half year with $60 million of net profit, held over from the $181 million profit recorded in the first quarter.

The group's fortunes have been driven heavily by its one-year-old ethanol business, which was largely been responsible for the near doubling of revenues to $13 billion in the six months to 1 November, an 82 per cent improvement compared to the $7.1 billion in the comparative 2007 period.

Broilers suggests that group turnover would have been fatter were it not for the decline in market prices which impacted a shipment of anhydrous or fuel grade ethanol. Prices of the bio-fuel have slipped as far as US$1.60 per gallon in past weeks.

So while ethanol accounted for $5 billion or 38 per cent of group revenues as the top money spinner for Broilers year to date, the segment made a loss on operations of $11.8 million.

All other segments made gains in the period but midline profit still ended at less than half its 2007 position - $71.4 million in the current period compared to $147.5 million then.

Impacting its performance was the $11.5 billion of production costs, a $1 billion of administrative and other expenses that grew by a third or $250 million, and a 22 per cent rise in distribution costs that Broilers said were in line with inflation.

Poultry, though it remained the most profitable segment in the period, performed more poorly than last year because of a 22 per cent increase in the cost of production, linked to grain and energy. Broilers said it was forced to buy more expensive grain during the hurricane season when a storm in the US Gulf delayed regular supply shipments.

But, as with ethanol, the company said it was "expecting a return to acceptable margins in poultry in the third quarter" but adds in a statement appended to its earnings report that the outcome was subject to relative stability in the exchange rate.