7 months ago
23
After selling its hatchery located in the American midwest for US$23 million, poultry company Jamaica Broilers Group, JBG, is considering additional investments in the same line of business, just at a different location on the east coast of the United States.
JBG President and CEO Christopher Levy says the sale is geared towards a more efficient, vertically integrated operation. Jamaica Broilers still owns another hatchery in Pennsylvania and may either expand it or buy another one.
The Jamaican company is exiting the hatchery in Iowa, at a gain, after eight years of ownership, having acquired it for US$8 million from Welp Inc in March 2016 through subsidiary International Poultry Breeders Hatcheries Inc.
“The opportunity to sell came up and we decided that it would be a good strategic move for the next couple of years,” Levy told the Financial Gleaner.
He said Broilers acquired the Iowa hatchery at a time when the company was focussed on building out its baby chicks business. That hatchery supplies chicks to the midwestern United States and Canada.
With the sale, Jamaica Broilers baby chick operation will be centred in Pennsylvania. The company also has a meat processing plant in South Carolina.
Levy said the Iowa hatchery was an important asset when Jamaica Broilers’ US arm was only involved in the baby chick business, but having since entered meat processing in the American market, Iowa had become less of a critical asset.
“We’ll save a lot on logistics, and it will allow us to centre our operations closer to our production facilities in South Carolina,” Levy said.
Jamaica Broilers is a six-century-old company in the business of poultry, baby chick, egg, animal feed and other meat production. Its annual turnover is above $90 billion.
Up to recently, Jamaica Broilers operated assets in three main geographic segments: Jamaica, United States and Haiti. However, after weathering years of political turmoil and hurricanes, the company eventually decided to cut its losses in Haiti and exited the strife-torn country in 2022, for which it took a $1-billion hit.
Regarding the company’s next moves in the US market, Broilers has no immediate firm plans but will “either buy another hatchery in South Carolina, build another one, or expand what we have in Pennsylvania,” Levy said.
“If you’re not growing, you’re dying,” he quipped.
Jamaica Broilers reported four per cent growth in revenue for the quarter ended January 2024. But net profit declined by 13 per cent to around $1.3 billion. Similarly, over nine months ending January, sales grew modestly from $68.5 billion to $70.3 billion, but profit dipped from $4.5 billion to $3.8 billion after factoring out the discontinued Haiti operations.
“I think you’re seeing the reality of inflation touchdown,” said Levy.
“Cost of labour is going up, there’s no doubt about that,” he added.
However, grain prices are on the decline, which, he said, should translate to savings on inputs.
Broilers’ most lucrative market is Jamaica, but the United States is making gains.
Over the nine-month horizon ending January, the US segment grew its operating results by eight per cent to nearly $3 billion on the back of $25.7 billion in revenue. Jamaica’s operating profit amounted to $5.9 billion on $44.5 billion in revenue.
English (US) ·