2 months ago
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Seprod Limited reported significant revenue growth in the first quarter ended March 2025, but expenses and finance costs put a damper on profits at the distribution and manufacturing conglomerate.
Net profit and earnings per share declined in the period.
Moving forward, the company says it is focused on improving productivity and reducing finance costs to enhance profitability.
After the acquisition of Facey Commodities Holding Limited and its subsidiary Facey Commodity Company Limited in 2018, Seprod completed the acquisition of A.S. Bryden & Sons Holdings Limited in June 2022.
Additionally, A.S. Bryden subsequently acquired Micon Holdings Limited in November 2022, followed by a 55 per cent controlling stake in Stansfeld Scott (Barbados) Limited, a leading distributor and retailer of wines, spirits and consumer health products in Barbados, and then Caribbean Producers Jamaica Limited, CPJ, in December 2024.
Seprod is based in Kingston and CPJ is headquartered in Montego Bay, both in Jamaica, while A.S. Bryden is based in Trinidad and Tobago. All three businesses serve regional markets.
Seprod CEO Richard Pandohie says the acquisitions have both directly and indirectly contributed to increased revenues at Seprod, but the flows did not transit through to the bottom line, because the company had some increased costs.
“A big part of that is the investments that we made in such areas like our pharmaceutical business, for example, that hasn’t yet gone through to the bottom line. We’re investing mainly in people as we build out our pharma business across the region,” said chief financial officer of Seprod, Damion Dodd.
Pandohie added that Seprod is also investing pouring money into premium beverages and the business in general.
“We’ve been very clear on what it is that we’re building out – a regional platform is what we’re talking about,” Pandohie said in an interview with the Financial Gleaner.
“In many cases, the investment in infrastructure has to come ahead of the actual revenues that are flowing in, and then on to the profit.”
The lag between the investment and the actual return is up to nine or 12 months in some cases, he added.
For the March quarter, the company reported a 32 per cent increase in top line income to $37.69 billion. But profit dropped from $1.2 billion to under $850 million.
ACQUISITIONS A FACTOR
Pandohie said that, in addition to drag on overall revenue coming from the investment, the company’s finance costs have climbed because of the acquisitions. Additionally, its assets grew by 29 per cent to reach $133.4 billion.
“And, to get those going, we had to do leveraged acquisitions. Now, there’s a lot of effort to extract the synergies, to get the cost savings, and then use those to pay down the debt aggressively,” Pandohie said.
As to the mode of financing utilised for the deals, Pandohie said Seprod was comfortable leaning on its cash flows.
“We looked at our business and we’re very confident in our cash flow. With everything remaining as is, our cash flow is sufficient to pay it all without going to the market at this point,” he said.
“We want to save the market for when we’re doing major things. We want to make sure we have capacity, in the event that opportunities arise that we think will take us to our next level.”
In the meantime, the integration of the businesses continues to drive efficiencies through scale and synergies in logistics.
Citing the case of Caribbean Producers, for example, Pandohie noted that, right now, CPJ’s warehouse operation resides in Montego Bay. As such, all the imported goods that CPJ sells in Kingston are shipped to Montego Bay and then sent by truck to Kingston. But that is about to change.
“In short order, within this month, they’ll have approval from Customs. So they’ll offload their products in Kingston. That transportation and handling costs they are incurring in MoBay [will be] cut dramatically ...,” Pandohie said.
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