LEVY... the objective for next year is that we’re back and stabilised
DIVIDEND PAUSE
JBG skips normal payout as it continues repair work at USA operation
Jamaica Broilers Group Limited (JBG) has skipped its normal dividend consideration meeting as it continues work to restore confidence and turn around its operations in the United States which had a US$13-million ($2.05-billion) loss in the third quarter.
The poultry giant has historically paid a dividend every year going back as far as 2000.
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Since 2001 the company has paid dividends semi-annually, with payments usually made in March/April and October/November every year. The company’s dividend policy dictates paying 20 per cent of its audited net profit to shareholders.
There was no dividend consideration meeting announced in February or March, which is a formal precursor to a potential declaration. With the company’s financial year ending on May 3, the company’s board can always decide to have a meeting to consider a dividend. However, that’s not likely to happen, considering the recent loss reported by the USA operations and decision to separate the entire management team.
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“I think that at this point, that’s where the directors are. Now, they might look at this thing, and in two months’ time say we’re not paying any dividends, even if we can pay it or if the liquidity is just too tight. At this point, the [dividend] policy is the [dividend] policy,” stated JBG Group President and Chief Executive Officer Christopher Levy at last Thursday’s private briefing with the media and broker analysts.
JBG paid two dividends on November 25 totalling $0.51 per share or $611.63 million, but only $510.60 million was recorded in its financial statements due to the presence of JBGL Stockholders Nominee Limited, a special purpose vehicle consolidated in JBG’s financials. For JBG’s 2024 financial year ending on April 27, it paid $0.82, which is a significant increase compared to the $0.39 paid in the 2019 financial year.
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JBG released its third quarter financials last Thursday after they were delayed 16 days past the original due date of March 11. Those numbers revealed that the group reported a consolidated net loss of $1.15 billion compared to a consolidated net profit of $1.30 billion for the comparative prior period.
The unexpected loss was largely attributed to the US business which recorded a lot of invoices that weren’t previously accounted for in previous reporting periods. That resulted in the group’s operational expenses (distribution costs and administration and other expenses) jumping from $3.75 billion to $5.20 billion in Q3.
“I think we have a good business, and I think that the unfortunate circumstance that we have found ourselves in could have been avoidable. The situation that we found there is very correctable in terms of the operations,” Levy explained.
JBG has since made significant changes to the US business to restore confidence up north. Among the changes are the inclusion of more controls and streamlining several systems and processes. Christopher Levy has also assumed leadership of the US business and is currently being supported by Ian Parsard, group senior vice-president – finance and corporate planning, and Lennox Channer, group vice-president — accounting and administration to investigate the affairs in the US operation. Also, Tommy Waters, vice-president of Jamaica’s poultry operations, has been reassigned to Best Dressed Chicken USA.
Stephen Levy, president of the USA operations since 2016 and JBG employee since August 2002, will leave the company on May 3. Stephen Levy is the brother of Christopher Levy and son of Chairman Robert Levy.
We’re in a turnaround in that business and we’re in quarter four. I’m looking at the next fiscal year [and it] should be a strong year for us because [of] what we’re already seeing on the live production [which] is very good and very encouraging. Our sales are good and strong,” the group CEO stated.
Apart from noting that there was a lack of focus by the US management team on cost control, Levy said that there were inefficiencies at its chicken processing plant. He noted that plant yield moved up from 56 per cent to 62 per cent in just two weeks after the Jamaican executives assumed control. An external third-party auditor is currently assisting Jamaica Broilers to do a deep probe which involves checking every farm, reviewing inventory balances and biological assets and other measures to get a clean bill of health.
“I think that the objective for next year is that we’re back and stabilised. Are we going to be a little bit debt heavy? No doubt about that. You’re going to see that on the balance sheet and that’s because we have to fund these losses that we probably should have been funding over the last few years. I do feel that the cashflow capacity of Jamaica Broilers can support the debt that we’re going to end up with, but it is going to require space from our formal financiers. They’ve been very gracious, and we’ve found favour with them,” Levy explained as he noted the 2025-2026 period is a consolidation period.
Jamaica Broilers has made tough decisions regarding unprofitable businesses and other ventures such as selling its ethanol business and exiting Haiti in the last decade. However, the group CEO noted that the USA business is very strong and is operationally strong with reference to the processing plant, hatchery and feed mill.
However, the Jamaican company will be supporting the USA business through this transition period and will be tapping the capital markets to support this turnaround mission. Levy appeared on a Mayberry Investments
YouTube segment on Friday.
“Personally, I think, notwithstanding the challenges of this year and the reality of the situation, I am more excited about the US operations and about our company than I was six months ago. I think that this issue was probably festering in the company, but there is a clarity and what I would call a relentless focus on the performance and the cost of the operation,” Levy noted regarding the USA.
The group’s USA operations saw a five per cent rise in revenue to $26.97 billion, but a 69 per cent dip in the segment result to $922.37 million. Total assets were up seven per cent to $57.85 billion with current assets worth $44.51 billion. Total liabilities increased eight per cent to $35.07 billion with $28.81 billion as current liabilities for the nine months period.
JBG’s stock price closed Tuesday at $28.10 which leaves the stock down 22 per cent year to date from it starting price of $35.92. That leaves it with a market capitalisation of $33.70 billion. JBG’s $1.5-billion unsecured bond listed on the JSE Private Market with a 6.75 per cent interest rate and an April 2028 maturity date had no price change from its $105.53237 closing price. JBG also has a $2-billion unsecured bond maturing January 2027.
“The market side of things is amazing. We have a few strategic people that we still need to put in place more from the administration and controller side of things. So, we’re still interviewing and building back a team, but the operational team is completely in place, seated and focused,” Levy said, regarding the USA business.
LEVY… I think we have a good business, and I think that the unfortunate circumstance that we have found ourselves in could have been avoidable
