THE ANALYSTS: Seprod should focus overseas

Assistant Manager of Private Equity at PROVEN Wealth, Julian Morrison says expanding into overseas markets should be the focus for the Seprod Group of Companies as it looks to increase its profitability.

Speaking on Taking Stock with Kalilah Reynolds, Morrison said that Seprod has already dominated the Jamaican market and the company’s best opportunity to grow is overseas.

The recommendation follows Seprod’s acquisition of the Trinidad and Tobago-based distribution company, A.S. Brydon & Sons Holdings.

AS Bryden, which was founded in 1923, distributes food, pharmaceuticals, hardware, houseware and industrial equipment.

According to Seprod the acquisition will more than double the company’s revenues to over US$500 million.

In addition, Seprod owns several local manufacturing and distribution companies, with product lines ranging from Serge Island milk and Butterkist Biscuits to Arm & Hammer and Trojan products.

“I think looking overseas is the key because Seprod has arrested a great amount of market share in Jamaica. They sell major brands, most households in Jamaica have at least one Seprod product and they have a wide array of offerings,” he added.

Morrison said that exploring foreign markets could help Seprod improve their profitability as well as their growth prospects.

According to Seprod’s interim 2021 results, its net profit margin decreased from 7.5 percent in 2020 to 4.9 percent in 2021.

Morrison said that the net profit margin, which is the amount of profit they could have earned, slipped because they were paying more for raw materials due to the supply chain challenges caused by the COVID-19 pandemic.

However, he also noted that the company has done very “agile” inventory management, stocking up on inventory so that they can manage their pricing and offer products at a reasonable price, which Morrison said is essential during a supply chain crisis.

However, he said moving into countries that have larger spending power than Jamaica will help the company.

“You’re talking about looking at markets that have greater wallet share, greater GDP (gross domestic product) per capita, and greater spending power so you can turn over products faster and earn foreign exchange,” he said.

“For context, Seprod’s revenues for the financial year 2021 clocked US$283 million. So that is a major push in terms of growth and will change the profile of Seprod,” Morrison added.

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Sashell Williams2024-09-03T21:40:31-05:00