SEPROD Limited Reports Strong H1 Results 

• Seprod Limited reported a net profit of J$1.58Bn for the 6 months ended June 30, 2022, which represents a 30.8% improvement over H1 2021.
• Revenue for the period was 40.2% higher than the $19.83Bn reported last year. The revenue growth was driven by the contribution of the recently acquired Bryden Group for the month of June 2022, robust export growth, improved product mix, improved production of fresh milk at the dairy farms, the launch of a new snack line and price increases.
• The percentage growth in net profit is less than that of the revenue growth as the company continues to absorb some of the cost increases, rather than passing the full extent of these cost increases to consumers. Total operating expenses rose 30.2% and direct expenses jumped 44.4% causing the cost of sales margin to increase to 74.7% of revenues relative to 72.5% in H1 2021.
• Overall, the global market remains volatile but management believes that the company may be at, or close to, peak prices on certain key raw materials which creates the potential for some cost retreat by Q4. This should support continued growth in the company’s profits in the following quarters. The acquisition of T&T-based AS Bryden Group is also expected to continue driving revenues and profits.
• Seprod’s stock price has increased by 6.8% since the start of the calendar year. The stock closed Monday’s trading session at $69.17 and currently trades at a P/E of 20.9x which is above the Main Market Distribution & Manufacturing Average of 16.6x.

(Sources: JSE and NCBCM Research)