Weak Asian demand hits Q2 JBT FoodTech results, but CEO bullish on regional prospects

During a second quarter earnings call yesterday Charlie Cannon, chief executive officer, president and chairman of JBT Corporation, said: “Turning to Asia, despite weaker order activity in the quarter we have over 70% of forecasted fully year equipment volume on hand.​

“We are closely monitoring order activity in the region but feel it is too early to call the softness a trend.​

“We are still bullish on the long term growth prospects in Asia so we continue to invest in the region. Our latest assembly facility outside of Shanghai is on track to be operational later this year​.”

China activity​

In response to a question about basic product introduction freezer activity in China, he said: “I think we sold six since we started up over there and we’ve got a prospect list that we’re working on right now…​

“We’re kind of excited as we’re seeing customer names we’ve never seen before as we try to…bolster our sales presence on the ground over there so we’re I guess the words cautiously optimistic or excited about penetrating the local market for the first time…” ​

In the quarter, JBT FoodTech acquired rotary sterilization technology from H.G. Molenaar & Co (Pty)., headquartered in Paarl, South Africa which the firm said would further strengthen their in-container sterilization portfolio for the canned food industry.

The FoodTech segment of the business reported Q2 revenue of $137.5m for the period ending 30 June decreased 6% in constant currency from the same period in 2011. 

Concern over corn prices​

Cannon also voiced concerns over the drought conditions pushing US corn prices to record levels.

“We are closely following market developments and reactions from our poultry processing customers.​

“However, with over 90% of our forecasted full year equipment volume already on hand in our freezing and protein product lines in North America we are comfortable with our full year forecast for this region.”​

Sales gains in freezing and chilling and protein processing equipment across North America, Asia-Pacific and Latin America, were offset by an unfavourable year-on-year comparison in the project-based tomato & fruit processing equipment business and lower freezing and chilling equipment volume in Europe. 

Operating profit of $14.1m increased 8% relative to the prior-year quarter driven by the higher aftermarket volume and savings from cost reduction initiatives announced in January 2012. 

Q2 inbound orders of $162.9m increased 5% year-over-year and 11% sequentially largely because of strong order activity in freezing and chilling equipment in North America. 

Meanwhile, the firm announced a $4m deal this week with an unnamed global dairy processor, scheduled for completion by the second quarter of 2013. 

They will supply and install a synchronized Filler and Closer group and Rotary Sterilizer, to enable the processing of dairy products.