…banking on diversification investments to drive profits
Local beverage giant, Demerara Distillers Limited (DDL) has earned a whopping $22.403 billion in total revenues for 2019 and $3.484 billion in profits after taxation.
This, according to Chairman of the DDL Group Komal Samaroo, represents an increase of $541 million in total revenue compared to $21.862 billion recorded in 2018. He added that it also shows a hike in taxed profits by $206 million or six per cent, against $3.278 million recorded in the previous year.
Komal Samaroo
Profit before taxation was $4.544 billion, an increase of $182 million or 4.2 per cent of the $4.362 billion recorded in 2018.
Additionally, earnings per share in 2019 were $4.53 compared to $4.26 in the previous year, while equity increased by 14 per cent or $13.4 billion last year to $27.8 billion.
Moreover, an interim dividend of $0.25 per share was paid in December 2019. The Directors have recommended a final dividend of $0.90 per share, which would bring the total dividend up to $1.15 per share compared to $1.10 in the previous year. This was supposed to be up for approval at the company’s Annual General Meeting (AGM) set for April 3. However, that event has been postponed until further notice as a result of the ongoing coronavirus pandemic.
Nevertheless, in his annual report, Samaroo explained that most areas recorded improvements in turnover, with the main exception being the Bulk Division, which saw a decline of $841 million in sales.
“Although production in the Bulk Division was slightly higher than the previous year, a greater part of that production was set aside for ageing to support future growth in branded sales. This resulted in lower volume of bulk rum being exported in 2019 and an increased volume of rums being barrelled for ageing and for future use in our branded products,” he stated.
The Chairman went on to point out that despite cost increases for some key raw materials, margins improved slightly as the Group focused on operational efficiencies across all business units. He noted that the use of Liquified Natural Gas (LNG) to meet some of its power needs has helped in the reduction of costs in this critical area.
Samaroo further detailed that capital expenditure in 2019 totalled $2.677 billion, which was funded by self-generated funds of the Group. This includes two completed projects along with two new roll-over projects that are still in the developing stages.
The New Automated Blending Plant was commissioned in June 2019 and comprised of 18 tanks with a capacity of almost 600,000 litres. This $368 million project will not only reduce operation costs but also ensure continued uninterrupted supplies of the company’s brands.
The other finished project is the $856 million DSL Wholesale Distribution Centre, which was commissioned in March 2019 at Plantation Diamond, East Bank Demerara, and is expected to improve operational efficiencies as well as allow for growth of the Group’s business.
Meanwhile, the two developing projects are the TOPCO Fruit Processing and Packaging Plant and the upgrading of the Demerara Shipping Co Ltd Wharf Facilities, which will see the Port facilities totally rehabilitated to fully replace the wooden structure with concrete over the next two years. The former project is being undertaken at the cost of $4 billion and is expected to be completed by the third quarter of this year.
On the other hand, the Chairman had noted that despite a decline in the global economy, the Bank of Guyana had reported a growth of 4 per cent in Guyana’s economy in the first half of 2019 and this growth is expected to be reflected in the country’s overall performance.
He noted that the local economy further benefited from investments throughout the year in the oil and gas sector. Highlighting the commencement of oil production on December 20, 2019, Samaroo said that the DDL Group is well-positioned to take advantage of the unprecedented growth anticipated in the domestic economy from the industry.
In fact, he mentioned the Demerara Contractors and Engineers Company Ltd joint venture with Caribbean Welding Supplies Ltd to establish Demerara Offshore Inc to provide a wide range of services to the petroleum sector including the development of a world-class Shore Base facility.
“With the emergence of the oil and gas sector, it is anticipated that purchasing power will improve and the size of the local market will grow. In addition, the expected improvements [to] infrastructure and lower cost of power should improve the international competitiveness of local producers,” he posited.
On the other hand, the DDL Chairman further noted that the Group continues to engage the local sugar industry with the aim of reversing its high importation of molasses, which grew to 30 per cent in 2019 compared to 25 per cent in the previous year.
According to Samaroo, “…we estimate that the impact of the investments in our diversification drive will further enhance the overall profitability of the Group while reducing risks of over-exposure from any single sector.”
