– company preparing for oil production benefits
The Demerara Distillers Limited (DDL) Group has raked in some $296 million taxed profits for the 2016 financial year.
According to Chairman Komal Samaroo in the company’s 2016 Annual Report, the Group’s profit for the year before taxation was $2.920 billion, compared to $2.797 billion in 2015, thus reflecting an increase of $123 million, or almost 4.4 per cent. The after-tax profit was recorded at $2.191 billion, compared to $1.895 billion earned in 2015, representing a 16 per cent increase in profit.
The Chairman noted that an Interim Dividend of $0.16 per share was paid in December 2016. The Directors, he continued, have recommended a Final Dividend of $0.47 per share, which, if approved by members at the upcoming General Meeting set for April 7, would result in a total of $0.63 per share being paid for the year 2016.
As it relates to the group’s subsidiaries, Distribution Services Limited (DSL) recorded a profit before tax of $358 million in 2016, as against $313 million in 2015. However, this increased profitability escaped the Demerara Shipping Company Limited (DSCL), which raked in a profit of $102 million in 2016, compared with $146 million in 2015. This decline, Samaroo explained, was as a result of the reduced volume of cargo handled by the lines represented by the shipping company.
The profitability trend completely evaded Tropical Orchard Products Co Ltd (TOPCO), which experienced a loss of $16 million last year, whereas it had recorded a $20 million profit the previous year.
“This was due primarily to the loss of the school feeding programme contract (which had already been awarded to an overseas company), a matter which TOPCO successfully contested at the Bids Protest Committee…TOPCO had to write off inventory totalling $21.2 million in packaging material and finished product,” the Chairman explained.
He explained that the performance of the Group’s overseas subsidiaries had nevertheless made up for these losses by contributing $185 million in profit before taxation for 2016, compared with $172 million recorded in the previous year. The Demerara Distillers St Kitts Ltd recorded a profit of $25 million, Demerara Distillers USA Inc. recorded $41 million profit, Demerara Rum Company Ltd recorded $31 million profit, and the subsidiary in Europe recorded a profit of $88 million.
According to the Chairman, notwithstanding the Group’s complete withdrawal from the commodity bulk rum market in 2016 and the consequent absence of any sales in that segment for the year, the Group’s overall revenue for 2016 increased, though marginally, over 2015 by $89 million, or 0.5 per cent.
He added that increased sales from branded products and high-value bulk rum fully compensated for the sales foregone from the unprofitable commodity bulk rum segment, and noted that if the previous year’s revenue from the latter segment is omitted from the comparative results, the Group’s revenue would have increased by almost five per cent.
Samaroo said the revenue garnered from international sales of branded and high-value bulk rum increased in 2016 by 9.5 per cent over what had been garnered the previous year, while domestic revenue also increased in 2016 by 2.5 per cent over what had been garnered in 2015.
The DDL Chairman boasted about his company’s El Dorado brand, which continues to win accolades on the international market, once again being named in the ‘Top 10 Best Selling Rum Brands’ and the ‘Top 10 Trending Rum Brands’.
He noted that the introduction of the Diamond Reserve brand in the regional and international markets in April last year was well received, adding that the company would continue to carefully promote and reinforce its market position in the value segment until it carves its niche in the rum market.
Samaroo asserted that the launch of the ultra-premium limited edition – the 50-Year-Old Rum – strengthened the positioning of the El Dorado Rum in the high end of the market. Additionally, in the latter part of 2016, the company launched the limited El Dorado Rum Creme Liqueur in Butter Pecan, and successfully launched the Diamond Splash Cranberry Water and Soca Ginger Ale.
Going forward, the Chairman outlined, uncertainty in the global business environment presents a major challenge, which is compounded by intensified regulatory pressures locally. He nevertheless noted that the Group stands both well prepared and positioned to expand the global footprint of its rum brands, and continue its growth in this vital segment of its business.
Samaroo said Guyana’s economic outlook has been improved with the announcement of significant petro-carbon deposits offshore. To this end, the DDL Group would be expanding its several businesses to take full advantage of the opportunities that may arise from improvement in the domestic economy.
“Notwithstanding the predicted uncertainties ahead, the Group remains well poised for continued growth as well as revenue and profitability expansion in the foreseeable future,” the Chairman noted. He noted, too, that presentation of the 2017 National Budget last year was welcomed, adding that such a move allows for more effective and improved business planning for the year.
In this regard, he expressed hope that such a move to make the national economic environment more predictable, which is important to attract more investments, will be followed by an equally timely National Development Strategy and/or a National Development Plan, so that companies can align their business strategies with national policies.