Banks DIH Group profit down

Profit before tax for the Banks DIH Group was down by 6.4% for the half year ended March 31, 2017 compared to the same period in the preceding year when a one-off gain from the sale of shares was excluded from the results.

The company has cited reduced spending by consumers and what it termed “the prevailing economic conditions” for the results.

According to its interim financial statements for the half year in yesterday’s Sunday Stabroek, revenue for the period was up marginally from $14.6b in 2016 to $14.9b this year. Profit before taxation was  down 38% from $4.08b in 2016 to $2.53b this year. The steep decline in profit was as a result of the gain on the sale of shares in 2016. Profit after taxation was $2.98b for 2016 compared to $1.57b this year.

Directors of the company have approved an interim dividend of $0.27 per share unit. The cost of this is $229.5m. According to the company’s segment information, beverages is the key revenue supplier: $12.1b in 2017 compared to $11.7b in 2016. Commercial banking revenue from its Citizens Bank subsidiary fell from $1.75b in 2016 to $1.63b this year.

As one of the country’s largest companies, Banks DIH’s  results are usually a bellwether of how the economy is performing.

Clifford Reis

In his report, Chairman Clifford Reis noted that the 2016 profit figure included a gain of $1.375b from the sale of the company’s holding of ordinary shares in Banks Holdings Limited of Barbados.

He said that the unaudited operating profit before tax for the parent company this year was $2.05b compared to $1.95b in 2016. The unaudited profit after tax was $1.32b compared to $1.22b in 2016, an increase of $100m or 8.2%.

The Chairman noted that on December 1, 2016, the company repurchased 150,138,464 of its ordinary shares which represents 15% of the issued share capital from Banks Holdings Limited. The consideration for the repurchase of the shares was $5.524b financed through cash resources of $4.524b and borrowings of $1b.

Citizens Bank Guyana Inc, a 51% owned subsidiary of the bank attained an unaudited profit after tax of $288.7m for 2017 compared to the $440.8m in 2016.

“The results of the Group for the first six months were influenced by the maximization of operational efficiencies, the increased cost of doing business and the reduced spending by consumers”, Reis said.

He stated that the capital expenditure programme was limited to investment in vital areas in the long-term development of the company. These included initial payments on a new biscuit packaging line, a new 1.7 MW power generating plant and water storage tanks.

Reis said that in the second half of the year the group plans to complete new workshop facilities and the modernization of Demico House facilities.

Noting that in the second half of the year the company will expand on initiatives already introduced, Reis said that the “prevailing economic conditions and the limited supply of foreign exchange will definitely challenge our performance”.

Substantial shareholders in Banks DIH are the Demerara Life Group with 96.9m ordinary shares, Trust Company Guyana with 76.8m, Banks Holdings Ltd with 50m and Hand-in-Hand Trust with 45.7m.

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