Demerara Distillers Limited (DDL) says it had to import 14,000 tonnes of molasses last year for its rum operations as a result of the shortfall in the sugar industry.
In his address in the 2018 annual report, Chair-man Komal Samaroo said that the downsizing of the sugar industry has had a negative impact on its operations and importation of molasses was necessary to meet the distillery’s production requirements based on orders from longstanding customers. He noted that the molasses imports came with a high logistics cost.
Samaroo pointed out that DDL had explored the option of bidding for the Enmore Sugar Factory but did not pursue the option as “substantial costs associated with the requisite rehabilitation did not present a viable solution”.
The DDL Chairman said that the group continues to pursue every opening to improve international competitiveness and noted that a study undertaken by the West Indies Rum and Spirits Producers Association had shown that the regional rum industry faced significantly more red tape than its counterparts in the developed world.
DDL recorded its highest revenue ever last year with total revenue for 2018 pegged at $21.862 billion and profit after tax standing at $3.279 billion.
The $21.862 billion in revenue marked an increase of $2.378 billion or a 12 per cent increase on the total revenue of $19.569 billion recorded in 2017, the company announced in a press statement on March 8th.
In relation to its subsidiaries, the annual report said that Distribution Services Limited boosted its profit before tax to $404m, 2% above the previous year’s $396m.
Despite a growth of 8% in its gross revenue, Demerara Shipping Company Limited (DSCL) saw a decline of 8% in profit as a result of increased expenditure on the wharf facilities and equipment maintenance.
The annual report said that DSCL’s profit before tax for the year was $121m compared to $132m in the preceding year. DSCL is now on a phased programme for the rehabilitation and modernizing of its office and port facilities. This year $940m is projected to be spent on capital upgrades while in 2018 $40m was expended.
Tropical Orchards Pro-ducts Company Ltd (TOPCO) had a much improved year, transforming a loss of $53m in 2017 to a profit of $20m last year. TOPCO’s gross revenue for the year was $580m, a rise of $160%. A significant portion of this was as a result of its supply of fresh juices to the national school feeding programme.
The annual report said that overseas subsidiaries contributed $159m in profit before tax compared to $210m in the previous year. As a result of consolidation of the customer base for its bulk products, the company has agreed to phase out the operations of the Demerara Rum Company and to service these customers directly. Demerara Rum Company will be fully liquidated this year, it said.
DDL’s Group Profit after tax was $3.279 billion in 2018 compared to $2.6 billion in 2017, an increase of $679 million, or 26 per cent. Group Profit before tax for the year was $4.362 billion compared to $3.551 billion in 2017, an increase of $810 million, or 23 per cent. Earnings per share were $4.26 compared to $3.38 the previous year.
For 2018, Shareholders’ Funds increased by 16 per cent. Capital Expenditure totalling $2.187 billion, incurred during the year, was all financed by self-generated funds. Additionally, bank borrowing, in the form of loans and overdraft, was reduced by $1.437 billion from funds generated by the Group in the year. The net debt to equity ratio at the end of the year improved from 0.13:1 in 2017 to 0.06:1 in 2018, the company said.
An Interim Dividend of $0.25 per share was paid in December 2018. The Directors have recommended a Final Dividend of $0.85 per share which, if approved by the Shareholders at the March 29 Annual General Meeting, would result in a total dividend for the year of $1.10 per share. In the previous year, the dividend payment totaled $0.80 per share, the statement said.