On the back of significant increases in fuel, molasses, sugar and other input costs, Demerara Distillers Limited (DDL) recorded an after-tax profit of $708 million for last year, 12.5 percent less than the $809 million recorded in 2009.
However, the DDL Group recorded an after taxation profit of $1.140 billion last year, an increase of 10 percent from the $1.033 billion it recorded the previous year.
According to the Group’s annual report for the year ended 31st December, 2010, turnover for the DDL Group last year was $13.7 billion up by 10 percent from the $12.4 billion recorded in 2009. This represented an increase of 11 percent. The turnover for the DDL company increased from $8.371 billion in 2009 to $9.315 billion last year.
The Group achieved an operating profit of $2,360,738 slightly more than the $2,306,837 recorded in 2009. Capital Employed for last year was $15,819,174 less than the $15,905,774 employ-ed the previous year. Share-holders equity was pegged at $12,055,618 compared to $11,256,519 recorded in 2009. The basic earning per share in 2010 was $1.49 compared to $1.29 in 2009, while the equity per share for 2010 was $15.66 compared to $14.62 in 2009. Directors are recommending a final dividend of $0.33 per share making the total for the year $0.45 – the same as last year. The company’s Annual General Meeting is set for April 29.
Chairman of the DDL Group Yesu Persaud said in his report that “there was a 45 percent increase in the volume of export sales for the year as compared to 2009”. He noted, however, that “as a result of the fierce competition in the international market from other Companies that have benefited and continue to benefit from significant subsidies”, the company’s margins in this sector “were significantly less than on our branded products”. Further, Persaud said, “the profitability of the bulk business in 2010 was further affected by the significant increases in fuel and molasses prices, which escalated by 36% and 19% percent respectively, compared to the previous year.” According to him it is anticipated that once the New Distillation Columns and the Bio-Methanization Plant become fully operational; the improved efficiencies and substitution of methane gas for costly fuel will help to significantly mitigate these cost increases.
It was a mixed year for the Group’s local subsidiaries. One of the Group’s local subsidiaries the Demerara Shipping Company Limited (DSCL) recorded an after tax profit of $59 million down from the $72 million pegged in 2009. According to Persaud, “while the focus continued on increasing market share for the containerized segment, the disappointing decline in sugar output directly impacted this segment. “
Meanwhile, according to Persaud, the Group’s subsidiary Distribution Services Limited (DSL) saw stable revenue, but lower margins and rising delivery costs resulted in after-tax profits moving from $191 million in 2009 to $182 million last year.
Another of the Group’s subsidiaries Tropical Orchards Products Company Limited (TOPCO) experienced after tax losses of $13.9 million. In 2009, TOPCO experienced an after-tax loss of $17.1 million. According to Persaud, “the company continued its efforts in 2010 of partnering with farmers locally to ensure a steady and adequate supply of fresh fruits.” “Significant progress was made, in this regard, which resulted in fruits supplies to the Company surpassing a landmark one million lbs of fruits as well as revenue increasing from #378 million in 2009 to $561 million, increase.” According to Persaud, despite the admirable growth, the fruit supplies were still insufficient to meet the needs of the market on a consistent basis.
Another subsidiary Demerara Contractors and Engineers Limited (DCEL), the local agents for Otis Elevators and the construction and engineering services arm of the Group, recorded an after tax loss of $2 million compared to $0.17 million in 2009. “There were no new installations of elevators in 2010; the main area of cost in the year was depreciation,” Persaud said.
In terms of its associates’ performance, DDL’s share of the fisheries business, BEV Group’s after-tax profit in 2010 was $6.4M as compared to $31.4M in 2009. The report said that the increase in the price of fuel adversely affected the profitability of the group. It further disclosed that in March 2011 this year the company disposed of its 30% interest in the BEV Group resulting in a gain on disposal of around $3M.
In terms of its international operations, its Breitenstein Holdings BV in Europe saw profit of $208.7M compared to $91M in the preceding year. Demerara Distillers (USA) saw after tax profit of $21.5M in 2010 compared to $18.7M in the preceding year. Demerara Distillers (St Kitts-Nevis) saw after-tax profit rising from $5.5M in 2009 to $9.5M last year.
Demerara Distillers (Hyderbad, India) continues to experience significant production problems, the report said. The company made a net loss of $38.2M in 2010 compared to a loss of $37M in the previous year.
Meanwhile, the US$5 million bio-methanization plant, Persaud said, “is in the commission phase with two of the three tanks in operations”. About 30 percent of Bunker C is being replaced with methane gas, he said. According to him, the third tank will become operational in April after which the facility will be commissioned in June. Persaud said that “it is anticipated that 65% of the Bunker C will be replaced when this plant becomes fully operational in the latter half of 2011.”
Persaud also spoke about a US$5 million modernized Multi Column Still which is set to replace the existing Still that has been in existence for over thirty years. Once in operation, the Still is expected to bring about increased capacity, improved efficiencies from materials utilization and fuel consumption.
Meanwhile, Persaud said that the past year was challenging year for meeting the human resources needs of the company. “The labour market continued to be poor and recruitment of staff with the requisite skills, predominantly in the technical and management areas, was challenging,” Persaud said. Consequently, “strong emphasis was placed on the retention and training of staff,” the Chairman said. “With the New Still, we will be able to better compete in the international markets for bulk rum and spirits,” Persaud said.
However, according to Persaud, the completion date has been revised mainly as a result of the lack of welders with the requisite specialized skills in Guyana, to complete the work as previously scheduled.
Its 59th Annual General Meeting is set for April 29th at DDL’s Diamond Complex, Diamond, East Bank Demerara. It is scheduled to start at 4:30 pm.
