Demerara Distillers Limited (DDL) recorded an after-tax profit of $1.89 billion for 2015, down 1% from the previous year and for the first time ever the export value of branded rums was greater than the value of bulk rum exports as the latter was hit by low prices and currency issues.
In his report for the Group’s Annual General Meeting set for March 31, Chairman Komal Samaroo said that the precipitous decline in international commodity prices last year had a severe impact on the bulk rum market.
“Low prices combined with the decline in (the) international value of the Euro necessitated our withdrawal from segments of the commodity bulk rum market that were no longer contributing to our profitability. This resulted in a 43% decline in bulk rum export revenue in 2015,” he disclosed.
To cover this loss of revenue, Samaroo pointed to the branded rums and said that the strategy that had been pursued by the Group over the last few decades had insulated it from the turmoil in the international commodity market.
“We continued to make impressive progress in the international branded segment of the rum market with sales increasing 20% in foreign currency terms. In 2015, however, almost half of the growth, or about $250 million, was lost on conversion to Guyana dollars as a result of the comparative weaknesses of the Euro and Canadian dollar against the US dollar,” Samaroo stated.
On the domestic market, Samaroo said that liquor sales dropped by 5% while sales in the other non-liquor segments rose by 24%. Overall, he said this resulted in total Group sales inching down by $92 million or 0.5%.
Samaroo stated that to preserve the El Dorado brand here and overseas, the Group will be pursuing a second brand. He added that to this end, the Diamond Reserve Brand has been revamped and a new portfolio of rums is now available. He said that the Diamond Reserve Coconut Rum and Diamond Reserve Rum Punch have been introduced to the domestic market.
According to Samaroo, the expansion of the El Dorado brand of aged rums continued last year with the introduction of a limited amount of six different wine-casks-finished El Dorado 15-year-old rum. He said that there are plans to introduce an ultra premium to mark the country’s 50th independence anniversary.
As it relates to its subsidiaries, Samaroo said that Distribution Services Limited registered a before -tax profit of $313 million which was in line with the previous year’s results.
A slide in cargo amounts resulted in Demerara Shipping Company Limited’s turnover declining by 12% and before-tax profit slumping from $217 million in 2014 to $146 million last year.
Tropical Orchard Producers Ltd recorded a profit before tax of $20 million compared to $22.5 million in 2014. Overseas subsidiaries improved their overall combined profit by $105 million. However, Demerara Rum Company which markets bulk rum in North America and the UK saw a decline of $15 million.
Turnover for the DDL Group was slightly down from $18.112 billion in 2014 to $18,020 billion last year.
The company paid an interim dividend of $0.16 in December last year and a final dividend of $0.46 per share is being recommended to the AGM.
