Despite the severely negative impact of the COVID-19 pandemic, the Demerara Distillers Limited (DDL) Group registered after-tax profit of $3.89 billion for 2020 compared to $3.48 billion in 2019.
This reflected an increase of $408 million or 11.7% over the preceding year.
In his presentation contained in the annual report for 2020, DDL Chairman Komal Samaroo reported that the profit before tax for the group was $5.2 billion in 2020 as opposed to $4.5 billion in 2019, translating into an increase of $662 million or 14.5% over 2019.
Earnings per share in 2020 were pegged at $5.06 compared to $4.53 in 2019. An interim dividend of $0.30 per share was paid in December, 2020 and the Directors have recommended a final dividend of $0.95 per share which if approved at the upcoming Annual General Meeting (AGM) on Friday, April 23rd will result in a total dividend of $1.25 per share. In the previous year, the dividend payments totaled $1.15 per share. The total proposed dividend for 2020 would result in a payout of $962.5 million compared to 2019’s figure of $885.5 million, reflecting an increase of $77m or 8.7%.
Discussing the results for the year, Samaroo said that turnover achieved by the Group for 2020 was $24.68b compared to $22.4b in 2019, representing a rise of 10.2%.
He said that COVID-19 had a “severely negative impact” on the export of branded products in the Caribbean and revenue declined by 33.5%. However, there were improvements in the North American and European markets, which compensated for the shortfall and resulted in the Group ending 2020 with the overall export of branded products at approximately the same level as in 2019. Turnover of bulk exports in 2020 exceeded that for 2019 by 10%, while turnover in the domestic market rose by 11% last year over the 2019 figure.
“2020 was an extremely challenging year for our Group, as it was indeed for our country. In addition to the negative effects of the ongoing global coronavirus pandemic (COVID-19), the failure to finalise the results of the General Elec-tions, held in Guyana on March 2, 2020, for five months added to the economic and social strain on the population,” Samaroo said.
TOPCO expansion
As it relates to capital expenditure, Samaroo said that the TOPCO Fruit Processing and Packaging Plant expansion was one of the key capital projects for the Group last year. He said that measures to mitigate the COVID-19 pandemic resulted in substantial delays in completing the project.
“The TOPCO Operations had to resort to extraordinary measures in order to achieve substantial completion of the project”, he said.
Despite the challenges, Samaroo said that the juice processing and packaging equipment was successfully commissioned and approved for production of one-litre juice products. The commissioning of the fruit processing plant was expected by the end of the first quarter of this year. The milk processing plant was expected to be completed by the end of the second quarter this year. A total of $1.2 billion was spent on this expansion project last year.
The second major area of capital expenditure in 2020 was on the rehabilitation and upgrading of the biomethanisation plant at Diamond, which accounted for $215m. In June, 2019, the Environ-mental Protection Agency had ordered that the plant cease operation after complaints by residents of wastewater constantly invading their yards and the roadways.
Samaroo said that net cash generated from the activities of the Group in 2020 was $4.8 billion. He said that this facilitated the self-financing of capital expenditure of the Group totaling $2.1 billion. Further, he said that at the end of 2020, bank borrowing in the form of loans and overdraft was cut from the end of 2019 by just over $1b.
In relation to the future outlook, Samaroo said that in accordance with the Group’s pledge to adhere to international best practices on the sale and marketing of alcoholic products, it intends this year to bring all labels in line with these practices.
In June, 2019, rum producers from around the Caribbean region had announced plans to introduce labels that include warnings in order to address concerns about the harmful use of alcohol.
“As indigenous brands firmly rooted in the communities in which we serve, we have a responsibility to do the best we can in ensuring persons consume our products responsibly. This initiative goes some way towards that,” Samaroo had said.
He added, “As we work to implement these commitments over the next 24 months, we hope that we can continue to work in partnership with our governments to reduce harmful drinking and its impact on society.”
According to the 2020report, one of the Group’s subsidiaries, Demerara Rum Company Inc was dissolved on February 25, 2020. The gain on the dissolution of $68.73m was recognized through other comprehensive income.
The AGM is set for 4 pm on April 23rd at Lot 214 Camp Street. The AGM will be held in accordance with COVID rules and as mandated by an order of the court on March 3rd, 2021. No more than seven individuals representing personally or by proxy no less than 40% of the shareholding of DDL shall be present.
