The Demerara Distillers Limited (DDL) has reported a marginal increase in after-tax profits for the first half of this year compared to the same period last year, citing challenges, including a decrease in bulk spirits’ sales.
“This report is presented against the background of a particularly challenging international economic atmosphere which existed during the first half of 2024 and still persists. The contraction of markets globally directly affected consumer spending which continues to be under severe pressure on account of continuing inflation,” DDL’s Chairman’s State-ment, which is included in the company’s Interim Report 2024 for the period ending June 30, pointed out.
“…Group profit before taxation for the period was $2.8 billion, a marginal increase of $0.1 billion over the $2.7 billion achieved in the comparative period of the preceding year. Profit after taxation was $2.1 billion, again marginally above the $2 billion in 2023,” it added.
DDL’s interim report on its half-year performance can be found in yesterday’s Sunday Stabroek edition.
The company said that it was still able to increase profits because of improv-ed margins and rigid cost control measures implemented across the group. In addition, the ongoing diversification of the group’s business has been widening its revenue base and minimising the effects of negative conditions in many of its market segments.
“During the period, considerable progress was made in the implementation of several capital projects, some of which will contribute to the revenue growth in this year. The completion of some of these projects next year will widen the revenue base and profitability of the group in the future,” the Chairman’s statement said, thanking the staff and board for their work over the period.
DDL said that for the first half of this year, consumer spending in the developed markets, particularly on premium products including premium spirits, declined considerably but did not give possible reasons for the slump.
However, the report pointed out that as a result of this market reality, “major brand owners had to rationalise their production and reduce sourcing of bulk spirit supplies to levels significantly below that of previous years. This reduction in purchase of bulk spirit supplies adversely impacted the group’s turnover.”
As at June 30, 2024, turnover was $14.4 billion compared to $15.7 billion recorded for the comparative period in 2023, reflecting a decline of $1.3 billion or 8 percent.
The report said that turnover in the domestic market grew by 8 percent, but this growth was not adequate to fully offset the decline of 45 percent experienced in international markets. Overstocking on account of decline in consumer demand coupled with high interest rates, forced retailers to curtail purchases resulting in over supply in distribution and supply chains in markets around the world.
DDl had last year reported after tax profits of nearly $6 billion; 12% higher than 2022.
“The group’s profit before taxation for the year was $7.674 billion compared to $7.086 billion in 2022. This represents an increase of $588 million or just over 8% above the previous year. Profit after taxation for the year was $5.969 billion, an increase of 12% or $648 million over the previous year’s $5.321 billion,” the company had stated in its annual report sent to shareholders and later told to them at a shareholders’ meeting in January.
DDL shared that the group’s turnover for the year was approximately $33.3 billion and this represented an increase of $1.9 billion or 6% over the comparative 2022 turnover of $31.4 billion
International revenue in the year, the company said, had grown 3% over that of the previous year despite the challenges faced. In addition, domestic revenue increased by 7% over that of 2022. The earnings per share for the year 2023 was $7.75 compared to $6.91 in the previous year.
DDL said that shareholders’ equity at the end of the year was $53.353 billion, reflecting an increase of approximately 5% on the amount at the end of 2022 when it was $50.934 billion.
And as it relates to dividends, an interim dividend of $0.40 per share was paid to shareholders in Decem-ber 2023. However, the directors had recommended a final dividend of $1.60 per share, which was approved at the AGM resulting in a total dividend of $2 per share. In the previous year, dividend payments totalled $1.75 per share.
