JAM | May 18, 2024

Derrimon’s American subsidiaries dulled March quarterly results

/ Our Today

Reading Time: 3 minutes

By Durrant Pate/Contributor

The Marcus Garvey Drive headquarters of Derrimon Trading Limited.

Derrimon Trading Limited saw its March quarterly results dragged down by its American subsidiaries Marnock Retail LLC and Food Savers NY supermarket.

Marnock Retail operates Food Savers NY supermarket, which has not been in operation since March 22, 2024 due to the collapsing of the roof and continuous rains over a sustained period. The sustained rains have caused a delay in repairs, thereby resulting in a temporary closure of the business. 

The impact to Marnock Retail also impacted Marnock LLC, operator of wholesale food distributor Good Food for Less.

“This is a material event as both businesses contribute to the consolidated group results and provide management fees to Derrimon,” the company stated in its March quarter report to shareholders.

“We continue to be in active dialogue and discussion with our landlord in order to get a full understanding as to the timelines for the replacement or repairs to the roof and the internal repairs required, given the levels of water damages incurred. Our insurers have also been advised and at the appropriate time, the necessary claims for damages to equipment and for consequential losses will be made.”

Closure of the Mandeville Sampars’ outlet

Derrimon was also hit by the closure of its Mandeville Sampars’ outlet and technological glitches with its retail software platform. Both were responsible for the reduced sales, resulting in a general reduction in consumption during the first quarter.

During the quarter under review, DTL saw a drop in its revenues, which plummeted to J$3.56 billion. This was a J$1.36 billion (27.67 per cent) decline on the J$4.92 billion for the comparative period last year. 

The reduction in consolidated revenue can be attributed to several factors observed during the period.

Derrimon’s distribution segment continues with the strategy of reducing its focus on commodities which carry lower margins and is instead increasing its focus on developing its proprietary brands (Delect, Refresh, Gentle) along with greater emphasis on its core distribution portfolio.

General reduction in consumption 

This shift along with a general reduction in consumption in the market during the months of February and March resulted in the distribution segment recording a 19.47 per cent decline in revenue from $1.51 billion in March 2023 to $1.22 billion for the current quarter.

The wholesale and retail segment (Sampars & Select) saw a  26.19 per cent contraction in revenue moving from $1.78 billion to $1.31 billion, which was influenced by a general decrease in business activities during the period.

This was in addition to issues with the functionality of the information technology platform that was implemented and the closure of the Sampars Mandeville retail outlet.

The subsidiaries of Caribbean Flavours & Fragrances Limited (CFF) and Woodcats International experienced a drop in revenue as local manufacturers reduced orders during the period due to a general reduction in economic activity. 

The offices of Caribbean Flavours and Fragrances.

However, the Spicy Hill Farms subsidiaries saw improved sales during the quarter, while Arosa saw a slight reduction in sales due to technical delays with its major equipment and a small contraction in sales to the hospitality segment.

Improvement in profitability

Pre-tax profit closed on $36.98 million, an improvement from the $143.96 million pre-tax loss chalked up in 2023. Net profit amounted to $29.59 million representing a rebound from the $125.96 million net loss in 2023. 

Total Assets from core activities closed on $14.09 billion, representing an increase of $1.54 billion above the $12.55 billion reported last year. This improvement was as a result of increased inventory balances held during the quarter and right-of-use assets.


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