It was a lacklustre March quarter performance for distribution company Derrimon Trading Limited (DTL), as while revenues went up, its lost considerable ground on profits.
Revenue for the period amounted to J$4.92 billion, which is an increase of J$682.03 million (16.09 per cent) over the J$4.23 billion reported for the same time last year. The growth in revenue is driven by improved performance from many of DTL’s subsidiaries notwithstanding the current worldwide economic climate.
Central to this improvement is Derrimon Trading’s adherence to sourcing products at the best possible cost to ensure its competitiveness within the market. Additionally, the focus on new products that appealed to DTL’s relevant business segments is instrumental in this improvement.
The company continues to provide innovative products which add value to its customers and this has aided to navigate exogenous shocks to our business.
Net profit went south
Net profit amounted to J$120 million last year but down to J$52.5 million for the quarter under review, while the earning per share went down to J$0.009 from J$0.036 last year. Pre-tax profit amounted to J$70.01 million, down J$127.69 million (64.59 per cent) over the J$197.70 million reported last year.
These results were impacted by higher administrative and finance cost during the period. The company is expecting that these costs will fall in the upcoming quarters based on the strategic initiatives that are upcoming.
Consolidated operating expenses for the quarter went up to J$898.10 million, an increase of J$241.10 million (36.70 per cent) over the J$657 million reported for 2022. The increase was mainly due to the impact arising from the consolidation of the cost of its new subsidiary, Arosa Limited and the new Select Grocers store in Clarendon.
Other notable increases were seen in utilities, salaries, distribution costs, and new operating cost from some of its other subsidiaries
The distribution and local retail arm of the business recorded revenue of J$3.29 billion for the first quarter, which represents growth of J$467.84 million or 16.57 per cent over March 2022 quarter. The major contributor to this growth was recorded within the retail segment of the business given the addition of the new retail store as well as sterling performances from some of its other stores.
Derrick Cotterell, chairman and CEO, cited the positive out-turn of this segment saying, “we continue to implement strategies to improve and expand our offering within our channels whilst ensuring that we remain available, presentable and our offerings are reflective of our customers’ expectations”.
He points out that the full reposition of the distribution business was accelerated at the beginning of 2023 though the introduction of many products under the ‘Delect’ brand.
According to Cotterell, the company is very encouraged based on the market acceptance thus far, arguing that the decision and timing was correct.
“The continued redefining of this business unit and ensuring that our proprietary brands attract additional world class principals will ensure the long term sustainability and growth in profitability. We continue to navigate the various challenges within the company, as the impact from adversities with logistics and supply chain negatively affected the business in the first quarter,” he added.
The delays experienced with supplies and the influx of orders from many of DTL’s suppliers at once impacted its bottom line due to excess demurrages along with the cost for extra off-site storage.