COVID 19 blamed for 6.1% decline in revenues for the September quarter
By Durrant Pate
Food distributor, Wisynco Group saw its exports rise by 43% to earn $56 million but revenues fell to $8.1 billion for its just ended September quarter.
In their report on the just released September quarter unaudited financial results, company directors told shareholders that COVID 19 is to be blamed for the decline in revenues.
Wisynco boss, William Mahfood says “the Covid Pandemic has continued to affect various channels of activity within our nation and consequently in our business, specifically in areas such as Tourism, Bars and Entertainment, Restaurants and Schools which have not been able to return to normalcy.”
As a result, revenues to these areas have continued to be impacted with the latest quarterly results showing that revenues were down $8.1 billion below the $8.6 billion achieved in the corresponding quarter of the previous year. This represented a 6.1% decline.
However, Wisynco did experience some bright sparks with exports leading the way with a 43% jump to earn $56 million more than the export revenue for the first quarter in 2019.
According to Mahfood, who chairs the company’s board, “We attribute this increase to higher demand in the US, Canada and other CARICOM countries for our brands and we continue to press the development of our exports as a means of getting exposure to new revenue channels.”
Gross profit down for the quarter
There was a slight decline in gross profit for the quarter, which was $2.9 billion or 5.9% less than the $3.1 billion achieved in the same quarter of the previous year. The company’s gross margin remained at 35.9%, the same as at September 2019.
Selling, Distribution & Administrative expenses were down 6% at $1.92 billion, less than the $2.04 billion for the corresponding quarter of the prior year. Mahfood told shareholders “Management continues to implement measures to reduce expenses and were pleased that our expense to sales ratio held at 23.8% of sales even though our revenue base was lower than the prior year’s quarter.”
He expressed the hope that the expense control measures will be more evident in future quarters. The other bright spark was the fact that in spite of the fall-off in revenues and the associated challenges caused by COVID-19 Wisynco was able to keep operating profit within reasonable margins.
According to the Wisynco Chairman, “management was also pleased that operating profit, considering the impact of Covid on our Revenues, were only lower than the prior year’s quarter by $39 million or 3.7%. Profit before Taxation for the quarter was $1.03 billion which was 10.4% less than the $1.15 billion realized in Q1 2019, which included an exchange gain of approximately $67 million greater than the current quarter. “
After provision for taxes, Wisynco recorded net profits attributable to Stockholders from continuing operations of $851 million or 23 cents per stock unit compared to $932 million or 25 cents per stock unit for the corresponding period of the prior year.” Wisynco’s balance sheet remains strong and the management is actively reviewing new investments to drive down our costs of operations and to seek new revenues.
The company received a new long-term loan of $500 million during July 2020, at a very attractive interest rate and tenure to refinance the capital outlay on the Cogeneration plant. The Cogeneration plant was successfully commissioned and placed into production in July 2020 (this quarter).
As a result, Wisynco has seen positive contribution from the implementation through reduced energy costs. Mahfood reports that the engineering team did very well to get the plant commissioned.
Elder Mahfood departure
In its report to the shareholders, the board took the opportunity to acknowledge its just-retired director, Joe Mahfood for his contribution to the company for over 55 years.
The directors state, “we will miss his astute guidance on engineering, production and technical matters. He has been a great mentor to many executives within the organisation over the years and we express our deep gratitude and wish him the best.”