Wisynco Group is reporting that business has been depressed, as a result of the pandemic with the projection for the depression to continue.

In its just released quarterly financial results for the second quarter ended December 31, 2020, Wisynco indicated that the depression has impacted the company’s bottom line with profit and revenue going down for the period. Company directors in their quarterly report to shareholders highlighted that the business continues to suffer as a result of the pandemic.

In fact, they made the point that the recently announced added travel restrictions in the United States, United Kingdom and Canada will no doubt lead to the situation being exacerbated in the near term. They emphasised that COVID-19 continues to depress activity specifically in areas such as tourism, bars and entertainment, restaurants and schools, which have been unable to return to any normalcy.

These channels will continue to be impacted in the near term based on the added travel restrictions in the three major source markets.

Bite being felt in the depressed quarterly financials

Revenues for the quarter totaled $8 billion, a decline of six per cent compared with the $8.5 billion registered for corresponding quarter of the previous year. As a result revenues from these channels will continue to be impacted with company directors declared that they expect this to continue into the third and fourth quarters of 2021.

Due to the depressed activity and shrinking wallets, revenues from some of Wisynco’s higher margin products have slowed while some of its lower margin products have increased. Gross profit for the second quarter was $2.7 billion, plunged 14.7% from the $3.1 billion achieved in the same quarter of 2019.

Wisynco had a gross margin of 33.3% for the quarter under review, which was lower than the 36.7% registered in the prior year. This was due primarily to changes in sales mix, impacted by the pandemic, which has caused consumers to change their spending habits and to essentially stay at home.

As it regards cost containment, this was achieved in the areas of selling, distribution and administration, where expenses for the quarter totaled $1.8 billion or 17% less than the $2.2 billion for the same period in 2019. This expense reduction of $381 million for the quarter brings the fiscal year to date cost reduction to $503 million.

Success in controlling costs

The directors, Chairman William Mahfood and Chief Executive Officer, Andrew Mahfood stated that, “management has been laser focused on controlling our costs from before the start of this pandemic and we applaud the team for their efforts. Our SD&A expenses to sales ratio was 22.7% for the quarter, compared to 25.85% in the prior year with the current quarter having a lower revenue base than the prior year. “

They pointed to the fact that the management team is equally motivated and intent on growing revenues and not just on controlling costs. The Mahfoods identified some key areas of focus such as the company’s export channel, which for the six-month period ended December 31, 2020 grew by 23% while its Full Service Model route to market focused on customers.

The management team is optimistic that when the recovery starts Wisynco will gain back lost revenues and with a much lower cost base, expressing confidence about the company’s propulsion and recovery from this pandemic.

Profit slightly down

Profit before taxation for the quarter was $876 million, which was $80 million or eight per cent lower than the comparative quarter of 2019. The year to date profit was $1.9 billion, representing a 7.4% decline from the $2 billion attained in the second quarter of 2019.

After provision for taxes, Wisynco recorded net profits attributable to stockholders of $688 million or 19 cents per share for the quarter. This was similar to the $686 million earned for the prior year, while earnings per share on a fiscal year to date basis was $0.41 per share.

This, the directors reported compared reasonably well to $0.43 per share for the prior year, which was not affected by the COVID-19 impact. The company’s balance sheet remains strong with the directors declaring that the company will continue to seek investments for expansion to garner new revenues and cost-effective technologies to improve its costs of operations.