74% of revenues derived from products it controls

Manufacturing and distribution group, Wisynco has staged a rebound from the dark early days of the COVID pandemic, due in the main to its ability to pivot to exports and products that it controls.

Speaking at Wisynco’s AGM held Tuesday morning (February 8), Executive Chairman William Mahfood said: “The financial year 2021 greeted us with some serious headwinds due to the COVID pandemic. It ravaged our economy in many ways and impacted Jamaicans from all walks of life.”

“The fact that we withstood these unprecedented challenges and circumstances and maintained comparable revenue results as our prior financial year is a testament to the tremendous talent, resilience and commitment of the entire team. Despite the challenges faced during the year under review, revenue from continued operations came in at J$31.8 billion, 1.1 per cent less than the $32 billion posted in the prior year,” Mahfood added.

Wisynco posted $11 billion in gross profit for the year which was about the same for the prior year with a gross margin of 34.9 per cent compared with 34.4 per cent for financial year 2020.

Mahfood continued: “We achieved these results through expert fiscal prudence, taking a strategic approach to managing expenses and containing costs while not restricting business and other areas of revenue.”

“We also demonstrated our ability to adapt creatively to shifting consumer patterns and as sales dipped, we expanded our footprint in supermarket channels, recording good growth with Bigga, Coca-Cola, Boom cereals, ice-creams and confectionery. Our efforts bore fruit, as during the final quarter of the year, we experienced recovery in all channels,” the Wisynco boss added.

Attention must be paid here to Wisynco ability to champion its own brands and to lock onto the right mix of both imports and exports with its suite of products. So many Jamaican companies experience difficulties because of foreign exchange challenges and an overreliance on imports. This is particularly evident during this time of COVID where revenue channels are being narrowed or in some cases shut off. Companies can no longer be one-trick ponies.

In its fourth year as a listed company, Wisynco had the highest payout of dividends to shareholders to date at 30 cents per share. This delivery translated to approximately a 1.9 per cent dividend yield to shareholders.

With a good performance for the first half of the fiscal year, the interim dividend declared for financial year 2022 is double that of 2021 and will be paid out in three weeks time.

Wisynco’s CEO Andrew Mahfood noted that COVID began taking hold in Jamaica during March 2020 but the months July, August September would be the second quarter of COVID for the group’s fiscal 2021 year. He recalled the no-movement days, no tourism, no travel, no schools, no restaurants were hurdles it had to overcome while keeping the business functioning.

Therefore it comes as no surprise that for Q1 2020, fiscal sales for 2021 began to go down in every single quarter except Q4 (Jan-March 2021) where Wisynco was able to deliver a 17 per cent increase in revenue.

“This was a testament to the steadfastness and resilience of the Wisynco team largely because no one knew what next would pop up. We are a company known to always deliver top-line growth in revenues. To put that in perspective, for the six months ended December 2019, Wisynco’s revenues were increasing at 30 per cent. Just before the COVID pandemic, we were at 23.5 per cent before going into negative territory,” Andrew Mahfood explained.

“It is amazing that we were able to end up at break even on fiscal 2020 albeit with no revenue growth. We have a five-year compounded annual growth rate of 8.4 per cent,” said Wisynco’s CEO.

He went on to declare that 74 per cent of the group’s revenues remain within its control and that one of its objectives is to control the majority of the source of its revenues. This now sees the vast majority derived from products such as Wata, Bigga, Boom Tru Juice Worthy Park Rum – products Wisynco manufactures or does so for third parties. The imported portfolio remains a good add-on.

Gross margins are steady at around 35 per cent, though there were some supply increases and saw some movements in the foreign exchange rates which saw prices increases in order to maintain margins.

The real story here is Wisynco’s ability to contain expenses and press them south. Looking to LNG as an energy source helped in this regard.

Looking at 2019 with expenses at 26 per cent of sales, Wisynco Group was able to bring expenses down to 23.8 for fiscal year 2021. Andrew Mahfood attributes this to good cost management and various strategies. Here the revenue base stayed the same, but expenses came down, spelling $600 million in lower expenses.

EBITDA moved from 12 to 13 per cent and net profit moved from eight to 10 per cent to end fiscal 2021. Wisynco has been able to convert its net profits into cash thus allowing it significant working capital and no real need to rush into an imminent APO. It has also lowered its debt to equity ratio which means there is leverage for future expansion.

Its six-month results ended December 2021 which were recently reported to the Jamaica Stock Exchange (JSE) reveals revenues up 17 per cent, gross profits up 19 per cent, expenses as a per cent of sales now at 21.7 per cent which has produced a net profit margin of 11.4 per cent after taxes. Earnings Per Share (EPS) is up 39 per cent for the period under review.

Now note here the five-year dividend trend, given Wisynco started as a public company in December 2017. It made dividend payments in fiscal ’18, fiscal ’19, fiscal ’20 and fiscal ’21. There was an interim dividend declared last week of 20 cents per share which is 100 per cent above the 10 cents interim dividend declared for January 2021.

“We saw normalcy returning in the latter part of Q4 and we can feel the optimism. Wisynco is definitely chomping at the bit. We see a huge runway ahead of us. We have very healthy cash reserves and we expect to provide greater dividends to our shareholders. We will be triggering some new projects in the next three months. This should bring additional revenue growth down the road,” said the Wisynco CEO.

The Wisynco Board voted to continue with PriceWaterhouseCoopers as the company’s auditors. Odetta Rockhead-Kerr, Adam Stewart and Devon Reynolds were returned to the Board of Directors.