Benefits should be realized midway through Fiscal Year 2024
The massive capital expansion planned for Jamaican distribution giant, Wisynco is truly well underway with the company expecting to start seeing the benefits as early as next year.
The expansion plan would cost in the order of US$20 million and US$30 million (J$3.2 billion – J$4.8 billion). Capital expansion activities are well underway with the acquisition of capital assets as per its expansion plans, the benefits of which should be realized midway through Fiscal Year 2024.
Wisynco is ramping up production capacity, particularly of its beverage line to meet growing local and export demands with Wisynco Group Chairman, William Mahfood and his cousin, Chief Executive Officer Andrew Mahfood stating, “The capital program mentioned below will contribute to bringing stability and expansion to our production capacity as demand in all channels continues to be favourable. We are excited and optimistic to be embarking on the largest capital expansion ever undertaken by Wisynco.“
They advised shareholders in the company’s just-released report on the third quarter ended March 2023, “The flexibility and increased output resulting from this expansion program will ensure we meet the current demands of local and export markets and pave the way for additional capacity for growth and future innovations in our varied product lines.”
Wisynco reports that it has resolved some of the production challenges faced in the second quarter and is now seeing increased production to meet the increasing demand.
Revenues for the quarter amounted to J$12.0 billion, which represents an increase of 23.4 per cent above the J$9.7 billion achieved in the corresponding quarter of 2022. Notably, this is the second continuous quarter that Wisynco has recorded sales of $12.0 billion.
Selling, Distribution & Administrative (SD&A) expenses for the quarter totalled J$2.7 billion or 30.0 per cent more than the J$2.1 billion for 2022, in line with increased growth and revenue. SD&A expense to sales ratio is 22.5 per cent for the quarter, compared to 21.3 per cent in the prior year.
This increase can be attributed to additional marketing and promotional costs and inflationary increases in other variable expenses. While the gross profit of J$4.1 billion of the current quarter is the same as the preceding quarter, this represents an increase of 32.2 per cent over the J$3.1 billion posted in 2022.
Similarly, the gross profit margin at 34.6 per cent this quarter is higher than the 32.3 per cent for the same quarter last year but below expectation due to production output being lower than projected, which impacted Wisynco’s product mix.
Profitability continues to grow
Profit before Taxation for the quarter was J$1.57 billion, an increase of 43 per cent over the J$1.10 billion of the comparative quarter for the prior year. After provision for taxes, Wisynco recorded net profit attributable to stockholders of J$1.2 billion, or 31 cents per stock unit for the quarter, which is 38.6 per cent greater than the J$831 million or 22 cents per stock unit earned for the prior year.
The company’s balance sheet remains strong with a current ratio of 3.7 compared to 2.8 for last year’s quarter. This improvement is due to an injection of funds from borrowing facilities, partly offset by increases in inventories, reduction in payables and purchases of capital assets per Wisynco’s expansion plan.
However, inventories remain on the high side, as production output was lower than projected in January and February. Management expects these inventories to normalize within the next few months.