Wisynco anticipates gov’t compensation for styrofoam losses
Wisynco chairman William Mahfood said in the second-quarter report, “While it is unfortunate to have to close any manufacturing facility, the management team’s efforts in securing new business lines and growth in our core beverage brands is to be congratulated."
Wysynco, which posted a second-quarter decline in net profit due to the closure of its 40-year-old Styrofoam plant, says it is continuing to negotiate for compensation from the Government of Jamaica.
In comments attached to unaudited financial results, directors said the styrofoam plant was closed with effect on December 31, 2019, in accordance with the Government of Jamaica’s ban on production and sale of Styrofoam. That ban took effect on January 1, 2020.
There was a one-off loss resulting and accounted for as discontinued operations, impacting net profit by $262 million for the three months ended December 2019.
After provision for the loss and taxes, Wisynco posted net profit attributable to shareholders of $582 million, or 16 cents per share compared to $776 million or 21 cents per share for the corresponding period of the prior year.
“We have provided for the full financial impact of the closure of the styrofoam plant in this report, however, the industry was given certain commitments from the government that there would be some form of compensation for these closures. We will continue to negotiate for this compensation,” Wisynco said.
Wisynco chairman William Mahfood said: “While it is unfortunate to have to close any manufacturing facility, the management team’s efforts in securing new business lines and growth in our core beverage brands is to be congratulated. We will continue rolling out strategies to enhance shareholder value in the near future.”
The company’s cogeneration plant is scheduled to be commissioned during the third quarter (March 2020), with promised cost savings and efficiencies.
Revenues for the second quarter from continuing operations stood at $8.5 billion, an increase of 25 per cent over the $6.8 billion achieved in the corresponding quarter of the previous year.
Directors noted that the company, outside of styrofoam production, has grown in all major product categories despite tempered demand for some products at the start of the second quarter. Demand was impacted by rains that continued into early October.
Nonetheless, gross profit increased to $3.1 billion or 14.1 per cent over the $2.7 billion achieved in the same quarter of the prior year. Wisynco said gross margin was 36.6 per cent was above target for the quarter.
Selling, distribution and administrative expenses for the quarter totalled $2.2 billion or 25.3 per cent more than the $1.75 billion for the corresponding quarter of the prior year.
Directors noted that additional one-off marketing costs were incurred to support new product development and introduction during the quarter. There was also Christmas related marketing expenditures.
This effort resulted in a 10 per cent increase in revenues for the quarter.
Wisynco is located in St Catherine, Jamaica, and operates from two main locations. Manufacturing takes place at White Marl, while Lakes Pen carries all distribution activities.
The company is the franchise holder for Wendy’s, Haagen-Dazs stores and Domino’s pizza restaurants located island-wide.
Wisynco distributes 110 brands with over 4,000 different products between beverages, grocery and synthetic items.
As indicated on its website, beverages distributed include brands such as Coca-Cola, Sprite and Welch’s and locally produced brands Bigga, Sweet, Boom, Wata, Cran Wata with white, strawberry, cran-grape and original flavours as well as Minute Maid and Hawaiian Punch.
The company’s grocery brands include General Mills, Unilever, Nestle and Kellogg’s and also items from Yoplait, Betty Crocker, Nature Valley, Haagen-Dazs, Green Giant and Hunt’s.