Wisynco outlook: Big savings on debt, $2b sugar sales
William Mahfood, chairman of Wisynco Group Limited, is projecting that the addition of packaged sugar to its line of distributed products will grow sales by 10 per cent.
The company began distributing Worthy Park Estate’s branded sugar in January, offering bags in four sizes that range from 0.5 to five kilogrammes, along with a darker sugar option for baking.
The one-tenth growth would equate to sales of $2.45 billion, based on the $24.5 billion in revenue recorded by the company in its last financial year ending June 2018.
“We are now distributing sugar, and it will start to lift revenues by about 10 per cent,” said Mahfood. “Sales are going very well.”
Wisynco signed a distribution deal with Worthy Park last year to market its spirits and sugar and took a stake in the agricultural business. The arrangement for spirits kicked off last November, with rum sales accounting for two per cent of Wisynco’s revenue in the quarter ending December.
growth despite hit
The distribution and manufacturing company reported a strong second quarter, with total sales of $7.1 billion, and a 34 per cent improvement in net profit, $775.7 million.
Over six months, the company made $14 billion in revenue and profit of $1.55 billion. Its bottom line grew 25 per cent year on year over the six months. That’s despite a $128-million hit taken by the company on its foreign-currency holdings, due to movements in the exchange rate, which Mahfood said represented a book loss rather than actual realised loss.
The Jamaican dollar continues to fluctuate, and going forward, the figure should adjust accordingly, he said.
Over the year ending June, Wisynco effectively converted its capital at $8.69 billion into profit at $2.3 billion, as reflected in its return on equity, or ROE, of 26 per cent.
Its ROE now hovers at 30 per cent on an annualised basis, with capital at $9.96 billion as at December 2018.
Mahfood says Wisynco’s ROE outperforms many other large companies, due in part to his philosophy of “constructive discontent”, which encourages team members to aim for even higher sales targets.
Going forward, the company is projecting annual savings of $40 million on debt-servicing costs, having refinanced $1.9 billion of its borrowings. The refinancing cut 2.25 percentage points off its interest charges to less than eight per cent on average.
More savings are expected for the company from its switchover to a new power plant in either April or May, which is designed to provide 2.0 megawatts of power for its headquarters in St Catherine. The plant cost $300 million to build and runs on liquefied natural gas.
Wisynco also offered an update on its dividend policy, saying it would make distributions to shareholders twice per year, in January and July, unless the funds are needed for capital projects.
The company plans to share 20 per cent of net profit with shareholders annually. The first dividend for this year was declared at seven cents per share, totalling $262 million.