Jamaican car sales deliver for Goddard; rum and catering deflate

Published: Wednesday | January 16, 2013 Comments 0
The new-look Fidelity Motors Ltd, dealer for Nissan vehicles in Jamaica.
The new-look Fidelity Motors Ltd, dealer for Nissan vehicles in Jamaica.

Nissan car sales in Jamaica jumped over 20 per cent last year despite the recession which negatively affected other local businesses owned by Barbadian conglomerate Goddard Enterprises Limited.

Goddard expects Nissan sales to fall in 2013, but predicts its holdings in National Rums of Jamaica and air transport company GCG Jamaica Services Limited should record better results.

The Nissan dealership is operated by Goddard subsidiary Fidelity Motors.

"Fidelity Motors Limited in Jamaica had another year of solid performance, marked by increases in both revenue and profit. Sales increased by 22 per cent over prior year, helped in great part by duty reductions on some vehicles," said Goddard in its financial report released this month for financial year ending September 2012.

Total car imports at the Kingston Wharves which specialises in car imports, surpassed 18,775 units between January to November last year, or 86 per cent higher than year-earlier levels based on the latest Port Authority of Jamaica data.

Highest imports in 4 years

The figure represents the highest imports in at least four years, helped by a 20 percentage-point rollback of the Common External Tariff (CET) on car imports, from 40 per cent to 20 per cent, implemented in May 2011.

"However, most of these duty reductions have now been discontinued which, together with a deterioration in the value of the Jamaican dollar towards the end of the financial year, could lead to challenging times going forward," Goddard said.

A portion of the duties was reinstated on June 1, 2012, repricing the CET on some motor imports at 30 per cent.

Goddard made BDS$34 million of profit from BDS$999 million of revenue in 2012. The company recovered from a loss of BDS$5.3m in 2011.

Jamaica's overall contribution to group operations is unknown as Goddard, which operates in multiple Caribbean markets, does not disaggregate its results geographically.

Goddard owns 99 per cent of Fidelity Motors in Jamaica, having bought out the 30 per cent holdings of former partner GraceKennedy Limited (GK) in a 2009 deal that also saw Goddard acquiring GK's 51 per cent holdings in Versair In-Flite Services. Goddard used GCG Jamaica Services for the Versair acquisition.

Production issues

The Barbadian company also has a 31 per cent stake in National Rums of Jamaica. The conglomerate indicated that rum sales declined due to production and irrigation technicalities.

"National Rums of Jamaica Limited had a disappointing year, as it produced a result well below last year. The main plant in Clarendon continues to perform well, but operations were severely disrupted on several occasions during the year because of the inconsistent operation of the ferti-irrigation of adjoining sugar cane fields. We are pleased to report, however, that significant progress has been made in resolving the problems experienced during the year," said Goddard.

It added that GCG Jamaica also recorded a poor performance because of increased competition.

"We continue to see a significant reduction in our revenue due to double catering, reductions in the service levels in the airline business and high utility costs. The market conditions in our terminal operations at Kingston continue to challenge us given the lower passenger throughput and higher competition," stated the financials.

In early 2012, GCG exited its catering contract for terminal operations beyond the security checkpoints - or 'post-security' as the company describes it - at Sangster International Airport in Montego Bay. The job is now being handled by Goddard's joint-venture partner Express Catering Limited (ECL), which was awarded the contract for all post-security food and beverage operations.

"ECL has invested significantly in order to build out new concessions which are expected to produce good results into the future," said Goddard.

"During the year, we exited from several unprofitable contracts in the industrial catering division and undertook a restructuring exercise to align the reduction in revenue with our operating costs."

steven.jackson@gleanerjm.com



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