Fri | Jun 2, 2023

Derrimon mulls more foreign acquisitions

Published:Wednesday | July 20, 2022 | 12:10 AM
Derrick Cotterell, chairman and CEO of Derrimon Trading Company Limited.
Derrick Cotterell, chairman and CEO of Derrimon Trading Company Limited.

Derrimon Trading Group is on the hunt to acquire another business beyond Jamaica’s shores, a potential deal directly targeted at getting the company closer to its goal of having 50 per cent of revenues coming from foreign markets.

“We can’t say yet at this time. We are still looking,” CEO Derrick Cotterell told the Financial Gleaner this week, when asked about the new acquisition possibility.

For years during the early stages of its operations, the Derrimon Group had what Cotterell described as “minuscule” foreign revenue from original subsidiary Caribbean Flavours and Fragrances, but a refined focus on diversifying revenue flows began in 2021 with the acquisition of Brooklyn, New York, United States-based grocery businesses, FoodSaver New York and Good Food for Less.

The new assets, which were acquired under a New York subsidiary called Marnock LLC, were expected to immediately add 25 per cent to the group’s top-line income. Cotterell planned on driving that number up by designating shelf space in the stores for Jamaican-made products, including Derrimon’s own Delect brands, and fresh produce, over the short term.

Derrimon’s growth strategy since the initial acquisition has largely been around acquiring businesses that are strategically aligned to the group’s core strategy while intensifying its vision of greater value through exports.

In January this year, Derrimon purchased 100 per cent of manufacturer Spicy Hill Farms, which trades in dried agricultural products, soup and spice mixes, before closing the deal to acquire 100 per cent of St Ann-based meat processing company, Arosa Limited, in April.

Derrimon intends to grow output at Arosa in order to increase supplies to local hotel chains, restaurants and retail stores, before tackling the international market. But FoodSaver grocery retail operation in New York is already being used as a conduit for Spicy Hill’s products.

Cotterell did not disclose whether the new company being sought for acquisition would also be in the grocery business or how the deal would be financed. Some of its acquisitions and expansion activities were part-financed by proceeds from Derrimon’s $3.5 billion additional public offering of shares in January 2021.

Export focus, for now, Cotterell said this week, is on the North American market with a large African and Caribbean diaspora population. Outside the United States, Derrimon Group also has a presence in Canada and the United Kingdom through the export of Spicy Hill’s products.

Caribbean Flavours and Fragrances’ tentacles are spread throughout the Caribbean regional market, with its newest target being Spanish-speaking Dominican Republic. The other subsidiaries that make up the Derrimon Group – Sampars, Select Grocers and WoodCats International – cater to the local market.

For the first quarter to of 2022, Derrimon reported consolidated revenues of $4.2 billion, which were nearly six per cent up on the prior year’s result, from which the group earned profit attributable to shareholders of $165 million. The company reported total assets of $9.3 billion.