Derrimon warns of challenging year
Published:Wednesday | September 18, 2024 | 12:05 AM
Hit hard by a steep decline in revenue, occasioned by the temporary closure of its New York operations, distribution and manufacturing company Derrimon Trading has labelled 2024 a tough financial year.
It is looking towards the manufacturing operations to extract value for shareholders, according to Chief Financial Officer Ian Kelly.
Derrimon, one of the largest companies listed on the junior stock market, has seen its sales falling by 18 per cent and profits by almost 44 per cent, at the halfway mark, extending from January t0 June.
Reporting to shareholders at their annual general meeting regarding the company’s performance for the financial year ending December 2023, Kelly said security costs were up $48 million, insurance $58 million, staff costs $200 million, utilities $40 million, and debt financing $120 million.
Amid the spike in expenses, the company reported a dramatic decline in yearly profit, from $618 million to $182 million.
“When you look at the normalisation of many of these costs, you will understand what transpired at the bottom line, as reported, Kelly told shareholders at the company’s annual general meeting.
Since its listing on the market a decade ago, Derrimon has evolved into a diversified group, with operations spanning distribution of consumer foods and other goods, grocery retail, pallet making, and manufacturing of food and cosmetic additives. Its retail footprint has grown beyond the flagship Sampars Cash and Carry grocery chain to include a new brand called Select, as well as FoodSaver and Good Food for Less in New York, both of which are to be rebranded by year end under the Sampars name.
Its member companies also include various manufacturing entities, including Caribbean Flavours and Fragrances food flavour maker, pallet maker Woodcats International, Spicy Hill condiments, and Arosa meat processing.
Kelly says critical to the continued growth of Derrimon is capitalising on opportunities and retooling of the existing operations to extract value.
“We’re at that place where we will see major improvements as we tweak the outcomes at the various subsidiaries over the next two years,” Kelly said.
Regarding the half-year that has already elapsed, Cotterell said March was challenging, but June showed signs of improvement despite the absence of the New York businesses’ usual 35 per cent contribution to revenue.
“The uniqueness of our New York subsidiary is that whilst it is servicing the Caribbean and African diaspora in the New York and tri-state area, it also serves as one of the channels for our Delect-branded products,” Kelly said.
The Food Savers and Good Food for Less retail operations in New York have been closed since March 22 due to flood damage caused by heavy rains at a time when the roof was under repair. In light of the fallout, Kelly said shareholders can continue to expect lower revenues.
“Truthfully, this year will be a tough year for the company,” Kelly told shareholders, “but what we’ll continue to do is to manage costs while ensuring that the team is agile and continues to be very effective within the marketplace,” he said.
“Many of our Delect products are being manufactured by some of our subsidiaries, and we intend to be increasing the capacities in those subsidiaries so that the value chain in terms of profitability remains within the group,” Kelly said.
Caribbean Flavours, for instance, produces a range of food-preparation items and cordials for distribution by Derrimon under the Delect brand; Arosa produces sausages, cold cuts, and a range of processed meats under the Arosa and Delect brands’ and Spicy Hill produces Ram it Up soup dried concentrate, dried Scotch bonnet pepper, and other dry mix soups under the Spicy Hill and Delect brands
Otherwise, Woodcats, whose wooden pallets are utilised in warehouses and distribution centres, is expanding into the production of sawdust for use in horticulture and landscaping and as raw material for patio furniture.