Wisynco profits shaved by Beryl, new plant ramp-up delayed to early 2025

A softening of demand for frozen and chilled products, lower visitor arrivals, the reduction in remittances, and some inflationary effects “all seemed to have resulted in lower-than-expected overall consumption” during the September quarter, according to drinks manufacturing and distribution company Wisynco Group Limited.

The period saw a moderate rise in sales revenue for the manufacturing and distribution company but a shrinkage of its bottom-line earnings.

In its quarterly report to shareholders, Wisynco said “some customers had storage challenges”, no doubt occasioned by the effects of Hurricane Beryl in early July. Power was knocked out for as many as 120,000 JPS customers. Although service was restored to about 80,000 of those affected within 48 hours, a stubborn number, 30,000 customers, mostly in central, southern and some parts of western Jamaica, were without power up to September.

The fall in demand in the post-Beryl period was “more than compensated for by the increase in demand” for the products in its beverage portfolio.

Wisynco Chairman William Mahfood said in an interview with the Financial Gleaner that a lot of the south coast, especially parishes like St Elizabeth, Manchester and parts of Clarendon, lost electricity, and many businesses would have been closed for a short while.

“So, from that point of view, if you look at it, that impacted our deliveries. Let’s say we sell average almost $5 billion a month; when you lose two days’ work in an operation that really is literally at its full capacity, you lose ... $500 million. It’s like 10 per cent just because it’s only 20 [production] days in a month, “ Mahfood explained.

Continuous rains

The challenges were compounded by continuous rains which impacted road conditions and logistical arrangements, while back-to-school spending impacted the available discretionary income for the purchase of consumer goods, he noted.

“What we’re seeing, and you would see it in a lot of other companies in the last quarter, we had a pretty challenging time. We’re seeing that things are reverting to what it used to be pre-COVID, where the back-to-school period is now back into sort of normal times. People have to buy school books and pay school fees, and so there is a little bit less discretionary spending, I believe,” Mahfood opined.

Revenue for the July-September first quarter improved by 6.6 per cent year on year, from $13.7 billion to $14.6 billion. The outurn was the highest quarterly sales in the history of the company, amid expansion.

“With the expansions of our beverage lines being primarily completed, we have been able to meet the demand of our products, as well as improve the service levels to our customers. With Hurricane Beryl impacting Jamaica on July 3, 2024, the start of our first quarter, we experienced decreases in demand for frozen and chilled products,” Wisynco said in its latest quarterly report to shareholders.

Wisynco delivered shareholder profit of $1.5 billion, down 6.25 per cent compared to the $1.6 billion earned for the first quarter of 2023.

The company’s SAD costs, that is, selling administration and distribution, climbed by nearly 24 per cent, mainly because of the scaling of its “warehousing and distribution, as well as sales, and marketing teams to meet the anticipated increase in demand”, Wisynco said.

Mahfood says the buildout is ongoing.

“We started already with the commercial teams, where the production teams are being hired. You won’t really see any revenues from that business unit until around, probably early next year. So, it’s like you’re pre-spending in anticipation of the business, basically,” he said.

Wisynco’s new factory expansion and new lines should have commenced production in November but delays have pushed back the timeline out to the third quarter, that is, the January-March 2025 period.

“The reality is, in these times ... you always have some hiccups. So, there are delays in the installation and all of that. We’re looking at early in the next quarter. I would say at this point, we’re probably going to be somewhere around February,” Mahfood said.

neville.graham@gleanerjm.com