Banks rose to challenges - except political instability --Reis Stabroek News March 13, 2000 Banks DIH rose to the challenge of inflation, rising unemployment, negative population growth and low wages in 1999, but could not find a suitable strategy to cope with the continuing problems of political instability, Chairman Clifford Reis said. Banks DIH recorded a 3.8 per cent reduction in its after-tax profit last year as against 1998. The company's plans for the year include the opening of the Sheriff Street Drive-in Restaurant; the acquisition of a site for the Arapaima Restaurant or, if possible, the acquisition of the current site where it is housed; the establishment of a branch of Banks DIH at Corriverton; the establishment of a refrigerated warehouse; the setting up of a new duty free shop on South road; the development of the Linden branch; and the installation of a new malt mill. In his address to shareholders at the company's 44th Annual General Meeting at Thirst Park on Saturday, Reis said that in terms of the financial accounts, last year was no better than the previous one and Banks DIH had recorded an after tax profit of $580.4 million. This compared to $603.1 million in 1998, representing a reduction of $22.7 million or 3.8 per cent. Gross sales for the year were $8.677 billion compared to $7.776 billion in 1998, an increase of $901.0 million or 11.5 per cent. However, the increase in dollar sales, he said, was as a direct result of higher selling prices for the company's core products and the depreciation of the Guyana dollar. The lower net profit was due mainly to the reduced demand resulting from the pressure placed on consumers' disposable income, and the political unrest during the early part of the financial year. The increased costs of packaging, raw materials and other related expenses contributed to reduced profits the Chairman said. The consumption tax on malt products increased to $960.9 million from $861.2 million in 1998. Overall taxation also increased from $1.9 billion in 1998 to $2.1 billion last year. He noted that while sales for biscuits, cereals and snacks increased by 2.3 per cent, the sales for bread and rolls dropped by 3.7 per cent. While branches, merchandising and other services departments' sales increased by 10 per cent their profits decreased by $24 million. Goods and operating costs last year increased from $3.6 million to $4.5 million. The wage bill also increased by $131 million. In terms of investment, Reis said that Banks now held 51 per cent of the shares in Citizens Bank in Guyana bringing its total number of shares to 30,340,557 from 27,840,557. The shares represent an investment of $386.9 million. Banks acquired its majority shareholding in December 1998. In August last year the company received a dividend of $6,068 million from the bank. Directors Azam Khan, Joseph Vieira, Richard Fields and Reis himself represent the company on the Board of Citizens Bank Inc. Banks has closed the subsidiary Caribanks Shipping Company because it became impossible to maintain its viability. However, Banks has retained the wharf for shipment of its beverages and has restarted negotiations with government to purchase the Caribanks property site. Reis noted that there was no growth in malts this year in spite of marketing activities and distribution strategies. One of the successful strategies, however, was the joint effort between government and the company to curtail the illegal importation of Polar beer. With the installation of a new labeller Banks will bottle beer in the short bottles and no longer in the old ones. Banks showed a decline of 6 per cent in sales while Malta, Milk Stout and Guinness Stout recorded an increase. Shandy, he said, was well received especially by the female segment of society. Last year Banks also introduced Premium beer, Millennium beer, Draft beer and Strong Ale. Soft drinks sales declined by 7 per cent last year compared to the previous year but according to Reis Banks still maintains a 70 per cent share of the industry. The company plans to introduce shortly I-Cee drinks in plastic bottles in three sizes - eight-and-a-half ounces to be called `Kiddie'; 24 ounces and a two-litre family size. Plans are in train to export I-Cee flavours. Banks is still negotiating with Coca Cola in relation to the packaging requirements for the soft drink. This project is expected to be on stream by the end of next month. Reis reported that after years of decline, rum sales increased by 21 per cent last year over the previous year with the growth coming from the Five Year Old set. In relation to refurbishment and rehabilitation, Reis said that the company's programme had begun. Kitty Qik Serve had been completed and negotiations were underway for the purchase of the Arapaima building. If successful Banks would build a new restaurant there. The Banks chief executive noted that the public servants strike last year caused a severe shortage of competitive products which created an opportunity for consumers to be much more aware of the local Trisco brands. As such sales increased by 243,000 pounds. Noting that banks exported a fair amount of breakfast cereals to neighbouring Trinidad, he said it amazed the company's management team that the consuming public in Guyana supported imported biscuits and cereals while Trinidad consumers used the Guyanese products. Banks, he noted, too, after many years of negotiation, had finally received permission to operate a duty free shop at the Cheddi Jagan International Airport, Timehri. Banks competitors, who previously handled the company's products and only purchased $125,000 per month, had claimed that there was no demand for Banks BIH Limited products. Using the old addage that `the proof of the pudding lies in the eating,' Reis declared that Banks Duty Free Shop at the airport is now selling an average of $1.7 million per month.