Sterling Products Ltd (SPL), now controlled by the Beharry Group, recorded an after-tax profit of $130 million in 2001, a 15% increase over 2000, but the earnings per share fell by $3.90 each as a result of a rights issue during the year.
The Beharry Group's Secure International Finance Company Inc, which held 32.58% of SPL's shares in 2000, increased its holding to 58.1% during 2001. SPL had a rights issue last year, which realized $610.9 million, to restructure and modernize its operations. But it is not clear whether it is via this issue alone that the group was able to increase its stake in the firm.
SPL's chairman, John Carpenter, told shareholders yesterday at the company's annual general meeting that the rights issue enabled the company to raise the money without having to borrow it which he said was a good thing because he was not sure whether SPL would have been able to service such a debt.
He said now SPL would be able to repay the confidence shown with the new equipment it has acquired.
Carpenter stated it was another rewarding year for the company despite a downturn in the economy. The company's recorded sales were $1.082 billion as against $1.005 billion in 2000 - an increase of eight per cent.
The company recorded positive sales and profitability without raising selling prices during the year, Carpenter said. He said restructuring production procedures and more efficient distribution routes as well as internal and external training for its staff in the areas of marketing, production and quality control have led to an increase in sales for ice cream and the firm's edible fat products.
He said the soap and detergent plants needed more work in production and product presentation and expected that both plants would make a major contribution to the firm's bottom line this year.
The company has already purchased a state of the art edible fat processing plant, and had expected to commission it this month but this has been rescheduled to the end of August. The plant is to be housed in a new building at the company's Providence, East Bank Demerara, compound. This facility, Carpenter said, would also house the ice cream plant expansion scheduled for next year.
Work is also ongoing to the company's infrastructure to improve access and to facilitate handling of containers. Carpenter said the company has also upgraded its power generating capacity and has installed two new 1050 KVA generating plants along with increased fuel and edible oil storage capacity and additional cold storage for increased ice cream production.
"We have reevaluated and classified our long-term objectives and recognized that we must satisfy the needs of our customers if we are to stay ahead of our competitors," said Carpenter. The company is focusing on product development, presentation and marketing. Key laboratory testing equipment has been acquired to enhance product development and quality assurance procedures. A repackaging and re-labelling exercise to improve the presentation of the company's products has also commenced and the company has also increased its fleet of delivery vehicles to cover the market better.
Carpenter said SPL was consolidating for the future and would be a viable manufacturing force in the region. SPL manufactures food products and cleaning agents.
The company paid an interim dividend of ten per cent in December last year and the directors recommended a final dividend of 20 per cent to make it a total of 30 per cent for the year.
Chief executive officer of SPL, Ian Glasford, giving a review of the edible oil plant project, told shareholders that it was put together to primarily address the company's requirements for increased capacity for edible oil processing and improve various aspects of infrastructure.
Glasford stated that prior to the improvement works, the existing margarine plant was antiquated and was barely able to keep up with production demands.
He said the laboratory was under-equipped and required new testing equipment.
There was also poor access to the plant and the stand-by electrical equipment was inadequate.
The electrical system, too, was aged and needed to be upgraded.
Construction of the new infrastructural works commenced in July, 2001, with the building of SPL's new Igloo factory outlet at the front of the company property at Providence. A new electrical distribution system was built to safely manage SPL's electrical loads.
SPL also constructed and equipped a new generator building with two new Cummins diesel generators rated at one megawatt (MW) output each, which, with the existing diesel generator, brought the total generating capacity to 2.8 MW.
Diesel storage capacity has been upgraded.
Glasford said SPL constructed access roads to the north and south of the factory area to improve access for emergency vehicles as well as by large container loads.
He stated the laboratory has been updated and equipped with state-of-the-art analysis equipment to enable the company to test its products to ensure international standards.
The water treatment plant was upgraded to provide increased capacity for future requirements of pure water.
Bulk storage was installed for the major raw material and the storage to the production area has been linked by pipeline with computer controlled valves.
Glasford said a decision was taken to construct a building that would accommodate the edible oil plant and a new ice cream plant.
He stated the new edible oil plant would increase production from the current 1,200 kilogrammes per hour to 3,000.
SPL has addressed the sanitation aspect of its production by providing an additional employees' sanitation room and air conditioning for the packaging area.