Banks DIH reports $619M profit
-Group profits reach $747M
Stabroek News
April 20, 2003
Banks DIH made an after tax profit of $619M (US$3.2M) last year compared with $618M (US$3.3M) in 2001. The Banks group made a stronger showing with profits increasing from $694M (US$3.7M) in 2001 to $747M (US$3.9M) in 2002.
Banks DIH owns 40% of BB Farms Inc and 51% of Citizens Bank (Guyana) Inc. A 60% growth in after-tax profit by Citizens Bank last year impacted heavily on the better performance by the group in 2002. However, the financial statements have no information regarding BB Farms Inc, except an investment of $8M and the ownership interest.
The rescheduled 47th Annual Meeting of Banks DIH was held yesterday at Thirst Park, Georgetown where Reis formally presented the accounts and his report to shareholders. The meeting had been postponed from March 8 after the company gave improper notice to shareholders of the meeting. This lapse was challenged by chartered accountant and shareholder, Christopher Ram.
The food and beverage company performed creditably in the consumer market last year despite a stagnant local economy, increasing its market share in several areas. Revenue from sales was $9.4B (US$49.6M) as against $9B or US$48.1M the previous year - a five per cent increase. The group revenue was $10.4B in 2002 as against $9.9B in 2001.
Banks DIH in 2002 launched its PET (Polyethylene Terephthalate) or plastic line of bottles last year with an initial investment of $70M which had to be expanded by a further $38M because of a higher than anticipated demand for the PET line of soft drinks, including Coca Cola. The company plans to invest a further $909M this year to enhance and improve its manufacturing operation and its restaurant business, Chairman and Managing Director, Clifford Reis said in his report.
“In 2002, we were able to manufacture products to broaden our customer base, expand our market share and reestablish our leadership in the major product markets,” Reis also said.
Reis told shareholders that the new I-Cee flavours and the introduction of Coca-Cola Light boosted consumption and market share for Banks DIH in 2002. A breakdown of the sales for the various categories of product was not available.
Reis also informed shareholders that a tremendous demand for Tropical Mist Water stretched the resources of the plant during the early part of 2002 and saw the company investing over $30M to double the production of packaged water. Tropical Mist now dominates the local market for packaged water, he said.
The company also launched Tropical Juice, packaged in three sizes and flavours, and these were well received by customers, Reis said. These were launched using existing production lines with the only required investment being for packaging and the targeting of school children, supermarkets and cool-down carts.
The Chairman/Managing Director also reported that Guinness sales were good in 2002, doubling over the past three years. No figures were available.
The company also introduced on the market vodka, rums and liqueurs in PET bottles, which allowed for these products to be packaged in affordable sizes.
Reis told shareholders that the savings accruing from using plastic bottles were quite meaningful in the areas of storage, breakage, handling, staffing and accounting and The Xtra Premium blend rum in PET bottles was well received.
Banks DIH also moved its pastry production unit for all restaurants to Thirst Park which allowed for economies of scale and standardization of product and quality. This led to meaningful increases in sales, Reis said. The new Homestyle bread has also increased its market share.
The introduction of Smirnoff Vodka on the market in September 2002 met with good results. Bimbo Milk and Juices have been reintroduced and have gained wide acceptance from the public.
And Tastee Snacks, packed in 20-gram packages, have seen consumption going up by 400% and Banks expects that new flavours could increase consumption further.
Reis said that the Group’s financial position remained sound and its present profitability only represented 8.2% on net assets of $8.2B. Steps, he said, are being taken to improve on this in the immediate future.
The company’s (not the group) profit margin (net income before taxes as a ratio of revenue) remains around 11 per cent, whilst its liquidity (current assets less inventory as a ratio of current liability) has improved to 57.7% from 54% last year. Cash and short-term funds have declined by 24 per cent. There was no cash flow statement for the company to explain the reasons for this net movement. Trade debts and credits for the company have also increased by an average of 15 per cent.
Banks DIH remains one of the largest contributors to the tax system with the company paying $2.6B in taxes last year compared to $2.4B in 2001. This represents 49% of the company’s gross income.
Reis in his report said he was looking forward to the government taking urgent action to stimulate the economy and adopting measures to induce investments in the economy so as to create a better standard of living for all and to generate employment for youths and graduates.
