Sterling Products Limited realised a significantly reduced after-tax profit of $49M for the year 2002 - compared to $130.9M in 2001, although there was a 1.4% increase in sales.

This was disclosed in the Chairman’s Report read at the company’s Annual General Meeting (AGM) held at Providence, East Bank Demerara yesterday.

Recorded sales for 2002 were $1.096B compared to $1.082B for 2001. Cost of sales was $777.7M for 2002, increased from $722.6B in 2001. Net profit before taxation for 2002 was $109.3M compared to $186M. Other income accounted for $33.2M in 2002 down from $62.5M in 2001.

The company, which makes margarine, soap powder and ice cream, paid increased taxes of $60.2M for 2002, up from $55.1M in 2001. Earnings per share dropped to $3.21 in 2002 from $8.57 in 2001. The board approved an interim dividend of 10% ($10 per share) and a final dividend of 20% ($2 per share) - a total dividend of 30% ($3.00 per share) for the year 2002 at $3 per share.

Total capital expenditure for the year amounted to $301.9M, all of which was financed from internally generated funds.

Chairman of the company, John Carpenter, announced that the company’s performance during 2002 was a good one overall and should not be measured in financial terms alone. He urged that the short-term performance should be examined in light of significant long term capital investments the company entered into in an effort to be able compete outside of Guyana when trade sanctions are removed.

He added that despite some delays during the year under review the company was able to complete construction and testing of the new margarine plant, which he said would reduce the cost of production. The plant has been commissioned and is in operation.

The company has also constructed access roads and improved storage facilities. Sterling has also been self-generating power for more than a year, Carpenter stated and had brought down its power consumption cost to $20 per kilowatt hour. The company had installed two 1MW Cummings generators for this purpose.

He said there were some events in 2002 which were responsible for the drop in profits despite increased sales. This included a 45% increase in the price of edible oil used in the manufacturing of many of Sterling’s products. The company, Carpenter said, had decided to absorb the increase without passing it on to its customers.

Proceeds from the sale of empty edible oil drums were reduced to $8.08M in 2002 from $14.2M in 2001 because of the change in the method of transport of the oil from drums to tank containers. Carpenter made the point that the company was about one year behind schedule in its targets.

Director Paul Cheong, in answering questions on taxation from shareholders, explained that taxes had to be paid on a greater amount of profit. He stated that even though profits had been higher, taxable profit for 2002 was greater than that of 2001. He added that the company had applied for a reduction of taxes to be paid to the Guyana Revenue Authority (GRA). (Johann Earle)