In the face of a persisting challenging global economic environment, the Demerara Distillers Limited (DDL) Group has recorded a marginal increase in its profit after tax during the first six months of 2024.
This was reported by the Group’s Chairman, Komal Samaroo, in his mid-year results for the period ended June 30, 2024.
According to Samaroo, the Group’s Profit Before Taxation for the first half of this year was $2.8 billion, a marginal increase of $0.1 billion over the $2.7 billion achieved in the comparative period of the preceding year.
Similarly, the Profit After Taxation of the DDL Group was $2.1 billion during this period, again marginally above the $2 billion recorded in 2023.
The Chairman said, “This result was possible on account of improved margins and rigid cost control measures implemented across the Group. In addition, the ongoing diversification of the Group’s business has been widening the revenue base of the Group and minimising the effects of negative conditions in any of its market segments.”
Moreover, during the reporting period, Samaroo noted that considerable progress was made in the implementation of several capital projects some of which will contribute to the revenue growth this year. He added the completion of some of these projects next year will widen the revenue base and profitability of the Group in the future.
Additionally, it was reported by the Chairman that the Group’s Turnover as of June 30, 2024, was $14.4 billion compared to $15.7 billion recorded for the comparative period in 2023, reflecting a decline of $1.3 billion or eight per cent.
However, turnover in the domestic market grew by eight per cent but according to Samaroo, this growth was not adequate to fully offset the decline of 45 per cent experienced in international markets. He further stated that overstocking on account of a decline in consumer demand coupled with high interest rates, forced retailers to curtail purchases resulting in over-supply in distribution and supply chains in markets around the world.
The Chairman presented the DDL Group’s Interim Report 2024, which was published in Sunday’s edition of the Guyana Times, against the background of what he describes as a “…particularly challenging international economic atmosphere” that existed during the first half of this year and still persists.
He pointed out that the contraction of markets globally directly affected consumer spending which continues to be under severe pressure on account of continuing inflation.
Samaroo said, “Consumer spending, particularly on premium products including premium spirits, in the developed markets declined considerably during this period. As a result of this market reality, major brand owners had to rationalise their production and reduce sourcing of bulk spirit supplies to levels significantly below that of previous years. This reduction in the purchase of bulk spirit supplies adversely impacted the Group’s Turnover.”
Nevertheless, the Chairman used the opportunity in the 2024 mid-year report to recognise the ongoing commitment of staff and commend their hard work which contributed to these results. He also expressed gratitude to the Board of Directors for their continued support, advice and guidance.
In its last report for the 2023 financial year, the DDL Group raked in some $5.969 billion in profit after tax – an increase of 12 per cent or $648 million over the $5.321 billion recorded in 2022.
Chairman Samaroo had stated that the diversification of the Group and the continued premiumization of its core brands contributed to last year’s growth. He disclosed that the Group recorded its highest level of Capital Expenditure in 2023, as it focused on investments that will expand capacity and modernise its operations as well as allow for greater product and service diversity, and will ultimately grow and sustain revenue within the Group.
Capital Expenditure in 2023 was over $8.4 billion, almost two-thirds of which was funded from funds generated by the Group, and the balance was funded by a loan from the Inter-American Development Bank Invest (IDB Invest).
The largest investment being pursued has been the major expansion of the Group’s Beverage Plant, which is expected to cost around $10 billion to be expended over three years (2022-2025) of implementation. When completed, the production capacity of this operation will almost triple, providing a wider range of products for both domestic and export markets.
Going forward, Samaroo pointed out that the Group’s expansion and planned growth will most certainly put it in a strong position to take advantage of the new opportunities being created as Guyana leads the regional food security drive. He added that the company is also continuing its international marketing drive to expand the distribution of its rum brands in unserved markets around the world.
“These projects are designed to advance the Group’s diversification while continuing to build greater competitiveness in its traditional businesses. These investments will position the Group to expand its revenue base as it takes advantage of new opportunities in a rapidly changing and growing marketplace locally, regionally, and internationally… I believe that with the completion of several ongoing projects in 2024, we can look forward to strong growth in future years,” the DDL Chairman had stated.
