Wisynco eyes new business line

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Wednesday, November 14, 2018

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Wisynco Group Ltd may find itself starting a new business line as it seeks to recoup lost revenues from the ban on styrofoam produced in Jamaica.

The Government of Jamaica has placed a ban on plastic straws effective January 1, 2019, which will be followed by a ban on styrofoam come January 1, 2020. Both products are manufactured by the Wisynco Group.

Chairman of the company William Mahfood, in a note to shareholders posted on the Jamaica Stock Exchange website, reiterated that the company continues to work assiduously to innovate products that are environmentally friendly.

“However, if we are unable to develop these products, then we will repurpose our team members and building to ensure any lost revenues as a result of the ban will be recouped through new business,” Mahfood reasoned.

Up to September, Mahfood estimated losses from the ban on styrofoam at roughly $1 billion or four per cent of total sales. Plastic straws, however, represent less than a tenth of one per cent of the company's revenue.

Since the announcement, the chairman, while noting that the company is in support of the Government on the matter of recycling and removal of damaging materials to the environment, insisted that the Government allow a five-year transition period to minimise impact on businesses.

He argued that in addition to his suggestion of a transition period, the Government should implement key activities over a 24-month period for the purposes of public education; legislative review; and to ensure that Customs, Trade Board and the Ministry of Industry, Commerce, Agriculture and Fisheries are fully prepared to enforce the ban.

“This would also allow time for a full regulatory impact assessment to be carried out, which would measure the full impact of the ban to fully inform the subsequent nature of the final Bill,” Wisynco's chairman said.

Aside from losses on its styrofoam and plastic straws production, Wisynco has also stopped its supply of beverages containing six grams or more of added sugar per 100 millilitres from schools two months earlier than the effective date.

“Wisynco continues to be mindful of the need for healthier beverage and lower sugar alternatives, and our research and development teams are working to identify these. Again, we thank the passion of the Wisynco team on their solid efforts for our first quarter as well as all our customers,” Mahfood said.

For its first quarter ended September 30, Wisynco produced revenues of $6.8 billion, representing an increase of 12 per cent over the $6.1 billion achieved in the corresponding quarter of the previous year.

The company's profit grew to $768.6 million over 2017's $697.9 million. Gross margin of 37.8 per cent was slightly lower than the 38.4 per cent for the corresponding quarter of the previous year due to the commissioning of the new beverage lines and the devaluation of the Jamaican dollar.

During the quarter, Wisynco managed to successfully transition from all leased facilities into its new central cold storage distribution facility located at Lakes Pen.

“We expect synergies and efficiencies from this successful transition,” Mahfood said.

Wisynco has also been appointed the local distributor for sugar and spirits produced locally by Worthy Park Estates Ltd. The group expects to earn an additional $2 billion annually from the five-year partnership.

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