Derrimon reports $183 million in profits

Derrimon reports $183 million in profits

Wednesday, August 19, 2020

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Food products and distribution firm Derrimon Trading Company Limited reported an unaudited net profit of $183.89 million for the six-month period ended June 30, 2020.

The consolidated results represent an increase of $16.26 million or 9.70 per cent above the $167.63 million previously reported for the corresponding period.

Revenues for the period under review amounted to $6.30 billion, $16.11 million more than the $6.29 billion reported for the previous corresponding six-month period.

Reporting to shareholders, CEO Derrick Cotterell attributed the slowdown in economic activities and demand by consumers and manufacturers to the novel coronavirus pandemic, which resulted in the negligible growth experienced at the group level.

“We were, however, encouraged by the continued growth that was reported by the retail segment of our business and by Caribbean Flavours and Fragrances Limited which speaks to the diversity of the Derrimon Group of Companies. As the economy continues to reopen, we remain encouraged that other areas will benefit from the expected increase in economic activities,” Cotterell stated.

The company, which has been listed on the junior market of the Jamaica Stock Exchange since 2013, indicated its subsidiary Woodcats International saw a reduction in business during the reporting period. However, it anticipates a rebound based on the reopening of many segments of the manufacturing sector in July 2020.

Consolidated operating expenses for the six-month period was $965.76 million, a 17.17 increase over the $824.20 million reported for the corresponding period in 2019. This increase was driven by the increases in lease payments, the depreciation of the Jamaican dollar to the US dollar, trucking and delivery charges, and costs associated with the new warehouse and utilities.

According to Cotterell, despite the improvements in the company's distribution strategies, improved efficiencies, and greater availability of key products, the COVID-19 pandemic had an adverse impact on the distribution arm of the business.

For the six-month period, revenues for the distribution and retail division totalled $5.71 billion, when compared to the $5.73-billion reported for the corresponding period last year.

Revenue generated from core activity for the second quarter ended June 2020 was $2.70 billion, representing a decline of $151 million or 5.30 per cent when compared to the $2.85 billion reported for the similar period in 2019.

However, despite these results, the CEO further indicated that the retail arm of the business continues to do well and served to reduce the shortfall in revenue which the company experienced.

Net profit for the six-month period was $104.18 million, representing a $25.58 million or 32.54 per cent increase on the $78.61 million reported for the corresponding period last year.

Core operations generated a net profit of $50.66 million, a 26.1 per cent increase for the second quarter ending June 30, 2020.

It should be noted that this financial year's net profit includes taxation cost as it is Derrimon's second year of making a payment of 50 per cent of corporate taxes on projected net profits.

“The results for the first six months of 2020 are very encouraging for our business as a whole, despite the global pandemic which has resulted in an economic slowdown and has negatively impacted some aspects of our business. Despite the many challenges, we remain confident that we have the right talents and leadership to deliver on our plans for the ensuing periods,” Cotterell asserted.

— Abbion Robinson

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