Wisynco increasing production capacity to satisfy insatiable demand
Wisynco Group Limited is expected to nearly double its monthly production by February as it brings new production lines on stream in a bid to expand its product range and meet the rising market demand for its products.
The manufacturing and distribution giant has seen its revenues grow from $26.93 billion in its 2019 financial year (FY) to $48.71 billion at the end of the 2023 FY ending June 30. This has been catalysed by the growth in rising demand for its proprietary manufactured brands and its growing distribution portfolio which propelled net profit to $4.92 billion in 2023.
Wisynco’s two-year expansion project is now moving into the final phase with the company set to add three manufacturing lines by February which will boost its capacity by 50 per cent. It even expects to have one line commissioned within the coming days which is expected to contribute to December’s sales. The overall expansion at the end of June 2024 will see five new production lines that will double its output.
“These five new lines we’re putting in are going to pave the way for serious growth to come in the next five years,” said Wisynco Chief Executive Officer (CEO) Andrew Mahfood at the company’s sixth annual general meeting (AGM) held on Wednesday at the AC Hotel by Marriott in Kingston.
Wisynco has had to juggle the local demand along with export requests which have all been impacted by the company ensuring it maintains relevant inventory to produce the various products. As a result, it has had to focus on local demand which outstripped its production capacity, forcing the company to resurrect a old machine that hadn’t been in use for almost three years to help improve output.
“Our chairman echoed that we caused some frustration to some of our local customers, and we intend to make sure our customers feel the service that they’re used to with Wisynco. When they order from us, they don’t get one or two products, they get what they want, and they get it tomorrow. That’s where we’re heading to go back to,” the CEO noted. To help meet that demand, the company has spent $1.78 billion (US$11.48 million) on capital expenditure in the first quarter.
The overall expansion, which is projected to cost US$30 million, has seen the company build out a new 200,000-square-foot facility along Lakespen Road, in Portmore, St Catherine where most of the new manufacturing is set to take place. Wisynco hired 100 new team members recently and is set to add another 150 employees to its 2,200-plus workforce to operate this expanded production capacity which is set to be fully reflected in the 2025 financial year. Wisynco’s 2025 financial year starts on July 1, 2024 and goes to June 30, 2025.
“The message to Jamaica is that we want talent. Wisynco needs engineers, we need talented machine operators. We have five machines by June that need help. We have it, but we need more,” Mahfood added.
Wisynco’s export sales totalled $1.14 billion or 2.33 per cent of 2023 FY’s total sales. Wisynco has set an ambitious target of 10 per cent of sales in the future to come from exports which is likely more attainable from the recent expansion. The CEO even highlighted that this is the first time in the company’s history that they bought a line almost as a reserve based on the projected demand which is to come following discussions with its overseas partners.
“We had almost achieved five per cent of our revenues a few years ago. With the increased demand on the local market over the last couple of years, we’ve had to basically throttle the export business. Our biggest market for export right now is UK and USA. UK is growing at a phenomenal pace especially with brand Bigga. We’ve not been able to make a really huge breakthrough with the brand, but the intention is that we will focus on the US markets with this new expansion,” responded Chairman William Mahfood to a shareholder on their export desires.
This growth in production has forced the company to explore additional distribution centres across the island, particularly in the southwestern end of the country to service its 13,000 retail customers. Wisynco opened a distribution facility in Hague, Trelawny, in March 2022, which the chairman highlighted as a tremendous success in how the company manages its logistics.
While the company continues to focus on building out its manufacturing capacity, it is also in discussions with other businesses in the fast-moving consumer goods (FMCG) segment to take them on as distribution clients. Wisynco added Jamaican Teas Limited (JAMT) on November 1 as its latest distribution client which is set to add at least $563 million in revenue to the top line. When asked if the company would consider purchasing a stake in JAMT’s new Caribbean Dreams Foods Limited subsidiary, the chairman noted that it wasn’t the right time to discuss such a possibility. Wisynco purchased a 30 per cent associate stake in JP Snacks Caribbean Limited in April 2019.
Wisynco’s first quarter revenue climbed 15 per cent to a historic $13.73 billion with its gross profit margin remaining around 35 per cent. Its net profit also grew by a fifth to $1.55 billion during the period. This translated to an earnings per share (EPS) of $0.41 and a trailing 12-month EPS of $1.37.
This performance has translated into the company’s cash pile hitting $9.07 billion at the end of September. While the company is deploying some of its cash to long-term corporate bonds at high interest rates, it is being cautious on acquisitions.
“We are looking for acquisitions, Jamaica and overseas, but one of the things is that we’re not going to overpay for strategic acquisitions. We believe, hopefully in the near future maybe something will happen,” the CEO expounded.
Wisynco’s total assets jumped 26 per cent to $32.90 billion with its current assets around $20.89 billion. Total liabilities and shareholder’s equity closed the period at $10.20 billion and $22.70 billion, respectively.
When asked about the current Panama Canal situation, the CEO explained, “We’re not having any impact yet from the congestion in the canal. I’ve been reading the international news that there is some expected congestion that they may think come from the Canal, but we haven’t experienced any of that yet. We’ve been pushing up our inventories as we go into expansion mode.”
The company’s head of manufacturing noted that the canal did pose some difficulties last year, but they found ways around that issue. Wisynco’s inventory balance is down from $6.15 billion to $5.38 billion over the quarter, but still remains well above the December 2022 figure of $2.91 billion before supply chain disruptions.
Wisynco’s stock price closed Thursday at $19.76 which leaves it up 12 per cent year to date, but below the 52-week high of $22 on November 1. Wisynco’s market capitalisation stands at $74.32 billion and makes it the seventh-largest Jamaican company and ninth-largest company on the Jamaica Stock Exchange.