Derrimon Trading Company Limited has posted a decline in revenue for the first quarter ending March 2024, a performance it blames on operational hurdles and ‘teething pains’ it’s experiencing as it undergoes a strategic realignment of its business model.

For the past few months, Derrimon has been shedding commodities in its distribution segment, which it says are “low margin products”. Instead, it has been focusing on developing its proprietary brands — Delect, Refresh, Gentle — along with greater emphasis on its core distribution portfolio.

“This shift, along with a general reduction in consumption in the market during the months of February and March, resulted in the distribution segment recording a 19.47 per cent decline in revenue from the $1.51 billion reported for the March 31, 2023 quarter to $1.22 billion,” Derrimon’s Chairman and CEO Derrick Cotterel said.

The quarter’s results also reflect lower sale numbers from a new distribution agreement Derrimon has with Nestle, which covers a smaller geographical area.

The group’s revenue for the quarter stood at $3.56 billion, down by 27.67 per cent or $1.36 billion from the $4.92 billion reported for the same period last year.

Aside from the operational changes, the decrease in Derrimon’s revenue is also attributed to several key factors in the wholesale and retail segment, including the closure of the Sampars Mandeville retail outlet and issues with a newly implemented IT platform.

Cotterell was also busy addressing challenges in the United States in which the Derrimon Group has subsidiaries FoodSaver New York, Good Food for Less, and Marnock Retail LLC. The assets were acquired in 2021 by Derrimon Group’s New York subsidiary, Marnock LLC as a means of diversifying the company’s revenue stream.

During the quarter, Marnock Retail LLC, operator of Food Savers NY supermarket, was ordered closed due to a roof collapse and subsequent water damage from continuous rains. This closure also impacted Marnock LLC, the operator of wholesale food distributor Good Food for Less.

“This is a material event, as both businesses contribute to the consolidated group results and provide management fees to Derrimon, the company. We continue to be in active dialogue and discussion with our landlord in order to get a full understanding as to the timelines for the replacement or repairs to the roof and the internal repairs required, given the levels of water damage incurred,” Cotterel said.

He added that the company has since engaged a public assessor and has had many discussions with its attorneys to review the present situation as well as to file the appropriate claim with its insurance company regarding the damage to inventory, consequential losses, and equipment.

“As a result, the contribution of this subsidiary will be muted during the second quarter,” he said.

Overall, the international operations experienced a 36.90 per cent drop in revenue, from $1.63 billion to $1.03 billion.

Meanwhile, Caribbean Flavours and Fragrances Limited and Woodcats International Limited also reported decreased revenues as local manufacturers cut back on orders amidst a general economic slowdown. Conversely, Spicy Hill Farms saw improved sales, though Arosa experienced slight reductions due to technical delays and a contraction in the hospitality sector.

Both Arosa and Woodcats are set to receive equipment upgrades in the near future, the CEO added, as the company works to modernise the operations of both subsidiaries. Cotterel has disclosed plans to install new equipment at Arosa by the end of the third quarter, while Woodcats is set to benefit tremendously from the diversification in supplies in the coming quarters.