ANSA McAl Limited’s share price has dipped by 26 per cent as investors continue to assess the conglomerate’s move to suspend dividends until 2028 to meet its 2x growth agenda which includes a TT$2 billion ($46.90 billion) before profit before tax (PBT) goal.

The Trinidadian conglomerate, run by the Sabga family with businesses in construction, manufacturing, banking, insurance, media, automotive and distribution segments, operates primarily in Trinidad & Tobago, but has businesses in Jamaica, among them Berger Paints Jamaica Limited and Ansa Chemicals Jamaica Limited.

In May 2023, ANSA McAl had announced that it intended to double its scale, size, impact and capacity by 2027. This objective would be funded by a mixture of organic growth in each business segment along with inorganic growth from large scale acquisitions in the Caribbean and North American markets.

On March 20, ANSA McAl’s board approved the move to suspend dividend payments for a three-year period to strengthen its balance sheet and provide it with financial flexibility to fund its large acquisition pipeline. This was communicated to the market on March 21 when its 2024 audited financials were released.

The decision has not gone down well with investors as the stock price on the Trinidad & Tobago Stock Exchange (TTSE) swung from TT$57.06 on March 21 to TT$44 ($1,040.77) on June 6, with the stock hitting a new 52-week low of TT$40 on May 27. That translates to TT$13.06, or TT$2.30 billion in lost market capitalisation for the company.

ANSA McAl paid TT$317.16 million or US$46.71 million ($7.42 billion) each year between 2021 to 2024 in dividends to shareholders or a combined TT$1.27 billion (US$186.84 million) over the period (1 TTD = J$23.4502).

ANSA McAl grew its 2024 consolidated revenue by five per cent from TT$7.05 billion to TT$7.40 billion ($170.93 billion) with TT$5.31 billion or 71 per cent of group revenue coming from Trinidad & Tobago followed by Barbados with TT$793.62 million. Group operating profit rose by eight per cent to TT$945.27 million with profit before tax increasing eight per cent to TT$905.82 million ($20.92 billion) despite higher finance costs.

Consolidated net profit grew 14 per cent to TT$675.55 million with TT$571.33 million attributable to shareholders. ANSA McAL generated TT$1.26 billion in consolidated operating cash flow during 2024 with free cash flow at TT$671.85 million.

2024’s PBT was the second-highest figure over the last five financial years with 2021’s PBT being TT$935.26 million.

While the parent company has suspended dividends, this has not precluded it from its publicly listed subsidiaries from paying dividends to shareholders. Berger Paints Jamaica Limited, a 53.86 per cent-controlled subsidiary of ANSA Coatings International Limited, declared a dividend of $0.125, totalling $26.79 million to be paid on July 4 to shareholders on record as of June 20. This is the first dividend paid by Berger Paints Jamaica since May 2019.

ANSA Merchant Bank Limited, ANSA McAl’s 82.48 per cent subsidiary, paid a dividend of TT$1, totalling TT$85.61 million on May 26. ANSA McAl received TT$70.61 million. Guardian Media Limited, a 51.03 per cent subsidiary of ANSA McAl, will pay a TT$0.04 dividend on June 16, totalling TT$1.60 million, with ANSA McAl to receive TT$816,466.84.

The move to suspend dividends has drawn concern by some investors along with commentary by different executive leaders. At Guardian Holding Limited’s (GHL) May 12 annual general meeting, a shareholder asked about the concern of GHL’s management team on the move considering that Guardian Life of the Caribbean Limited, its wholly owned subsidiary, is the ninth-largest shareholder in ANSA McAl with 2.84 million ordinary shares or a 1.61 per cent stake.

Group Chief Executive Officer Ian Chinapoo noted that the move by ANSA McAl to suspend dividends wouldn’t materially affect the group’s ability to generate returns to policyholders or pay dividends to its shareholders. He also pointed to the move being an interesting way for ANSA McAl to build up its cash reserves.

“So, we are going to observe, like a good investor just like you would, and make good decisions in terms of that investment, but we believe that they have a purpose for their decision and, of course, we’ll be monitoring that as an investor,” Chinapoo said in his response.

NCB Financial Group Limited (NCBFG), GHL’s parent company, also had skipped paying dividends between May 2021 and December 2023 which saw the share price cut by more than half. NCBFG has since restored dividends and has only missed one quarterly declaration since.

Bourse Securities Limited, a licensed stockbroker, noted in its April 7 review that the group’s decision to suspend dividends reflects its focus on long-term growth through reinvestment.

“The company plans to expand its global footprint by entering new markets and pursuing acquisitions to double its size and scale by 2027. The successful execution of this strategy could likely lead to greater profitability and long-term stock price growth, ultimately benefiting shareholders. During this period of no dividends, AMCL’s demonstration of meaningful earnings growth and continued communication with its shareholders will be important in maintaining confidence in its stock,” Bourse said.

Despite the reactions by investors to the dividend suspension, ANSA McAl’s Group CEO Anthony Sabga III is sticking to the move as he noted that the decision would bear good fruit in the form of larger dividends and a stronger group by 2028.

“The level of confidence that they continue to have — even those who have sold — remains quite robust. Some people sold based off where they are in their life cycle. What has been quite interesting is the crop of new shareholders… This is a generation of investors that are deeply committed to, interested in, and encouraged by the corporate sustainability programme,” Sabga said at the company’s May 15 first-quarter results presentation.

According to recent share disclosures, ANSA’s directors have purchased 2,655 shares for an estimated TT$138,042.58 between April 4 – 11 while connected parties linked to directors and senior executives purchased 226,325 shares for an estimated TT$11.59 million (J$259.34 million) between March 26 to April 11.

ANSA McaL’s first quarter (January to March) saw consolidated revenue rise 10 per cent to TT$1.81 billion, but operating profit dipped 23 per cent to TT$132.21 million. However, the group’s adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) decreased six per cent to TT$278 million.

The jump in finance costs related to the recent acquisition of Bleachtech LLC during 2024 and non-cash mark to market losses drove a 46 per cent cut in PBT from TT$173.19 million to TT$92.92 million. Consolidated net profit decreased by 49 per cent from TT$126.33 million to TT$65.03 million with net profit attributable to shareholders at TT$54.17 million. Group operating cash flow improved 112 per cent to TT$300.24 million. ANSA McAl announced during April that it would be selling ANSA Technologies Limited to TOSL Engineering Limited.

ANSA McAl’s first quarter was affected by the harsh winter weather which led to frozen pipes and a decline in plant uptime. The company acquired Bleachtech LLC in November 2024 for US$327 million (TT$2.25 billion), the largest acquisition in ANSA’s 143-year history. Bleachtech serves the municipal and industrial potable and wastewater treatment sectors across the US Midwest and mid-Atlantic states while producing bleach, caustic soda and hydrochloric acid. Bleachtech contributed TT$67.7 million in revenue and TT$36.5 million in PBT for the last two months of 2024.