Massy Holdings Limited (MHL) achieved significant milestones in financial year (FY) 2023, reporting a robust 15 per cent surge in third-party revenue, reaching $14.2 billion (US$2.1 billion). This success was fuelled by growth across MHL’s diverse portfolio. The integrated retail portfolio (IRP) — its Massy Stores — recorded a 20 per cent increase in revenue while its Gas Products division as well as its Motors and Machines division saw growth rates of 11 per cent and 5 per cent, respectively.

In 2023 the group reported profit before tax (PBT) of $1,229 million (US$182 million), up 24 per cent over the $995 million (US$148 million) recorded in 2022.

“We are excited and energised by the performance of our portfolios, whose combined performance contributed to a 15 per cent improvement from the prior year,” expressed MHL CFO James McLetchie in the company’s annual report posted recently on the Jamaica Stock Exchange. “Furthermore, our three core portfolios all recorded double-digit growth in 2023,” the comments continued.

One of the key drivers behind this growth was MHL’s strategic approach to acquisitions. The acquisition of Rowe’s IGA supermarkets in Jacksonville, Florida; Air Liquide operations in Trinidad; and IGL Jamaica were pivotal.

McLetchie revealed that the Rowe’s IGA acquisition was of particular strategic significance, explaining that it “is a major step in achieving the group’s global vision, as it provides an excellent beachhead for further niche supermarket acquisitions in the United States while providing strength in hard currency cash generation”.

“The IGL Jamaica acquisition closed in May 2023, and this consolidated the group’s position as the leading LPG business in the region and will also provide access to additional economies of scale to bring efficiencies to consumers,” he added.

MHL CEO Gervase Warner shared additional perspectives on the value of the acquired entities.

“We are actively engaged in efforts to integrate the companies within the Massy Group,” Warner said. “These integration efforts are not only focused on capturing the desired synergies for enhanced financial performance but also on ensuring cultural integration and alignment with our core values for wider stakeholder value creation. After divesting non-core assets over the past few years, the strategy of focusing the group on the three portfolios continues to pay off, and these acquisitions demonstrate the benefits of such focus.”

Warner further highlighted that a portion of the financing for the three mentioned acquisitions came from third-party debt totalling US$106 million and borrowing against the margin line on MHL’s diversified funds portfolio (DFP) investments amounting to $127 million.

“While this reduced our weighted average cost of capital, it increased our debt-to-equity ratio to 46 per cent, which remains well within a tolerable limit,” he disclosed. “We will continue to responsibly use these sources of capital going forward, using improved cash management processes to ensure that we have adequate cash flows to service all our capital providers in the form of interest, principal, and dividend payments.”

Looking ahead, Warner expressed recognition of the importance of effective capital allocation for sustained growth and enhanced shareholder value.

“The group is focused on further codifying how capital is allocated between potential projects that are competing for funding and on what the optimal capital structure is across the group,” the CEO disclosed. “The introduction of this capital allocation framework will form part of our approval process for new investments and will be formally implemented in FY2024.”

MHL’s chairman, Robert B Riley, noted that despite the challenges of recent years, including the COVID-19 pandemic, global conflicts, contraction in China, and stagnation in Europe, the Massy group has steered through this volatile environment. In 2023 the group was buoyed by positive factors, such as healthy oil prices, rebounding tourist numbers, and the sustained growth of economies, like Guyana’s, contributing to MHL’s positive outlook. Despite challenges, like increased interest rates and currency depreciation in Colombia, Massy has demonstrated adaptability and confidence in the long-term prospects of the regions in which it operates.

Undeterred by the evolving landscape, the chairman emphasised that MHL continues to create value for its shareholders.

“The Massy group is continuously committed to creating value for its shareholders, and hence, we have declared a final dividend of TT 12.68 cents per share, which brings total dividend for FY2023 to TT 15.83 cents per share, which is an increase in the total dividend from FY2022,” Riley declared.