Derrimon Trading Group is now undertaking due diligence on a foreign company it was eyeing three months ago for possible acquisition.
Its talks continue with the United States-based retail and distribution company, but Chief Financial Officer Ian Kelly said they hope to close the deal soon.
“I wouldn’t want to say the state, but we have identified a company and in short order we will be able to make an announcement, if the deal goes through. It’s a similar business to what we have in New York,” Kelly told the Financial Gleaner, on the margins of the company’s annual general meeting on Wednesday.
If successful, the transaction would mark the third foreign business that the Derrimon Trading Group has taken over and the fifth acquisition for the company over the past two years.
It would also push the company closer towards its goal of having 50 per cent of revenues generated from foreign markets.
In January, Derrimon purchased 100 per cent of manufacturer Spicy Hill Farms, which trades in dried agricultural products, soup and spice mixes, before closing the deal to acquire 100 per cent of St Ann-based meat processing company Arosa Limited in April.
Prior to that, the company acquired Brooklyn, New York-based grocery businesses FoodSaver New York and Good Food for Less.
Amid its plans to control a larger segment of the retail and distribution market in the US, Derrimon is also looking to secure more market share locally. The company will open its second Select Grocers retail location in Millennium Mall, Clarendon, in October and has its eyes on strategic spots across the country to expand that subsidiary, along with the Sampars Cash & Carry chain.
“The intention is not to go greenfield like what we did in Clarendon. If that’s the case then we will do that, but the intention is to acquire properties in specific areas,” Kelly said.
For the quarter ended June, Derrimon posted a 15 per cent jump in revenues to $4.6 billion.
Earnings for the quarter, however, fell 10 per cent to $113 million on rising expenses. Despite rising raw material costs, along with higher distribution costs, the company’s gross margins improved from 19.11 per cent to 21.39 per cent. Total assets grew to $13 billion, inclusive of $397 million in cash.
Derrimon expects to add up to $500 million in revenues quarterly, or $2 billion annually, going forward, from the roll-out of a new line of Delect products in its US and local stores.
The company added callaloo, ackee, coconut milk, lime juice, breadfruit slices, bammy, sorrel concentrate, ginger beer and lemonade concentrates to the Delect line, after more than a year’s work.
Kelly declined to comment on the cost of the roll-outs.
Prior to the addition of new products, the Delect line included sea salt, ketchup, oil, corned beef, mackerel, rice and tissue paper.
The products are all manufactured under co-packing arrangements, one of the arrangements being with Derrimon’s own Caribbean Flavours & Fragrances subsidiary.