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Beverage maker and consumer goods distributor Wisynco Group Limited is already reaping gains from its big investment in expanding its operations.
Wisynco has now commissioned two major components of its expansion programme which was originally priced at $5 billion, but is now estimated by Chairman William Mahfood at $7 billion, while two more lines are due to be ramped up by year end and another by early next year.
The company put Beverage Line 5 into operation last December, followed by Water Line 4 in March of this year.
“Our final quarter therefore reflected the positive results from these expansion efforts,” the company said in its newly released year end financial report.
The fourth quarter, spanning April-June 2024, delivered 12 per cent revenue growth and was the best ever at $14.3 billion. However, net profit for the quarter was $1.22 billion, just around the same as the fourth quarter of 2023.
Wisynco Chairman William Mahfood said that because of the new lines, export sales in the fourth quarter shot up by about 25 per cent, compared to the June 2023 fourth quarter.
For the full year ending June, total revenues stood at $54.27 billion, having grown by 11 per cent over the $48.7 billion of sales racked up in the 2023 financial year. This pushed net profit to $5.2 billion, up from $4.9 billion.
Mahfood said that while the December 2023 and March commissioning of the new machines had to hurdle system-bugs and operational kinks, the fourth quarter operations were smooth.
“The remarkable thing is that those machines didn’t really get up to full speed until the fourth quarter, say, April, May, June and that is where you started to see it affect the numbers, particularly exports,” Mahfood said in an interview with the Financial Gleaner.
In earlier quarters, the company faced challenges related to stock availability and pricing issues, Mahfood said. With the year having ended on a strong note, driven by improved product availability and growing demand in key markets, he added, the company expects even better performance for the present financial year ending June 2025.
“We’re just starting now to fill the pipeline so what I think you’ll see is that in the coming quarters of the new financial year, the numbers will be looking even better. We’ll also see it affecting exports because we now have the product available to sell,” Mahfood said.
Exports are centred around Bigga soft drinks to the United Kingdom market, Tru Juice to the United States market, while Cran Wata product met with varying degrees of success in other overseas markets, he indicated.
“Before the end of the calendar year, we should have the canning line up and running, while the bottling line will not be far behind. That will give us more flexibility as we take on more markets,” Mahfood said.
Some products are to be produced in glass bottles, but Mahfood did not disclose any specifics.
The 200,000-square-foot expansion at Wisynco’s complex in Lakes Pen, St Catherine, is in its final stages, with activity focused on the outfitting of new offices, testing of utilities, and other works, the chairman said.
In the past year, Wisynco’s fixed assets have doubled in value from $7.56 billion to $15.5 billion. In addition to the two lines already commissioned, a glass bottle line and a canning line that will ramp up before year end at Lakes Pen, while another drinks line, to take care of odd-sized beverages, will be commissioned into service at the company’s White Marl complex by early 2025.
The project is financed from some borrowings, but mostly cash from Wisynco’s internal resources, Mahfood said, adding that it . He added that the company chose that mix to ensure there would be no hold-ups in funding the project
“The intention was to go to the market to have it financed but we couldn’t have the project waiting for the financing to come,” he said.
The reliance on internal resources saw the company burning through nearly $5 billion in cash last year, with its net cash holdings falling from $10 billion to $5.1 billion.
Due to delays and over-runs, the expansion programme ended up costing $7 billion, which was around $2 billion more than initially budgeted. Amid the expenditures, Wisynco’s gross margin was squeezed slightly from 34.6 per cent down to 34 per cent, notwithstanding the nine per cent gain in gross profit.
“The slight reduction in margin, rather than an expected increase in same, was primarily due to unexpected delays in completing the two expansion projects,” Wisynco said in the financial summary released with its year end results.
Meanwhile, in an update on Wisynco’s recent drive to onboard more workers for the expanded operation, Mahfood said so far they had filled 400 slots of the targeted 700 new hires. The company now plans to restructure the sales team to focus on three categories.
“We’re separating the sales and commercial teams into the various categories. So we’ll have foods, non-alcoholic beverages and then there will be what we call lifestyle, such as the energy drinks and alcoholic beverages and so on,” Mahfood said. The expectation is that the new arrangement will bring added focus and facilitate better sales execution in the marketplace, he said.
“It’s just expanding our approach to the market, making sure that as the company continues to grow, customers, the team, and the products get the right amount of attention,” Mahfood said.
English (US) ·