By McPherse Thompson, Staff ReporterDESNOES & Geddes (D&G) has reported strong growth in the sales of its brewed products for the year to June this year, partly boosted by a significant 29 per cent increase in its exports to the United States.
Led by its flagship brand, Red Stripe, total volumes grew by 10 per cent, with the relatively new product, Red Stripe Light, registering the highest growth rate among the company's portfolio.
According to the directors' report, released ahead of the company's annual general meeting at its Spanish Town Road, headquarters on November 27, turnover increased by eight per cent to $5.5 billion from $5.1 billion the previous year.
D&G's chairman, Patrick Rousseau, and President, John Irving, over whose signatures the directors' report appear, will also tell shareholders that the group's profit before interest, tax and exceptional items grew by 10 per cent due to cost savings and efficiency initiatives, combined with the growth in volume. The company said its cost performance would have been better but for high increases in insurance following the attacks on the United States on September 11, last year, and unexpected legal costs associated with defending the company against unfair trading allegations.
Shareholders will also hear that in the first year that the company benefited from what will be a five-year income tax break, profit before tax decreased by four per cent, due mainly to a significant increase in redundancy costs as the company reduced its production workforce. Some of the workers lost their jobs as a result of the installation of a new packaging line to increase efficiency.
Investors attending a forum at D&G's headquarters today, should also get further explanation about a decrease in the company's interest income as a result of a decision to invest more of its spare funds in US dollars to cover purchases requiring foreign exchange.
D&G said its board has recommended a final dividend of 35 cents per ordinary stock unit to be paid on December 11 to stockholders on record at the close of business on November 27.
The company also reported that two of its subsidiaries D&G Wines and Jamaica Metal Lithographers were both dormant and were in liquidation. It said that as part of the group's policy to divest itself of its non-performing assets, it has also applied for another dormant subsidiary, D&G Provident Society, to be struck off the company register for inactivity.
Stephen Johnson, the company's secretary and legal adviser, told the Financial Gleaner that both D&G Wines and Jamaica Metal Lithographers were placed in liquidation earlier this year and were in the process of being wound up. He said a decision had been taken from 1996 to transfer the assets and liabilities to the parent company. D&G Wines was sold to Wray & Nephew in 1999, and Jamaica Metal Lithographers, which used to be the crown caps manufacturing arm of the company, became dormant because the parent company was no longer involved in that business.
Mr. Johnson said D&G Provident Society was formed as a company-assisted mortgage scheme for employees, but that was now being administered by Life of Jamaica (LoJ) in association with the Jamaica National Building Society (JNBS).
The directors also reported that, as part of its corporate social responsibility, this year D&G initiated discussions with another major producer of alcoholic beverages with a view to establishing a social aspect organisation. The primary objective, they said, would be "to manage and influence the alcohol industry with respect to issues such as responsible drinking, responsible advertising and drinking and driving." The directors said the company has already started to include in the advertising and promotion of its newest products the recommendation to drink responsibly. "This will eventually be included in the advertising of all our products," the report said.
D&G said it continued to work closely with the National Environment Protection Agency (NEPA) to minimise the impact of its activities on the environment. "To this end, we are happy to report that we have now completely eliminated the use of ozone depleting substances in our plant," the directors said. In addition, with the installation of the new bottling line, "we will use less water and less energy, thereby further reducing our impact on the environment," they said.
