Sat | Jul 2, 2022

COVID relaxation drives earnings for Wisynco

Published:Friday | May 13, 2022 | 12:08 AM
William Mahfood, chairman of Wisynco Group Limited.
William Mahfood, chairman of Wisynco Group Limited.

Wisynco Group grew earnings by 24 per cent for its third quarter on revenues that swelled to another quarterly high at $9.7 billion.

The manufacturer and distributor credited the quarterly performance to surging local and international demand from the relaxation of COVID-19 measures, which ultimately pushed its January-March quarter sale numbers beyond that of the prior two quarters.

Wisynco’s first and second quarters usually outperform the third.

Still, the higher sales numbers did not translate into better margins for the beverage maker, its gross margin having dipped by nearly two points due in part to additional spending of $81 million on energy. The company’s LNG-fired power plant that’s been in operation since July 2020 suffered from supply disruptions, in tandem with upheavals in global energy markets, forcing Wisynco to purchase electricity to make up for the shortfall from its own plant.

“Additionally, we had production downtime which led to some higher costs of production as well as increased input costs,” Chairman William Mahfood said in the preamble to the quarterly results.

Profit for the third quarter amounted to $831 million, up from $672 million in the 2021 period.

Over nine months, July 2021-March 2022, Wisynco’s earnings rose by 33 per cent from $2.21 billion to $2.96 billion, despite the global uncertainty around supply chains, rising commodity and input prices, and disrupted oil and gas markets.

Mahfood remains optimistic about market prospects as well as capex projects for Wisynco over the short to medium term.

“We are on the verge of some of the largest capital investments in the company’s history. We see continued increase demand, we are optimistic about the market and the conditions, especially with tourism opening up, and some softening of the COVID measures,” he told the Financial Gleaner.

The company is investing upwards of $5 billion on capital projects.

It’s getting back into reinvestment mode, having scaled back its capex plans at the start of the pandemic in March 2020 and prioritising liquidity instead by growing its cash pile.

At the close of the March quarter, Wisynco held $8.49 billion in cash, 28 per cent more than the year before.