GEL reports drop in profits

by Shawn Cumberbatch

goddardenterpriseslimitedhaggatthallhqGoddard Enterprises Limited, Barbados’ single largest group of locally-owned companies, has suffered a drop in profits. And while the island continues to have a difficult business climate, the conglomerate said the near $3 million decline in net income during the six month period ended March 31, 2013 was due in a significant way to events in the Caribbean and Latin America.

Reporting on GEL’s most recent financial performance, Chairman Charles Herbert, and Acting Managing Director, John Taylor, said over that time final profit decreased by 13.4 per cent, dropping from $22 million during the same time last year to $19.1 million this year.

The officials also noted that with there being no immediate sign of economic recovery in the Caribbean the company would have to review its costs.

“During the period under review the group recorded a six per cent decline in revenues compared to prior year. This decline occurred in our Import, Distribution and Marketing Division, where sales of our St. Lucia subsidiaries were adversely affected by depressed market conditions exacerbated by the implementation of VAT there on October 1, 2012,” they noted.

One bit of good news for GEL was the “improvement in gross profit margin from 34.5 per cent in the prior year to 36.7 per cent during the period”, something Herbert and Taylor attributed to “improved efficiencies across all divisions as well as ongoing improvements in procurement strategy”.

As with the difficulties in St. Lucia, this positive outcome was stymied, however, by challenges in Venezuela and Latin America business markets.

“Our selling, marketing and administrative expenses … as a percentage of revenues were 31.4 per cent compared to 28.9 per cent in the prior year. This is due mainly to mandated increases in payroll costs in some of our Latin American countries as well as difficulties reducing costs quickly enough to compensate for declining sales,” the officials said.

“Across the Caribbean, economies continue to be depressed and are showing few signs of recovery; as a result, our cost base will need a thorough review.”

They also pointed to an increase in inflation expenses recorded by two subsidiaries in Venezuela as an area of concerned. “This is required by International Financial Reporting Standards as Venezuela is considered a hyper-inflationary economy. Profit from operations fell by 17.5 per cent to $25.7 million Group Finance costs were 6.9 per cent below the prior year,” the directors stated.

“After deducting non-controlling interests, net income attributable to equity holders of the company was $11.8 million with a basic earnings per share of 19.7 cents, a decline of 22.1 per cent. Turning to our balance sheet, our cash flow continues to be adequate and our debt to equity ratio remains healthy at 37:63,” they added. (SC)

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