An increase in drinking at home has helped Angostura offset some of the financial difficulties it experienced because of the COVID-19 pandemic, the company’s unaudited financial results for the first half of the year has shown.
“The group closed the first half of fiscal 2020 with revenue of $358.5 million, 3.5 per cent ($12.1 million) over the comparative period in 2019. Revenue growth was due primarily to increase in local rum sales, up 11 per cent, and Bitters sales to the North American market, up 8.4 per cent over the same period last year,” Terrence Bharath said in his chairman’s statement.
“Despite the global pandemic, and its adverse impact on several distribution and on-trade channels at home and abroad, the Group has maximised opportunities,” he stated.
“Shifts in trends in the off-trade channels, increase in at-home consumption and cocktail preparation to deliver revenue growth allowed for offset of these adverse trends at this unprecedented time,” Bharath stated.
According to the company’s results revenue from Rum increased by $17 million between June 30 and the same period last year.
“Ongoing upgrade works on our water resource recovery and anaerobic digester facility which was directly impacted by the global pandemic, temporarily reduced our production capacity resulting in an increase in the cost of production. Delays to the commissioning of the facility also resulted in increased operating costs. Shifts in local demand led to an increase in customs duties,” Bharath stated.
“These together with a decline in the global demand caused by the closure of on-trade businesses and travel restrictions, have resulted in a decline in the gross profit margin to 46 per cent.
This temporary decline will normalise in coming months as these works have now been completed and will result in production increases and the ability to manage product mix as international markets recover,” he stated.
Bharath said the effect of COVID-19 on the company is being quantified.
“Directly due to the pandemic, accounting standards require that we record a specific COVID-19 factor to the estimated credit loss to conservatively evaluate the potential impact of losses related to our trade receivable portfolio. This is reflected in our selling expenses and has resulted in a decline in operating margins from 22 per cent as at June 2019 to 17 per cent for the same period this year,” he stated.
Bharath said despite the decline in profit by $16.7 million the company anticipates that it will recover over the next half of the year “arising from new opportunities in our overseas markets and the launch of new products, in particular Cocoa Bitters.”
Angostura Holding Ltd recorded a 66 per cent decrease in profit for the three month period ended June 30, compared to the same period last year, according to its unaudited financial results.
For the three-month period ended June 30, Angostura Holdings recorded a profit of $27.731 million.
During that same three month period last year the company recorded profit of $41.683 million.
The difference in profit for the two periods was $13.952 million.
“Notwithstanding this, and in the interest of cautious cash flow considerations, the board has agreed to defer the recommendation of an interim dividend payment at this stage.
“The Angostura team will continue to explore new opportunities for growth while ensuring that our staff and customers are kept safe with appropriate protocols in the face of the pandemic. We are working with the conditions imposed on us by the pandemic and have focused our plans and strategies to achieve more positive results to the bottom line,” he stated.