Angostura sheds non-core assets
Published:Wednesday | December 8, 2010 | 12:00 AM
Trinidad-based rum manufacturer, Angostura Holdings Limited is reporting a major revenue recovery, posting a strong nine-month earnings of TT$91.6 million, turning the corner on the anaemic TT$9 million it did last year.
The recovery came on the back of greater operating efficiency and cost reductions implemented by its new management.
"The turnaround demonstrated by these results testifies to the success of the new strategic direction adopted by the company - focusing primarily on our core operating activity which yields our highest return," said deputy chairman, Fraser Thornton in a statement to shareholders.
Angostura Holdings, which owns a piece of Jamaican spirits conglomerate Lascelles deMercado, last November appointed Wayne Yip Choy as chief executive officer and named him as managing director in January 2010.
Angostura has been under new management since the collapse of CL Financial Group, of which it is a part. CL was taken over by the Trinidad and Tobago Government.
The company has been touting strategies such as greater focus on core operating activity, the introduction of value-added rum brands, and improved utilisation of plant and equipment, among the factors contributing to its earnings climb.
Core earnings aside, for the period, other income increased to TT$11 million, bumped up by TT$8.7 million from the sale of a non-core loss-making subsidiary in the United States.
The company has reported that its only remaining non-core subsidiary, located in Canada, is also up for sale.
But asked whether any of the Lascelles companies would be affected by its refocus on core business, Angostura punted, saying it only holds three per cent of the Jamaican company shares, and that the query should be redirected at both companies' ultimate parent CL Financial.
"The majority shareholder will better be able to address the latter part of your question," the company said via email.
CL Financial and its companies control 92 per cent voting rights in Lascelles, a company businesses span rum and spirits as well as transport services, insurance and merchandising.
While net sales for the period, at TT$414.8 million, was slightly down from TT$415 million, cost of goods sold was significantly lower, resulting in an overall improvement in gross profit.
Administrative costs remained relatively flat and savings of TT$30.1 million were reported on selling and marketing expenses, which dropped to TT$58 million from TT$88.6 million during the period.
"Due primarily to lower advertising and promotional costs, which were better targeted to our markets, it has not only improved the return on advertising spend but has also resulted in better management of advertising and promotion arrangements with our foreign distributors," Angostura reported.
Finance costs also dipped to TT$52.5 million, reflecting reduced interest charges and lower exposure to bad debts. This resulted from debt retirement and reduced interest charges, which were down TT$12.8 million.
Angostura's principal debt payment declined by approximately TT$96.9 million at the same time that the company saw cash-flow enhancement with significant improvements in debt collection reported.
Net cash and bank balances at September 30, stood at TT$67.6 million, up from TT$51 million last year.
Other improvement in the company's performance for the year included a TT$167 million increase in finance income along with foreign exchange gains of TT$12.7 million.