Wisynco Group is feeling the sting of COVID-19 with the latest quarterly profit and revenue going down with a projection for further depressed activity.
In its just-released financial results for the second quarter ended December 31, 2020, Wisynco highlighted that the business continues to suffer as a result of the pandemic with the recently announced added travel restrictions in the United States, United Kingdom and Canada expected to exacerbate the situation in the near term.
In their interim report to shareholders, company Chairman William Mahfood and Chief Executive Officer Andrew Mahfood stated that COVID-19 restriction measures continue to depress activity, specifically in areas such as tourism, bars and entertainment, restaurants and schools, which have been unable to return to normal. Given the added travel restrictions, it is expected that these channels will continue to be impacted in the near term.
REVENUES SUFFERED AS A RESULT OF COVID-19
Revenues for the quarter under review amounted to $8 billion, representing a decline of 6 per cent below the $8.5 billion achieved in the corresponding quarter of the previous year. “As a result, our revenues from these channels will continue to be impacted, and we expect this to continue into Q3 and Q4,” the Mahfoods advised shareholders.
Additionally, due to the depressed activity and shrinking wallets, revenues from some of Wisynco’s higher margin products have slowed, while some of its lower margin products have increased. Gross profit for the second quarter was $2.7 billion, registering a 14.7 per cent drop from the $3.1 billion achieved in the same quarter of 2019.
The company attained a gross margin of 33.3 per cent, which was lower than the 36.7 per cent registered in the prior year, which was due primarily to changes in sales mix, impacted by the pandemic, which has caused consumers to change their spending habits and to essentially stay at home. Selling, distribution and administrative (SDA) expenses for the quarter totalled $1.8 billion or 17 per cent less than the $2.2 billion for the same period in 2019.
This expense reduction of $381 million for the quarter brings the fiscal year-to-date cost reduction to $503 million. According to the Mahfoods, “management has been laser focused on controlling our costs from before the start of this pandemic, and we applaud the team for their efforts. Our SD&A expenses to sales ratio was 22.7 per cent for the quarter, compared to 25.85 per cent in the prior year, with the current quarter having a lower revenue base than the prior year.
The directors made the point that the management team is equally motivated, and intent on growing revenues and not just on controlling costs. “We continue to focus on key areas, such as our export channel, which for the 6-month period ended December 31, 2020 grew by 23 per cent, and our Full Service Model route to market, while focusing on our customers,” shareholders were told by the chairman and CEO.
LOWER PROFITS FOR THE QUARTER
Profit before taxation for the quarter was $876 million, which was $80 million or 8 per cent lower than the comparative quarter of 2019, while the year-to-date profit was $1.9 billion, a 7.4 per cent drop from the $2 billion realised in the second quarter of 2019. After provision for taxes, Wisynco recorded net profits attributable to stockholders of $688 million or 19 cents per share for the quarter, which was similar to the $686 million earned for the prior year.
On a fiscal year to date basis, earnings per share was $0.41 per share compared reasonably well to $0.43 per share for the prior year, which was not affected by the COVID-19 impact. The company’s balance sheet remains strong with the directors declaring that the company will continue to seek investments for expansion to garner new revenues and cost effective technologies to improve its costs of operations.