Styrofoam ban slashes Wisynco's profits


Styrofoam ban slashes Wisynco's profits

... company's cogeneration plant scheduled to be commissioned in March

Business reporter

Sunday, February 16, 2020

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Wisynco Group Limited is reporting a 25 per cent slash in its profit for the second quarter ended December 31, 2019, due to the closure of its styrofoam plant in accordance with the Government's ban on the local manufacture, distribution, and use of expanded polystyrene foam containers. This ban came into effect at the start of the year.

Wisynco's net profit amounted to $582 million for the period under review, compared to the $776 million recorded for the corresponding period of the prior year.

Chief Executive Officer Andrew Mahfood indicated in the unaudited financial reports posted on Friday last (February 14), that the industry was given certain commitments from the Government that there would be some form of compensation for these closures, for which the company will continue to negotiate.

“While it is unfortunate to have to close any manufacturing facility, the management team's efforts in securing new business lines and growth in our core beverage brands are to be congratulated. We will continue rolling out strategies to enhance shareholder value in the near future. The entire Wisynco team takes this opportunity to thank our styrofoam team members for their invaluable service to our company over the past 40 years,” Mahfood stated.

He further added that the company's cogeneration plant is scheduled to be commissioned during its third quarter (March 2020).

Polystyrene foam containers — commonly called styrofoam after a US brand — are outlawed across the country as per the Natural Resources Conservation Authority Trade (Plastic Packaging Materials Prohibition) Order, 2018.

The Government's ban on polystyrene foam containers, which have become a staple in the food and beverage industry over the years, was implemented a year after the ban on the use, importation, and manufacture of specific categories of single-use plastic packaging material, including what are commonly known as scandal bags.

However, despite this result, Wisynco achieved revenues for the quarter from continuing operations of $8.5 billion, representing an increase of 25 per cent when compared with the $6.8 billion achieved in the corresponding quarter of the previous year.

Mahfood further added that the company saw growth in all major product categories in spite of tempered demand for some products at the start of the second quarter due to rains which continued into early October.

Selling, distribution, and administrative expenses for the quarter under review totalled $2.2 billion or 25.3 per cent more than the $1.75 billion recorded in the corresponding quarter of the prior year, due to additional one-off marketing costs to support new product development and introduction, and additional Christmas-related marketing expenditures.

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